Doing Business in Albania: Reforms & Opportunities second stage of its development. Substantial progress has been made in infrastructure, maintaining a stable macroeconomic environment, health and primary education, higher education and training, and business sophistication. The aim of these economic and business reforms is to increase domestic business initiatives and to attract FDI. Such focus does not come as a surprise. This is because the economic model adopted in Albania relies on the role of private actors in the economy and small government - through the use of “e-government” schemes and also the so-called “one-stop shops”. The situation today could not be more different from that of the early 1990s. Currently the private sector contributes roughly 80% of the Albanian GDP and as a consequence employs around 80% of the workforce. Such development is important also because it exerts pressure on the government to sustain macroeconomic stability, improve contract enforcement, protection of intellectual and property rights, and finally, yet most crucially, to ameliorate the functioning of the RoL. With regards to politics, every effort must be made by all political actors and parties in Albania to respect the consensus for EUconditioned reforms and to work together to make necessary forward leap in the implementation of vital structural reforms. The October 2011 APR noted several positive developments in Albania’s economy. To mention a few examples: •
Albania experienced GDP growth, despite the deep and on-going crisis in the Eurozone;
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Business registration and licensing has become easier and quicker;
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The banking sector remains wellcapitalised;
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Subsidies in 2010 are estimated to have declined to 0.3% of GDP from
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0.4% in 2009; indicating a low level of state intervention and hard budget constraints; •
The Albanian Investment Development Agency (AIDA), which serves as a one-stop shop for foreign investors, became operational in June 2011;
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The Law on FDI was amended to grant special protection, under certain conditions, to foreign investors in the event of land ownership disputes.
The APR also noted the impact on foreign investment cannot currently be assessed, as the new legislation has not yet been fully applied in practice. Despite these positive developments and indicators, it is the RoL and political stability that must evolve further to a level that would give confidence to foreign and domestic investors, stimulating them to invest. Only with political stability and macroeconomic prudence can the country develop at a vigorous pace and in the near to medium term to fully integrate with the EU. Due to serious challenges within the EU itself the Union has turned much of its attention to the Euro and sovereign debt crisis affecting key member states, which some believe is also slowing up the enlargement process to the Western Balkans and Turkey. That said, it is important that we take into account key facts when it comes to analysing future prospects of EU enlargement. Number one is the successful application of Croatia, joining the EU in 2013, and two, IPA funding for enlargement/potential candidate countries has been maintained at 2010 levels. With regards to the accession of Western Balkans countries, the President of the European Council, Mr Van Rompuy, noted that “Not only did we officially open www.ibde.org