Albania2005 INVESTMENT CLIMATE STATEMENT -- ALBANIA
Nearly 14 years after emerging from an isolated
communist dictatorship, Albania's private sector has grown to
account for almost 80 percent of gross domestic production.
Foreign direct investment in Albania has been low by regional
standards, but has been increasing in recent years. With its
developing market economy, Albania offers many opportunities
for investors -- property and labor costs are low, the young
and educated populace is ready to work, and tariffs and other
legal restrictions are already low in many cases and being
swept away in others. Albania's location, along with its
three maritime ports, offers further trade potential,
especially with EU markets -- it shares a border with Greece
and is just across the Adriatic from Italy. Albania is also
seeking to develop better trade ties to other rapidly
developing countries in the Balkans and has entered into free
trade agreements with all of them. Investment in Albania
comes with certain risks, however. As with most other
countries emerging from communism, Albania's infrastructure
is underdeveloped and resources are being strained to bring
transportation networks, electricity, water delivery and
wastewater treatment up to regional standards. Many
investors have also cited a weak judicial system, competing
claims of property ownership, and corruption as being hurdles
to investment. Nevertheless, Albania's economy remains one
of the fastest growing in Europe (averaging six percent
growth each year for the last four years), inflation has been
under control for over seven years (currently ranging between
two and four percent), the local currency has appreciated
significantly in value over the past year, and the local
financial sector has been gaining strength and has taken the
lead in bringing more formality and certainty to economic
transactions. End Summary.
Openness to Foreign Investment
The Government of Albania (GoA) seeks to attract foreign
investment and understands that such investment will be
indispensable to sustained growth. Although the government
-- through its Central Bank and Ministry of Finance -- has
been able to achieve a stable macroeconomic situation, the
level of foreign investment remains the lowest in the region.
GoA leadership appears to recognize this problem but
implementation of laws and development of infrastructure
designed to spur investment is in many cases moving more
slowly than could be hoped. As Albania moves away from IDA
assistance (current per capita GDP figures indicate that
Albania is no longer IDA eligible), it will lose much of the
public and quasi-public financial support it has enjoyed from
a variety of international institutions. This change may
force the GoA to become more effective in implementing
investment friendly policies.
Officially, a legal framework to encourage investment
already exists. Law No. 7764, dated November 2, 1994, and
titled "On Foreign Investment" was designed to create a
favorable investment climate for foreign investors in the
country. The Law offers considerable guaranties to all
foreigners (either physical or judicial persons) willing to
invest in business in Albania. Such provisions include:
- No prior government authorization is needed and no
sector is closed to foreign investment.
- There is no limitation on the percentage share of
foreign participation in companies -- 100 percent foreign
ownership is possible.
- Foreign investment may not be expropriated or
nationalized directly or indirectly, except for special
cases, in the interest of public use, defined by law.
- Foreign investors have the right to expatriate all
funds and contribution in kind of investments.
- Most favorable treatment according to international
agreements is also provided.
There are limited exceptions to this liberal investment
regime, most of which apply to broadcasting, health services
and legal services. Restrictions on the purchase of real
estate are also notable: agricultural land cannot be
purchased by foreigners, but may be rented for up to 99
years; commercial property may be purchased, but only if the
proposed investment is worth three times the price of the
land. There are no restrictions on the purchase of private
residential property.
Other legislation addresses investments made through
acquisition-mergers, takeovers and green-field investment.
Law 7638, dated November 19, 1992, "On Commercial Companies"
regulates the activities of companies and establishes the
type of legal structure under which companies may form. No
distinction is made between foreign and domestic investors in
this law. Albania's tax system also does not discriminate
against foreign investors. Likewise, legislation concerning
the public procurement process makes little distinction
between foreign and domestic firms. Many activities in
Albania require licensing. Before engaging in an economic
activity a company should inquire if a license is required
for the exercise of such activity. The procedures for getting
a license are, however, the same for national and foreign
companies.
The GoA does not screen foreign investments and provides
little in the way of tax, financial or other special
incentives. The government is actively considering the
creation of a "one-stop shop" to assist foreign investors in
obtaining information, licenses and meet any other legal
requirements. The Albanian business community and public
also generally welcome American firms and their products.
Investors in Albania are entitled to judicial protection
of the rights related to their investments. Parties to a
dispute may agree to submit claims for consideration by an
arbitration institution. Foreign investors have the right
also to submit disputes to an Albanian court. Provisions on
domestic and international commercial arbitration are
incorporated in the Code of Civil Procedure. As a practical
matter, however, corruption remains a problem in judicial
system, and some foreign investors have experienced delays
and losses as a result.
Albania offers considerable natural resources, including
oil, gas, and coal, iron, copper, chrome, water and
hydroelectric potential. An on-going privatization process
presents opportunities in strategic sectors, mining, energy
generation, oil and gas, telecommunications, finance. This
process has attracted foreign investors, mainly from Greece,
Italy and Turkey. The privatization strategy for sectors of
primary importance explicitly seeks qualified foreign firms
as strategic investors for these key sectors. The bidding
process appears to be more transparent for high value assets
than for lower value assets.
Conversion and Transfer Policies
The Albanian currency, lek, is freely convertible at
banks and exchange bureaus and foreign exchange is easily
found at a legal market clearing rate. Most transactions are
carried out in cash and the dollar and euro are legally and
commonly used. The lek floats freely and has appreciated
over the last 18 months by 20 percent against the dollar and
remained stable against the euro. Currently, the exchange
rate is 95 lek per dollar.
To combat the flow of illegal assets, new anti-money
laundering legislation was passed in July 2003 that requires
reporting of all transactions over USD 10,000. Transfers
abroad of funds and other financial assets are unrestricted
as long as tax obligations, debts, and reporting requirements
have been met. In the past, this legal freedom was not
always respected, but in recent times appears to be respected.
In 2004, the maximum limit accepted for transactions
executed in cash was reduced from Lek 1 million to Lek
500,000 for transactions effected during 2004, and to Lek
300,000 for any subsequent year. For cash transactions over
these limits, buyer and the seller are subject to a penalty
of five percent of the transaction value.
Expropriation and Compensation
In the post-communist period, expropriation has been
limited to land needed for infrastructure projects, such as
roads and airports. Compensation has generally been above
market value, though some owners have complained at the low
real amount of payments. Several U.S. citizens and residents
have on-going disputes with the government regarding
restitution for property expropriated during the communist
regime.
The Albanian Parliament approved in July a new law on
property compensation and restitution that is expected to
resolve competing land ownership claims resulting from
communist-era expropriation of land. The GoA has presented
three methods of compensation for expropriation claims: 1)
restitution, 2) compensation of property with similar valued
land in a different location, 3) cash settlement. The law
remains in the implementation stage, but the legal entity
charged with deciding claims is expected to commence
operation in the summer of 2005.
The property registration process has been completed in
approximately 80 percent of the total land area, but very
little in high value urban and coastal areas. Many of the
unregistered properties are in the south coastal area, which
is more valuable for its tourism potential, and where
disputes are more frequent.
Dispute Settlement
Albania has a civil law system similar to that of most
other European countries. Legislation distinguishes
arbitration of international disputes from arbitration of
domestic disputes in that the parties involved in an
international dispute may agree to settle through either a
domestic or foreign arbitration tribunal. In Albania,
ratified international agreements have legal superiority over
domestic legislation. Albania is a member of the
International Court for Settlement of Investment Disputes
(ICSID) and it is in the process of acceding to the New York
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards and the European Convention on International
Commercial Arbitration. Under government regulation,
international arbitration is recognized and accepted as
valid. The government accepts binding International
Arbitration on Investment Disputes and has over 40
internationally accredited arbiters on the country
arbitration list. The arbitrators will use the appropriate
law based on issues determined by the parties. If the
parties could not agree on the issues involved in the case,
the arbitrators would make the appropriate assessment. That
said, the judicial system continues to suffer from corruption
and unreliability. The GoA has taken steps to address this
issue, establishing a High Council of Justice to investigate
claims of judicial misconduct, but the process remains in its
early stages. Although the situation is improving, investors
cannot yet fully rely on the enforceability of contracts.
Foreign firms and institutions have also been subject to
nuisance lawsuits aimed at receiving cash settlements.
Recent investment disputes appear focused on the ownership of
lands considered ideal for tourism, mostly along the southern
coast.
The Albanian government, with World Bank financing, has
established the Albanian Guarantee Agency (AGA) which
provides political risk insurance for foreign and local
investors in Albania. AGA administers the Political Risk
Guarantee Facility (PRGF) and, with the exception of the
production of tobacco products, alcohol and armaments,
investors can apply for political risk coverage. Specific
categories of risk covered by PRGF are:
- Inability to convert and transfer currency
- Expropriation
- Seizure of goods, prevention of sales or
prevention of exports/imports
- War or civil disturbances
- Cancellation of licenses and restrictions on
import and export
- Imposition or increases of import or export
taxes as consequence of war and civil
unrest
- Interference in the transport of goods
- Diversion of voyage
New provisions to Law no. 8560, dated December 22, 1999,
titled "On Tax Procedures" introduced the establishment of a
new body within the General Tax Directorate, the Tax
Discipline Commission. The Commission is vested with the
authority to review the claims of tax violations. The Tax
Discipline Commission quantifies the violation and proposes
to the General Tax Director the relevant penalty. Activities
of this Commission will be subject to forthcoming
instructions from the Ministry of Finance.
Bankruptcy is governed by Law no. 8901, dated May 23,
2002, titled "On Bankruptcy." According to the law, a
creditor has the right to request the opening of an
insolvency proceeding in order to be resolve debts. If the
Court repeals this request, the creditor has the right to
appeal.
The Bankruptcy law distinguishes the right of creditors
as follows: a) Insolvency Creditors have an unsecured claim
that is provable against the debtor at the date the
proceedings are opened; b) Subordinated Insolvency Creditors
are creditors whose claims are satisfied once after the
claims of regular insolvency creditors' claims are satisfied;
c) Estate Creditors are creditors who have given credit to
the insolvency administrator. They are paid out of the estate
in priority to insolvency creditors. They need not file
claims in order to obtain payment; d) Creditors with a right
of set-off can obtain satisfaction of his/her claim to the
extent of the set-off; and e) Creditors with a right of
separate satisfaction are secured creditors, who have a legal
right to rely on specific items or kinds of property
(collateral) of the debtor to obtain payment of part or all
of an obligation owing to them by the debtor.
The Law on bankruptcy does not contain any provision
regarding bank transfers.
Performance Requirements and Incentives
Albanian law generally does not establish performance
requirements or very detailed incentives for foreign
investors. Legal incentives include:
- Equal treatment of foreign and domestic investors.
- Full profit and dividend repatriation (after
taxation).
- Funds from the liquidation of a company may be
repatriated.
- Bilateral agreements on the promotion and protection
of reciprocal investments.
- Double taxation treaties.
One important exception concerning performance
requirements is the investment requirement relating to
foreign persons' purchase of commercial property -- such a
purchase can be made only if the investor plans to improve
the value of the property by three times the purchase price.
Some foreign firms operating in Albania have also complained
that capital goods and raw materials, on occasion, have been
subjected to the same taxes as consumer goods. The GoA has
said that it is not official policy to subject capital
investments to consumer taxes. To the extent there have been
problems concerning this issue, they appear to result largely
from corruption or misunderstandings on the local level.
There is an incentive program for investment in the
tourism sector. The investor can, pursuant to a law
entitled, "For development of the areas with tourist
priorities", obtain the title of "stimulated person" and
would be entitled to profit from a tax exemption for the
first five years of activity and for the following five years
would pay only 50 percent of the profit tax. Such persons
would also be excluded from custom taxes on imported goods
used for capital investment. Another law, "On Free Zones"
No. 8636 dated July 6, 2000, regulates the establishment of
free trade zones and related matters. There are no
requirements for foreign investors to purchase from local
sources or to export a certain percentage of the output.
There are currently no approved free trade zones. The
government does, however, appear willing to offer incentives
on a case by case basis for concessions (either in the form
of very long concession periods or in the form of temporary
and localized monopolistic arrangements).
24. Any person or entity, who receives land as owner or
tenant for purposes of construction or for other economic
activities, is required to respect the term of the completion
of the project according to the prior agreement. Failure to
perform in the required time frame obligates the person to
pay an amount equal to the average annual rent of the land.
Right to Private Ownership and Establishment
Albanian law permits private ownership and establishment
of enterprises and property. Foreign persons intending to
invest in Albania do not need any additional permission or
authorization to do so over and above that required of
domestic investors. There are 11 procedures to be undertaken
and the costs to start up a business are roughly USD 800.
The average time for the registration procedures is 47 days.
Businesses have complained that, in some instances,
bureaucracy and corruption made obtaining a business license
a lengthy and costly process. The GoA is currently exploring
the establishment of a "one stop shop" for investors to
reduce the cost and start up time for business as well as to
create a check against potential corruption
The following documents are required for registration of
a company :
- Request to the district court
- Articles of incorporation
- Constitutive act signed in the presence of a public
notary
- Documents reflecting capital disbursement
The articles the incorporation should contain:
- Name of the company
- Initial capital
- Seat (location) of the company
- Administrators or directors of the company
- Objective of the company
- Duration of its activity
Activities requiring a business license include:
- Tourism
- Construction
- Fuel trading
- Pharmaceutical and medical product trading
A significant portion of economic activity, estimated to
be between 35 to 60 percent of the total GDP, remains outside
formal legal structures and fiscal evasion is still very
high.
Protection of Property Rights
Enforcement of property rights in Albania remains an
evolving issue. Currently, enforcement of property rights is
left to the claimants in the civil court system. To address
this issue, and relieve an increasingly burdened court
system, the GoA, with USG and other donor assistance, is
implementing an immovable properties registration system to
establish proper title to private claims to land ownership.
The Cadastral Office in each district handles land
registration information requests.
Intellectual property rights are established under
Albanian law. In 2000, Albania ratified the Marrakesh
Agreement and became signatory to the World Trade
Organization's Trade Related Intellectual Property Rights
(TRIPS) agreement. Albanian law protects copyrights,
patents, trademarks, stamps, mark of origin, and industrial
designs. Enforcement of these laws remains incomplete and
violations of copyright, trademark, and other intellectual
property rights are common.
Additionally, Albania is a signatory to the following
international agreements on Intellectual Property Rights:
- Convention implementing World Intellectual Property
Organization
- Paris Convention on Protection of Industrial Property
- Bern Convention on Literary and Artistic Works
- Patent Cooperation Treaty
- Madrid Agreement
- Madrid Protocol
- European Patent Convention
- Budapest Treaty on Biodiversity
- Nice Agreement concerning the International
Classification of Goods and Services for the purposes of the
Registration of Marks.
In 2003, the GoA passed an anti-piracy law which
required television stations to broadcast only those shows
and movies which they had legally licensed for broadcast. The
law was implemented in September 2003 and it has been quite
successful so far. Pirated copies of DVDs and CDs, imported
from other countries, are easily purchased and/or rented in
various shops all over the country.
Transparency of the Regulatory System
The regulatory system is not yet fully transparent.
Businesses have difficulty obtaining copies of laws and
regulations. Laws and regulations are sometimes inconsistent,
leading to unreliability of interpretation. Proposed laws
and regulations are often not published in draft form for
public comment (although there has been recent improvement in
this area). Some ministries have recently undertaken
campaigns in order to consult with business, civil society
and affected groups about issues in proposed laws and
regulations.
Efficient Capital Markets and Portfolio Investment
Albania's financial sector has achieved steady rates of
healthy growth over the last seven years, yet remains
somewhat fragile. There are 16 private banks, which offer
clients similar services, deposit accounts, foreign
transfers, trade finance and, increasingly, mortgages. The
American Bank of Albania (third ranked in terms of deposits,
first in loan portfolio) has recently introduced credit and
debit card service and other banks are following. Although
it has done well in managing the money supply, the Central
Bank of Albania, may need to be more assertive with bank
supervision in order to ensure that lower tier banks do not
cut corners in the relatively small loan market.
After two failed attempts, in December 2003, state-owned
Savings Bank was sold to Raiffeisen Bank for USD 126 million.
Raiffeisen has a large presence in the region. Raiffeisen's
bank has approximately 60 percent of all deposits in Albania
(approx. USD 1.4 billion). While state-owned, the bank was
not allowed to make loans, rather it gained income solely
through earnings on Treasury Bills purchased from the
Albanian Government. Raiffeisen began offering loans in late
2004. The privatization of the Bank has increased both the
availability of credit and competition in the market in
general. The loan market, however, remains small.
According to the banks and many small and medium
enterprises (SMEs), the following issues affect access to
credit in Albania:
- A low level of domestic savings
- High interest rates
- Distrust of the banking system
- High operating costs of banks
- Poor business/project proposals
Credit lines can be obtained on the local market, but
the interest rates can be high under some circumstances,
often from 10 to 18 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)
- One's own contribution in the investment project (about
40 percent of the value)
- Export-oriented and profitable project
- The entity requesting credit needs to be at least 51
percent privatized.
The insurance industry has also experienced high rates
of growth over the last seven years and, relative to
neighboring countries, the market for insurance in Albania
remains largely untapped. Five new insurance companies were
recently licensed to commence operations here and may bring
some turmoil to the market, which remains only weakly
regulated by the Government.
Total assets for banks in 2004 were USD 3.12 billion.
Note: Exchange rate calculated at 1 USD = 120 lek
Pct. Assets (in millions)
Raiffeisen 48.7 1,415
Nat'l Comm. Bank 10.9 339
Amer Bank of Albania 8.9 277
Tirana Bank 7.5 234
Alpha 7.0 218
Procredit 4.5 140
Ital. Albanian Bank 4.4 138
Non-performing loans in 2004 were 4.6 percent of the
total amount of loans -- this was an improvement upon 2002's
figure of 5.6 percent.
The Tirana Stock Exchange remains in its infancy. No
companies are publicly traded, but three have undertaken the
procedures to be listed. However, in practice it is still
inoperative. Domestic companies are financed primarily on
cash flow, because there are no bonds or securities to act as
other credit instruments. Albania's Central Bank has
recently introduced an electronic system for large and small
payments, which may ease and reduce administrative operations
in banks.
Cross-shareholding, stable shareholding and measures to
prevent hostile takeovers are not well-developed in Albania.
Political Violence
In 2004, the OECD reduced Albanian's political risk
rating from 7 to 6, reflecting the stability the country has
enjoyed over the last seven years. Albania last experienced
violent unrest in 1997 and, briefly, in 1998. Since then the
government has made significant progress in extending the
rule of law to all parts of the country. Crime, however
remains a concern to citizens and businesses alike.
Businesses and individual citizens have been targets of
extortion, theft and robbery.
Albania's neighboring countries pose no threat of
military belligerency.
Corruption
Corruption remains an issue of concern in Albania.
According to polls that gauge public perceptions, the
institutions most affected by corruption are customs, police,
the judiciary and health. To combat corruption in the public
sector, the GoA has established and made operative the High
Inspectorate for Financial Disclosure, which is in charge of
collecting declaration of assets from 5,000 state employees,
including all high-ranking officials. The first declarations
of assets were made in 2004. The GoA is also drafting a
conflict of interest law which is expected to become
effective in 2005.
Civil society organizations are very active in fighting
corruption through increasing public awareness. The Albanian
Coalition Against Corruption, an umbrella organization of
over 300 organizations that operate in this framework, is the
primary civil society entity addressing the issue.
Bribery is illegal in Albania. Under the Albanian Penal
Code (Law 7895, dated January 27, 1995, articles 245 and
260), giving and/or accepting a bribe constitute criminal
acts. These provisions were amended in September 2004 in
accordance with the civil and criminal convention of the
European Union. Giving a bribe is punished by fine or
imprisonment up to five years, while public officials
accepting a bribe can be punished by imprisonment from three
to ten years. A code of ethics for public administration was
also passed in September 2004 and it, too, is designed to
counter bribery.
Albania signed, on December 18, 2003, the UN
Anticorruption Convention but has not yet ratified it.
Albania is not a signatory country of the OECD Convention on
Combating Bribery. Albania participates in two different
regional anti-corruption initiatives. The first is GRECO
(Group of States against Corruption) which is an initiative
of the Council of Europe with the aim of improving its
members' capacity to fight corruption by monitoring the
compliance of States with their undertakings in this field.
The second initiative is SPAI (Stability Pact Anticorruption
Initiative), an initiative of the Stability Pact for South
Eastern Europe.
Albanian government agencies responsible for combating
corruption consist of three different levels. The highest
authority is the Commission of the Fight Against Corruption,
an inter-ministerial group bringing together the highest
officials of the GoA. There are two different units in the
technical level -- the Anti Corruption Monitoring Board,
which includes representatives from civil society, business
and government, and the Anti Corruption Unit, a governmental
agency operating in the framework of the Council of
Ministers. Police authorities and the General Prosecutor's
Office are in charge of investigation and law implementation
while the State Audit Commission and internal auditing units
within the different institutions of the GoA inspect, assess
and report alleged cases of corruption.
The Citizen's Advocacy Office (CAO), since its
foundation in 2001, has emerged as an important
anti-corruption watchdog and advocacy organization in
Albania. It is a member of the umbrella organization, the
Albanian Coalition Against Corruption.
Transparency International (TI) and CAO signed a
partnership agreement in December, 2004. The purpose of the
partnership is to strengthen anti-corruption efforts in
Southeast Europe in general and in Albania in particular by
joining forces and working towards shared objectives. The
agreement between TI and CAO is the first of its kind that TI
has signed with a non-governmental organization in Albania.
In TI's Corruption Perceptions Index 2004, published on 20
October 2004, Albania ranked 108th out of 146 countries
surveyed, placing in the same grouping as other developing
Balkan countries.
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. Albania also has
concluded bilateral investment protection agreements with the
following countries, in chronological order: Greece, Turkey,
Romania, Bulgaria, Macedonia, Germany, Italy, France,
Austria, Switzerland, Finland, Denmark, Sweden, the
Netherlands, Great Britain, Slovenia, Croatia, Hungary, the
Czech Republic, Poland, Russia, Israel, Tunisia, Egypt,
China, and Malaysia.
OPIC and Other Investment Insurance Programs
The Overseas Private Investment Corporation (OPIC), a
USG sponsored entity, can make available insurance and
project finance resources to U.S. investors in Albania.
OPIC's three main activities are risk insurance, project
finance and investment funds. Albania has also signed the
Convention of 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.
OPIC has closed its regional office based in Zagreb,
Croatia. However, OPIC will continue to provide its services
for this region from its Washington Office.
For information please contact John Moran at the following
address:
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
www.OPIC.gov
For information on Exim Bank please contact Margaret Kostic
at the following address:
Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, DC 20571
Tel: 202-565-3946
Email for general business inquiries to: info@exim.gov
56. General inquires about USTDA's services should be made
through USTDA's Information Resource Center by calling (703)
875-4357 or through TDA's website: www.tda.gov. You may
also contact us by sending an e-mail to info@ustda.gov or by
sending a fax to (703) 875-4009.
Labor
Labor relations between employee and employer are
regulated by individual employment contracts pursuant to Law
no. 8549, dated 11.11.1999, and the labor code, which was
updated on July 2003. The GoA has recently established the
National Council of Labor, composed of the GoA, Trade Unions
and Employers Association, and which has completed the
drafting of a Social Understanding Pact. The major goal of
the Pact is to improve social dialogue between government,
management and employees.
Albania's young, literate populace has a surplus of
labor, reflected in an official unemployment rate of 15
percent (other estimates go as high as 25 percent) although
the presence of a large informal sector may distort the real
figure. Many workers have emigrated, particularly to Greece
and Italy. While some members of the labor force are highly
skilled, many work in inefficient industries with outdated
technology. Albanians are rapidly learning market economic
practices and often display impressive entrepreneurship.
Albania adheres to all basic international labor
organization conventions protecting worker rights. However,
given the desperation of many Albanians for work and the
weakness of government institutions, compliance cannot be
assured. For example, child labor laws are poorly enforced
-- a number of children sell cigarettes, candy, and other
goods on the street.
Foreign Trade Zones
The Law on Free Zones anticipates the establishment of
free trade zones near ports, airports or at the crossroads of
international transport. The Council of Ministers is charged
with determining the areas and boundaries of the free zones
on a case-by-case basis. It approves the creation and the
economic activities to be performed in the free zones. A
free trade zone is defined as a protected area of land or
other immovable property of both private and public
ownership. In both cases the "developer" is approved by the
Council of Ministers.
61. The National Authority for Free Zones is in charge of
administration of the free zones and issues the licenses for
those wishing to establish or carry out any activities within
the free zones. However, no free trade zones or free ports
have yet been established.
Foreign Direct Investment
INSTAT, the national statistics agency, reports the
following foreign direct investment in Albania, in millions
of U.S. dollars: 2000 (143); 2001 (204); 2002 (149), 2003
(178) and 2004 (300 -- which includes the privatization of
the Savings Bank). The amount of FDI per capita is among
the lowest in the region and the GOA needs to be more
aggressive in attracting foreign capital. There are no
reliable estimates of Albanian investment abroad, but it is
believed to be significantly less than foreign investment
here.
The total amount of FDI for the period 1995-2004 amounts
to USD 1.257 billion. The average FDI per capita for
1995-2004 is 42 dollars. FDI per capita in neighboring
countries is much higher -- (for 1997-2003, in Euro) Albania
- 36, BiH - 37, Croatia - 254, Macedonia - 68, Serbia and
Montenegro - 50.
FDI from U.S. firms, excluding government contracts,
does not exceed USD 5 million.
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