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4th UK-ALBANIA INVESTMENT FORUM Albania’s 100th Anniversary of Independence

London 2012

CITY OF LONDON The World's Pre-eminent Financial Centre

Integrating World Markets Principle Objectives:  to provide assistance in increasing international trade and investment flows  to identify and promote new business opportunities and to support wealth creation  to support public private partnerships  to promote good governance and corporate social responsibility  to provide assistance in integrating developing countries into the global markets  to promote the concept of international business and commercial diplomacy  to undertake research to support our promotional activities

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CONTRIBUTORS Mal Berisha Charge d’Affaires, Embassy of Albania to the UK H.E. Edmond Haxhinasto Deputy Prime Minister and Minister of Foreign Affairs H.E. Aldo Bumçi Minister of Tourism, Culture, Youth and Sports H.E. Nasip Naço Minister of Economy, Trade and Energy H.E. Genc Pollo Minister of Innovation and Information and Communication Technology H.E. Nicholas Cannon OBE HM Ambassador to Albania Lulzim Basha Mayor of Tirana Adrian Fullani Governor of the Bank of Albania Eneida Guria Director, Albanian Investment and Development Agency -AIDA Genc Boga Managing Partner, Boga and Associates Seyhan Pencabligil CEO and Board Member, BKT Avni Ponari CEO, SIGAL UNIQA

PUBLISHER: INTERNATIONAL BUSINESS AND DIPLOMATIC EXCHANGE 1 Northumberland Avenue, Trafalgar Square, London, WC2N 5BW T: +44(0)2071931485 E: Registered in England as a company limited by guarantee registration number 7181393 ALBANIAN EMBASSY LONDON 33 St. George’s Drive, London, SW1V 4DG, UK E-mail: Editor: Rudi Guraziu Deputy Editor: Epidamn Zeqo Associate Editors: Penelope Bridgers Jacques N. Couvas Comments and letters should be sent to: Permission to reprint or republish in any form must be sought from the editor: Email: Disclaimer: The International Business and Diplomatic Exchange (IBDE) is an independent Organisation and does not express opinions of its own. The opinions expressed in this publication are, therefore, the responsibility of the authors. Copyright is normally owned by IBDE & Albanian Embassy Whilst every care has been taken in the preparation of this Report, IBDE nor the Albanian Embassy does not warrant the accuracy or completeness of the information in this publication and it reserves the right to alter specifications without notice. No recommendations are expressed or implied regarding the quality of services provided. The Publisher disclaims all liability for the accuracy of the information contained herein and will not be responsible for any damage or loss that may be sustained directly or indirectly by any individual, company or Organisation as a result of their reliance in whole or in part on any information contained in the publication. Photos courtesy of the National Tourism Agency

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Mal Berisha Charge d’Affaires, the Embassy of the Republic of Albania to the United Kingdom


t is my great pleasure to welcome you to the 4th UK-Albania Investment Forum, which seems to be a logical follow up to the UK-Albania Investment Forum organised by our Embassy in late 2010 as well as the recent UK-Albania Business and Economic Reform Forum organised by International Business and Diplomatic Exchange (IBDE) in partnership with the British Embassy in Tirana on the 25th January 2012. Both events were immensely successful in highlighting Albania’s business opportunities and allowing for productive networking with a view to mobilising future investment. The goal of these Forums is to promote and develop the Albanian FDI/business environment while boosting the profile of UK business interests and expertise. The presence of Minister Bumci, together with senior officials and a business delegation, illustrates our government’s commitment to attracting investment into the country. The presence of the UK Foreign office, the European Bank for Reconstruction and Development and of course our host, the European Commission, further illustrates the support that my country enjoys as an active player in the international community. Today’s UK-Albania Investment Forum is especially significant for my country as this year we celebrate the 100th Anniversary of Independence. Today I am proud to say that my country has made significant progress over the past years and Albanians have a lot to celebrate on the occasion of this landmark anniversary: the country has been radically transformed from the most isolated economy and society in Europe to a very dynamic emerging economy with democratic liberties guaranteed. The situation today could not be more different from that of the early 1990s. One fact highlights this transformation more than any other: today the private sector contributes roughly 80 % of the country’s GDP and employs around 80% of the work-force. The brochure that has been published for this event, which includes articles by key state officials and business leaders, plus inquiring interviews, aims to celebrate the progress Albania has made and to identify in detail the opportunities the country offers. I hope this will be a highly useful promotional document for

domestic or foreign investors and potential investors alike, regardless of the type, size and character of the investment. On the 1st of April 2009, Albania became a member of NATO, thus offering additional security guarantees for investor confidence. The World Bank, in its “Doing Business 2009”, ranked Albania in second place for the reforms that it has undertaken - an improvement of 50 places in the global ranking compared with 2008. Albania now ranks 15th in the world when it comes to investor protection. The economic, legal and regulatory reform momentum has been maintained in Albania and now the country, despite the negative external shocks from the global financial crisis and the enduring sovereign debt crisis, enjoys a stable macroeconomic environment and positive growth. This highlights the fact that the Albanian economy is an emerging one and has an indigenous growth momentum, therefore, offers an array of lucrative investment opportunities. We hope that British investors take advantage of the opportunities our country offers. Today Minister Bumci and other distinguished speakers will discuss in detail the economic progress and business opportunities that my country offers. I am particularly delighted to say that Albania is increasingly being portrayed as an attractive tourist destination by the British media: with the Guardian placing Butrint again in the top ten world destinations on its most recent “Short break ideas for 2012” review. Lonely Planet listed Albania as the number one tourist destination in the world for 2011. Beyond Albania’s pristine and unspoiled beaches British holiday-makers can discover the outstanding natural beauty of lakes and mystical islands, plus a shoreline of flatlands with surrounding mountain ranges. Equally important is the energy sector, a significant attraction for foreign investor interest in green energy. My country is determined to become a regional power in energy production. The United Kingdom is an important political and economic partner for Albania. The UK has always supported Albania’s integration with Euro-Atlantic IBDE – Integrating World Markets

5 structures and the European Union. Now both countries are NATO members, and their relationship is increasingly strengthening. We are particularly keen to attract British investors and companies because as Ambassador Cannon rightly states they have extensive experience in working on global ventures and the City of London is a world leader at mobilizing the capital needed for large-scale developments.

Finally, I would like to express my sincere gratitude to IBDE and the European Commission, together with all the supporters who have helped make this Forum possible. We hope to be of service to you during this exciting period of new opportunities in Albania. My government and the Albanian people look forward to welcoming you to Albania.

His Excellency Nicholas Cannon OBE HM Ambassador to Albania


t is my great pleasure to contribute to this important event for UK-Albania Business relations. It seeks to build on the highly successful UK-Albania Business and Economic Reform Forum on 25 January 2012 in Tirana, organised and funded by the Embassy in partnership with IBDE. The Forum produced an excellent Doing Business Report, which we hope will serve as a useful tool for British and other international investors interested in exploring business opportunities in Albania. This year marks Albania’s 100th Anniversary of Independence, a year when Albanians and foreign friends alike will be reflecting on the country’s recent progress and its path into the future. In recent decades Albania has been transformed from the most isolated economy and authoritarian regime in Europe to a dynamic free market economy with democratic freedom. All new arrivals in Albania are impressed by the beauty of the country and the dynamism of its people and culture. UK-Albania relations date back to the beginning of the twentieth century but have been greatly strengthened during these last two decades as Albania has emerged from its isolation and ultimately become a NATO ally and a prospective European partner. The UK continues to support Albania’s integration within EuroAtlantic structures and the European Union. The UK is also a strong supporter of Albania’s economic development and diversification. It is encouraging that, even in this time of economic difficulty, Albania’s economy is predicted to remain in positive growth. Albania offers good incentives to potential British exporters and investors. The tourism sector in particular is of great significance to Albanian economic growth and provides abundant opportunities to British investors. As well as the country’s natural beauty and fascinating IBDE – Integrating World Markets

culture, the many-layered historic heritage is a major attraction. The United Kingdom has a wealth of experience in maintaining and regenerating historic buildings and as Albania works to involve the private sector in the preservation and development of these important historic sites, I hope that British companies will take advantage of this opportunity. The power-generation sector also offers good investment opportunities for British companies interested in green energy. Albania has great potential to develop its hydro-electric capacity in particular. As this report demonstrates throughout, there are numerous investment opportunities in construction, services and infrastructure. Large-scale projects of course require the financial capital to make them a reality. I am pleased to say that the City of London is a world leader at mobilising the capital needed for such large-scale developments, and UK companies have extensive experience from similar ventures around the world. A significant proportion of investments in infrastructure could be funded through private public partnerships (PPPs) and the United Kingdom leads the field when it comes to planning, procuring, managing and delivering projects, from roads to hospitals to ports. Our expertise when it comes to services is second to none and British companies could make a significant contribution as Albania takes forward its PPP projects. We look forward to a prosperous future, with Albania as a strong partner pursuing political and economic reforms. We will continue to support Albania’s economic development and its path towards EU membership. As we do so, we will continue to seek new business and economic opportunities that will further strengthen our cooperation and friendship, and improve the living standards and quality of life of both our peoples.



Rudi Guraziu Chief Executive International Business and Diplomatic Exchange - IBDE irstly, I want to thank all contributors to this brochure. I also wish to thank Mal Berisha, Charge d’Affaires, and Entela Gjika, Counsellor for their invaluable support and commitment in making this project a success and all the staff of the Albanian Embassy in London. I am most grateful to my IBDE colleagues and in particular Epidamn and Penelope for their invaluable input. Last but not least my thanks go to supporters of the 4th UK-Albania Investment Forum. The purpose of this brochure is to encourage British investors and other interested parties to look at Albania as an attractive emerging market, with a friendly business environment, boosted by a plethora of opportunities in its strategic sectors, most notably: tourism, energy, infrastructure, information communication technology (ICT), and agriculture. In this brochure you will find articles from the most senior Albanian government ministers and other officials, plus enquiring interviews with key national political and business leaders. Each article and interview looks at different sectors of the Albanian economy and outlines diverse investment opportunities. Together they present an informed overview of Albania in this historic year marking the 100th Anniversary of the Albanian Independence. This brochure is designed to complement the comprehensive Report on “Doing Business in Albania: Reforms and Opportunities” published by IBDE with the support of the British Embassy in Tirana, Albania. Whereas the report, by analysing the economic and political reform process, aimed to provide an action plan for such reforms as an aid to policy-makers in Albania, this brochure is more promotional in character, presenting in a comprehensive manner the most important investment opportunities available in the country. We have also included a thorough countrywide profile section, highlighting key reasons to invest in Albania. The Albanian brand is still largely unknown in the United Kingdom despite strong political relations between the two countries. Therefore, this brochure serves an important role in publicising Albania and its


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investment opportunities in the UK (and beyond), consequently strengthening trade and economic relations. In this year of celebration the Albania people have a lot to cheer about. Therefore, it is the perfect year to promote the country in the UK, Europe and the rest of the World. With this in mind, the today’s 4th UKAlbania Investment Forum, held at the heart of London, is timely and essential to the overall goal of attracting new British investors who may be pleasantly surprised at how powerful the UK brand is in Albania as well as at the exciting opportunities available there. IBDE together with its partners is happy to promote and assist commercial relations between the UK and Albania. We believe Albania and the region of Southeast Europe as a whole, should receive more attention from foreign investors. Of special interest is the dynamic growth of Public Private Partnership (PPP) schemes that have sprung up throughout numerous countries in the region all seeking alternative ways to finance strategic projects. One prime PPP activity is underway in the Albanian energy sector, discussed at length in this brochure. IBDE, in partnership with the International Center for Promotion of Enterprises based in Slovenia, is organising a Southeast Europe Business and Economic Forum that will examine the future of PPPs in the region. The Forum will take place in Tirana on 6 June 2012. This is a tailor made event to show off the region as an outstanding investment opportunity. To register your interest please contact us at or visit to find out more. IBDE and partners look forward to welcoming you in Tirana on the 6th of June to further explore business and investment opportunities in Southeast Europe.

To order a FREE hard copy of the “Doing Business in Albania: Reforms and Opportunities” in the UK please contact IBDE at To order a copy in Albania please contact the British Embassy in Tirana.


Courtesy of the University of Texas Libraries, The University of Texas at Austin

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COUNTRY PROFILE: ALBANIA Official Name: Republic of Albania. Political System: Parliamentary Democracy with PM Sali Berisha of Democratic Party since 2005. Population: 3,204,284 (World Bank, 2010) Capital City and other key cities: Tirana, Durres, Vlora, Shkodra, Saranda and Korca. Official Language: Albanian Monetary Unit: 1 Lek=100 Qindarka Main Trading Partners: Italy, Greece, Austria, Turkey, Germany and China. GNI per capita: US $3,960 (World Bank, 2010) Internet Domain: .al; Inter. Dialing code: +355 NATO Member State EU Potential Candidate: expected to receive candidate status this year.

History: Modern Albania was established in 1912 when it declared independence from the Ottoman Empire, which had ruled the Balkans for around five hundred years. Independent Albania gained international recognition in 1913 during the Ambassadors Conference in London. During the inter-War period (1918-1939) Albania was experiencing political and economic instability. In 1925 a revolution erupted that transformed Albania into a parliamentary republic led by liberal Fan Noli. However, the republic was short lived. Albania become a monarchy in 1928 under the kingship of King Zog, self-proclaimed the King of Albanians. During his rule he established the rule of law, set up the national central bank and currency, and modernized the country’s economy, with market economy freedoms. In April 1939 the country was occupied by Italy. The regime of Nazi Germany replaced the Italians in the region following Italy’s defeat in November 1944. Following the end of the WWII Albania was under the leadership of the Albanian Communist Party led by Enver Hoxha, who continued to hold power as Albania’s communist dictator for around fifty years. He died in 1985 and was replaced by his most obedient supporter Ramiz Alia. The Democratic Republic of Albania was founded in 1991 and the first free and fair elections were held a year later. This election was judged free from foreign commentators, however, were not fair. The election was IBDE – Integrating World Markets

disputed by the opposition led by the newly formed Democratic Party under the leadership of Sali Berisha. Following social unrest President Alia declared new elections, which were won by the Democratic Party, led by Berisha. In 1993 Albania introduced a form of ‘shock therapy’ stabilisation, liberalisation, and privatisation, creating the environment for a flourishing free market. Following the demise of the communist regime in the early 1990s Albania succeeded in making the transition into a parliamentary democracy based on a constitutional legislative framework, largely in line with European principles and standards. Albania maintains membership in important international organisations such as: International Monetary Fund (IMF) 1991, World Trade Organisation (WTO) 2000, and the newCEFTA for the Balkans 2007. Albania became a full member of the North Atlantic Treaty Organization (NATO) in 2009. In 2006, Albania signed the Stabilisation and Association Agreement (SAA) with the European Union (EU). It also presented its formal application for EU membership in 2009 and is expected to be granted candidate status this year. Geography and Climate: Albania is located in the Western part of Southeast Europe, often referred to as the Western Balkans region, and borders Greece to the south, Macedonia to the East, Kosovo and Montenegro in the North-East and NorthWest respectively. To its West Albania accesses both the Adriatic and Ionian Seas. The country covers an area of 2,748 sq km. The climate is Mediterranean with dry hot summers and cool rainy winters. The terrain is mostly mountainous combined with a beautiful coastline and numerous rivers and lakes. The highest mountain in Albania is Korabi (2,751m). The three large and deep tectonic lakes on the Balkan Peninsula – Ohrid, Prespa and Shkodra Lake, are shared between Albania and its neighbors. Religion: The Albanian Constitution provides for freedom of religion and all faiths are protected. There have been no reports of religious violence or tensions. Albania is cited as the best example of religious tolerance not only in the region but also in the world. Education and Labour Skills: Most schools are public and financed by the government, however, recently several private schools and colleges have emerged to compete with public ones. The expansion of private education institutions has also been remarkable at the university level. Still the public University of Tirana – the oldest university in Albania, founded in October 1957, remains the biggest and most

10 Legal System: The Albanian legal system is based on a system of civil law. All legal acts must be in compliance with the Constitution, International treaties and conventions ratified by Parliament, which prevail in the event of an inconsistency with the Albanian legislation Legal acts are issued and approved by the respective organizations as follows: • University of Tirana

Credit: Wikimedia

important institution for producing knowledge and research in the country. Albania has a very young population with more than 50% under the age of 30 and the most multilingual population in the region. The official language is Albanian. Albanians learn Italian, French, and English as primary foreign languages. Greek is also spoken in the South of the country by the Greek minority. Albania offers the lowest labour costs in the region with the minimal wage Alb Lek 16.000 (app 130 Euros). The country ranks as offering the lowest average salary in the region, EUR 295 per month. Governing Structures and Political Parties: Albania is a Parliamentary Republic, which operates under a democratic Constitution. The state is based on the separation and balancing of the legislative, executive and judicial powers. Albania has opted for a unicameral legislature with the Parliament representing the legislative branch of the state. The executive branch is represented by the President as Head of State, Prime Minister as the Head of the Government, and the Council of Ministers. The judicial branch is composed of the Constitutional Court, the Supreme Court, multiple Appeal Courts and District Courts, and is expected to add an Administrative Court.

Albanian Parliament:

Laws are proposed by the Council of Ministers, any member of the parliament or twenty thousand voters, approved by the parliament and proclaimed by the President. Decrees are issued by the President; normative acts, decisions, instructions, regulations and orders are issued by the Council of Ministers and each Ministry. Albania has adopted the 1993 Law on Foreign Investments which guarantees equal treatment for foreign and local investors. Foreign investments are protected from expropriation and nationalization.

Economy: Albania is a middle-income economy with a Gross Domestic Product (GDP) per capita of EUR 2,572, which is around 35% of EU’s average. This means that Albania has tremendous potential for ‘catch up growth’ and thus offers a myriad of investment opportunities Albania’s economy has improved substantially over recent years and has outperformed many other countries in the region. During 2010, the GDP real growth rate was 3.5%, higher than that of the previous year (3.2%) according to the IMF. Whereas, during the period 20002008 Albania’s GDP grew on average by 6% annually. Albania’s GDP stood at EUR 8,748 million and EUR 8,169 million in 2010 and 2009 respectively.

Credit Wikimedia

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11 Considerable progress has been made in lifting the population who live below the poverty line: in 2000 it stood at 25.4% of the population whereas in 2010 was reduced to 12.4%, according to World Bank’s Poverty Assessment Program 2010. The official unemployment rate for 2010 is 13.8%. Agriculture is the sector that employs the majority of the Albanian workforce, however, other sectors have enjoyed considerable growth levels. Why invest in Albania? Albania offers a stable macroeconomic environment: the lowest inflation rates in the region and a stable currency. • Low-cost skilled and semi-skilled labour force. • Geographical proximity to East and Central Europe, Western and Southern Europe, and Asia Minor. Strategic ports of Durres and Vlora offering competitive fares. Integration with the regional highway infrastructure and railway network. • Open Economy with a very liberal foreign trade policy, having signed Double Tax Treaties with more than 30 countries. • Albania is rich in natural resources including: oil, gas, coal, iron, copper, chrome, and water/hydroelectric potential. • Growing tourist destination and ambitions to become an ‘all-year-round’ Mediterranean destination because of favorable weather and location, amazing beaches and stunning mountains, and a myriad of archeological, religious, and cultural sites. Transport: Highways, Railways, Aviation Albania benefits from an excellent strategic position, linking the Western Mediterranean countries with the Balkans and Asia Minor (Turkey). Corridor VIII passes through Albania and as the European Commission has stated: ‘The Corridor VIII’ is one of the ten transEuropean corridors that connect the Adriatic Sea to the Black Sea. This Corridor has a significant importance

Durres-Kukes Motorway IBDE – Integrating World Markets

Credit: Wikimedia

Credit: Tirana International Airport

for Albania, Macedonia and Bulgaria from a geopolitical and geo-economic point of view. Currently, there are four main highways in Albania: 1) Durres-Tirana 2) Tirana-Shkodra-Montenegro 3) Durres-Vlora 4) Durres-Kukes-Kosovo dubbed the ‘Nation Highway’. Albania has a road network of close to 12,290 km that is paved. The development of crucial sectors – from agriculture to tourism - is dependent on the country’s transport infrastructure. The government under the leadership of Premier Sali Berisha since 2005 has undertaken massive road-construction project and maintaining its momentum remains a high priority. The railways in Albania are administered by the National Railway Company and extend over a network measuring 399 km. However, this railway network is mostly obsolete and poorly connected, therefore, needs considerable investment to make it efficient and profitable. Albania’s geographical location has positioned the country favorably as a regional hub for maritime trade. Yet, despite recent investment, there is still a need for improvement of these ports to maximise their capacity. Investment opportunities are also in their modernisation with computerisation and technology. There are four major seaports: Durres, Vlora, Saranda and Shengjin. Durres accounts for the largest volume of freight – around 75% of the nation’s total. There is only one international airport in Albania – Tirana’s Mother Teresa International Airport - which has undergone significant modernization and expansion in the last decade, proving to be the most successful amongst the PPPs the Albanian government has made. Annual passenger numbers have risen dramatically to over one million a year and the number of international air operators with landing slots has increased from 7 to 18. This has made Albania easily accessible to foreign tourists who want to visit the country. Tourism: Tourism is the fastest growing sector of the Albania economy and during the recent years has witnessed a boom in visitor numbers that last year hit four million, with an increase by 29% compared to the previous year.

12 Lonely Planet recently listed Albania as the number one choice on its list of top-10 destinations for 2011. Positive coverage of Albania as a tourist destination in the Mediterranean and the Balkans has continued. Albania offers relaxing ‘Sun & Beach’ tourism, mountain adventures and rural treks, rich cultural tourism, and a diverse flora and fauna. Albania is a strikingly beautiful country with a unique culture and a wealth of historical sites.

Butrint Some of the most visited cities include: •

• •

Berat, known as the town of ‘a thousand and one’ windows and Gjirokastra known as the Stone City, which are both inscribed on the UNESCO’s World Heritage List. Durres, one of the most ancient cities in Albania housing one of the biggest roman amphitheaters in the region. Tirana as the capital and the most vibrant city with a myriad of cultural activities Vlora and Saranda as the two main summer destinations. In Saranda, the archeological site of Butrint is another UNESCO protected site, accepted in the World Heritage List in 1992. Shkodra, the city that is home, among other sites, to the famous medieval Rozafa castle.

Trade: Albania has a liberal free trade regime. The country has signed Free Trade Agreements (FTAs) with all its Balkan neighbors (new CEFTA). These agreements offer manufactures based in Albania a gateway to markets in Central and Eastern Europe and Southern Europe, as well as via trans-shipment to the EU and Asia. Albania is currently pursuing a path of greater EuroAtlantic integration. In June 2006, Albania and the EU signed the Stabilization and Association Agreement (SAA), which also allows all industrial and agricultural products made in Albania to be exported into the EU

with 0% customs tariff, while around 80% of industrial goods originating in the EU can be imported without any custom tariffs. Energy: Albania is an energy deficit country and thus a net importer of energy within an energy-deficit region. Domestic demand shows no indication of leveling off. The Vienna Institute for International Economic Studies predicts that the average growth in electricity consumption in Albania will continue to grow by an average of 4% annually until 2020. In 2006 the Albanian government set out a National Energy Strategy (NES) for the period 2006-2020, in order to boost the security of supply through diversification and construction of new generation facilities and inter-connection lines and the use of renewable sources of energy. NES is based on PPPs and has opened up many opportunities in the energy sector that so far have been exploited by foreign and local investors. For instance, the Government of Albania has entered into a concession agreement with a joint venture partnership between EVN AG and Statkraft AS, Austrian and Norwegian companies respectively. They will build a Hydroelectric Power Dam (HPD) in the Devoll River with a total capacity of 340 MW and an average production of approximately 1.000 GWh. The overall investment is expected to be around EUR 1billion and to be completed in 2016. In 2008 the government approved an energy park to be located in Porto Romano near Durres. Also, there are discussions with Italian companies to build several coalfired Thermo Power Plants with an installed capacity of 800 MW. Albania is also promoting the Trans Adriatic Pipeline (TAP) and its inclusion in other pipeline projects in the region. All of these projects are expected to boost FDI and turn Albania into a surplus exporter of energy in the region. Business Environment: Please refer to the report “Doing Business in Albania: Reforms and Opportunities” for more detailed information concerning recent reforms, the business environment, and opportunities. The report is available for download at To order a hard copy of the Report please contact IBDE at

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Albania – United Kingdom Excellent Bilateral Relations By His Excellency Edmond Haxhinasto Deputy Prime Minister and Minister of Foreign Affairs of Albania


t is a special pleasure for me to have the opportunity to comment on the excellent relations between Albania and the United Kingdom. This traditional friendship dates back a long way, but especially during the last two decades, it has witnessed outstanding progress in all areas. It is a friendship based upon the principle of mutual understanding, together with promotion of democratic values and economic interdependence. Albanian and British relations are not covered by simple diplomatic rhetoric. Indeed, this relationship nowadays has turned into a strong partnership, especially at the political level. Both countries share the same concerns about international developments. To this end, they have strengthened their partnership in many global and regional organisations and initiatives such as UN, NATO, Council of Europe and OSCE. Both countries make their contribution to the maintenance of peace and stability in the world and the region, and have joined their efforts in promoting democracy, protection of human rights, economic development and international cooperation. Both countries are facing the same challenges on many issues such as international security, globalisation and sustainable development. The Albanian government considers the United Kingdom as a strong partner in regional developments as well. It has greatly appreciated the British contribution in promoting peace and stability in the region, which is also one of the main pillars of Albanian foreign policy. We share the same view that European integration is the best prospect for the region and a win-win approach for all countries. Integration into the European family is one of the key priorities of the Albanian government and the strongest aspiration of the Albanian people. In this long and difficult path towards full integration, Albania has had the continuing support of the British government. During recent years the United Kingdom has offered valuable assistance in supporting various reforms of the Albanian government, particularly by funding projects focused on the consolidation of the rule of law, improving the efficacy of the judicial system and IBDE – Integrating World Markets

guaranteeing security. An effective judicial system that meets international standards is a prerequisite of EU membership for aspiring countries. In addition, the United Kingdom has been one of the major donors to the PAMECA program; channelling EU assistance to the Albanian police. Liberalisation of the visa regime between our countries would stimulate a further increase in the exchange of people and capital. In this regard, both countries are discussing a possible negotiated bilateral agreement for lifting the visa restrictions for the holders of Albanian diplomatic and service passports, as well as liberalizing visa procedures for certain categories of Albanian citizens. The visa liberalization with Schengen countries in December 2010 has generated very positive outcomes, increasing trans-border exchanges and visitor numbers. The Albanian government is also eager to enhance economic cooperation with the United Kingdom. British investors are most welcome to invest in Albania’s strategic sectors like tourism, energy, infrastructure, mining, etc. The intensification of contacts between the Chambers of Commerce and Industry of both countries has become a necessity given the growing need for economic and trade exchanges. The recent Albania-UK Business Forum, held in Tirana during January 2012, has contributed significantly to this aim. Also, the 4th UK-Albanian Investment Forum on tourism and other key sectors of the economy, held in London, will present directly to British investors and other interested parties investment opportunities Albania’s emerging economy offers. Some significant facts and data on the attractive business climate in Albania are: low corporate and personal income flat tax (10%), relatively low labour costs and proximity to major European economies, low inflation. The country is ranked 46th for starting a business and 15th in protecting investors according to the global competiveness index. Foreign investors in Albania are also encouraged to explore the opportunities from the regional market and free trade agreement that the country has with the EU’s Single Market. Another aspect of cooperation between our countries relates to

14 cultural exchanges. Personally, I greatly appreciate the contribution of Britain’s Lords Rothschild and Sainsbury in the establishing the Butrint Foundation and their tireless work over two decades on the archaeological research and explorations in this UNESCO World Heritage Site in the South of Albania, ranked as one of the top ten world destinations to be visited.

In conclusion, I am pleased to reconfirm the willingness of the Albanian government to contribute further in strengthening this spirit of friendship and partnership to the benefit of the citizens of both countries and for maintaining its responsibilities for a peaceful, democratic and prosperous world.

The Government Digital Agenda: the Priorities for Future Developments

By His Excellency Genc Pollo Minister of Innovation, Information and Communication Technology


find it significant to discuss business and investment at a time when the Eurozone debt crisis is far from over; many countries including our two main trading and investments partners to the south and to the west are struggling to implement overdue structural reforms, to satisfy creditors and financial markets, to prove the dreaded rating agencies wrong, and to simultaneously give budgets a haircut and spur economic growth. It is certainly not by chance that my country, Albania, managed to mitigate most of the crisis impact. The structural pro market reforms of the last six years, the business and investment friendly environment including a flat tax of 10% along with the right fiscal policy have resulted in Albania maintaining a stable macroeconomic environment, and achieving economic growth of almost 4% and increasing exports by 20%. The level of FDI reached one billion USD for 2010 alone - despite the negative worldwide growth trend. Unemployment also decreased slightly. Last December, Standard & Poor’s and Moody`s reconfirmed the Albanian economy as having a “stable outlook”. My government’s liberal reforms have paid off! I would also like to take this opportunity to briefly present the positive situation within the ‘information society’ and the electronic communication market in Albania. As we all know ICT is a main driver of economic growth, an indispensable tool for innovation,

and in our case the right ingredient for developmental leapfrogging. •

The electronic communication market is largely liberalised in Albania. Numerous sector undertakings provide different services through a light touch regime of general authorisation. There are four mobile companies operating in a 140% penetrated market within a competitive environment helped by good tariff regulation and number portability. The consumers have more alternative choices for voice, texting and 3G supported broadband provisions. Still, fixed line internet is on demand.

Our experience with e-government has been wonderful. The outcomes are: much easier interaction for the public and businesses with governmental agencies; increased effectiveness, and much less negligence and corruption. I could also mention: - The national business registration and licensing ‘one stop shop’ became operational three years ago; - The introduction of interactive services for etaxation since 2008;

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15 - The introduction of 100% e-procurement at the end of 2009 won Albania the prestigious UN Public Service Award in 2010, coming second in the Europe-North America zone; - With the proper legislation for electronic signatures, electronic documents and electronic databases, many state operations and transactions occur electronically and many more will do so in the future. •

We have built a logistic and physical platform called Gov.Net, which is not only a high speed electronic network, but also intranet integrating, all ICT infrastructure and interoperable electronic services for the government. A centre for governmental data services and cloud computing (probably the first in the region) is underway. Also under construction is a Government Gateway that will support and provide access to all interoperability services such as G2C/G2B/G2G. Users will safely be identified through their electronic ID cards, in all possible e-government services; they will be able to follow online the status of their application and be notified about the official reply. The growing need for cyber security will be addressed by the already established ALCIRT agency, a national team for computer emergencies and cyber security.

Together with Microsoft, Cisco, HP, Albtelecom and the AAD Foundation we are establishing PROTIK, a centre for ICT promotion that will offer advanced training, networking, sharing best practice, etc. We intend to launch an IT Park public-private partnership initiative this year.

More than 4.000 students were admitted this year alone to Albanian universities in ICT and other related study programs. Meanwhile all students leave elementary and secondary schools ICT educated with experience in e-learning.

All this I think points to a range of market opportunities, which I believe can be met by domestic and foreign entrepreneurs, especially British ones who will find that the UK brand in Albania is very strong. Besides our national market, Albania offers opportunities in software, systems and apps, customized in the Albanian language, also used by Albanians in our neighbouring countries and by the Albanian Diaspora in Europe, including the thriving community in London and the UK. I am certain those of you looking to invest in Albania, taking into consideration the risks associated, will most probably achieve great returns on your investment. Simultaneously, you would be contributing to employment-creation and an increase in state budget revenues. One can hardly find a better definition of a win-win situation!


The official logo marking the 100 Anniversary of Albanian Independence IBDE – Integrating World Markets



The New Mediterranean Destination

Exclusive interview with His Excellency Aldo Bumçi Minister of Tourism, Culture, Youth and Sports Background: Albania, recently labeled worldwide as “The Last Secret of Europe”, is a country which is establishing itself as a fast growing tourism destination within the Mediterranean Region. For the country itself this implies huge business opportunities in a sector still in its infancy in terms of development and exploitation. The tourism sector is gradually becoming an important and vital component of the Albanian economy, and therefore this is the right moment to look at both its achievements and to present the action plan from the Albanian government for addressing remaining challenges. Management of the tourism sector in Albania is the responsibility of the Ministry of Tourism, Culture, Youth and Sports (MTCYS). The Ministry is the competent authority for policy making and strategic planning, destination marketing and promotion as well as development control and regulation. There are two main institutions serving the MTCYS. Firstly, the National Tourism Agency is responsible for the implementation of governmental policies in the tourism sector through promotion and marketing activities. Secondly, the Tourism Service Office was created with the goal of

improving the quality of tourism services; they are therefore responsible for providing information to visitors in order to facilitate their trip as well as receiving official complaints with regard to tourism services or enterprises. The Office is structured on a regional level with nine branches. Two other important stakeholders operating within the country’s tourism sector are the Albanian Tourist Operator Union, and the Albanian Tourism Association, representing the tour operator business and hotels and other accommodation units respectively. The Ministry is responsible for the administration and management of the national historical heritage, encompassing a considerable number of monuments throughout the country. These constitute an enormous asset for the development of tourism, but this also brings with it a huge responsibility in terms of management, restoration and promotion. Such a burden stretches the Ministry’s financial limitations, therefore, it is exploring new ways to initiate projects and partnerships with private actors. Meanwhile, the Ministry has approved two partnership initiatives with regard to monument revitalisation. Currently we are in the process of negotiating contracts, IBDE – Integrating World Markets

17 which will be followed by restoration interventions, which aim to transform these historic sites into hospitable destinations, including small museums, service facilities, bars, etc. The government has already increased the available information on Albanian culture, thus improving the image of the country. Some of the initiatives that we plan to follow in the future are: •

• • • • • • • • •

the Albanian Diaspora with the slogan ‘Welcome Home-Bring Your Friends’, and attending important international tourism fairs such as those in Berlin, London, Milan, etc.

familiarisation trips with local and international travel agents and tour operators and with national and international travel journalists active participation at tourism fairs undertaking culinary events in main source markets supplements in travel magazines information placement on travel bureau counters travel guides in English and other languages product placement (location for international movies) launching of Albanian tourism in the main international and regional media channels dedicated tourism magazine promotional video recording of all the country’s seashore and lakes

A new project with National Geographic is the launch of a special website on Geotourism in the Western Balkan countries, which will serve as a “calling card” introducing Albania to a larger worldwide audience. To publicise Albania the Ministry is also cooperating with

Albania’s stunning coastline IBDE – Integrating World Markets


IBDE: Minister, last year around four million tourists visited the Albanian coast and mountainous regions, its cities and archeological sites. Why do you think there has been a surge of visitor numbers in Albania? Can this upward trend be sustained? Minister Bumçi: Albania is Europe’s last remaining secret, easily reachable from most major European cities - a combination that seems to work very well. This unexplored land has a lot of hidden treasures: stunning beaches, which the New York Times called a ‘frugal paradise’ and impressive mountains resembling Swiss landscapes. The country overall is blessed with a rich and colorful cultural and historic heritage. Consequently, the number of visitors boomed in recent years reaching more than 4 million. Tourism development in Albania during these last few years has been extremely positive, with the sector increasing its contribution to the economy and boosting employment. Public investment in infrastructure and services has increased exponentially. Across the board investment has facilitated access to and improvement of the tourist experience in important sites and regions. A strong presence at international tourism fairs, television spots on major networks, plus online promotion through various websites and specific promotional activities have played a key role in the surge of visitors to Albania.

Data indicates that non-resident tourism has increased significantly. During 2009-2010 29% more tourists visited the country. Growth levels were still in double digits during 2010-2011, however, at a lower 18.7%. We expect double digit growth in tourist visitors to continue in the short and medium term. In response to this positive development, the Albanian Government has placed sustainable tourism development at the center of its 2009-2013 Economic Strategy because it is closely linked to sustainable economic and social development. A strong tourism sector will improve the overall living standards of Albanians. We are determined to develop sustainable tourism through investment in infrastructure, marketing, human resources, the preservation of historic sites and cultural events. The guiding principles of our strategy are: sustainable development, benefits for local communities, quality of standards and partnership.

IBDE: With the fiscal budgets under scrutiny in most countries, including Albania, undertaking major investments to facilitate and spur the growth of tourism services is harder than in previous years. Your government seems to have embraced PPPs (public private partnership schemes) as an alternative method of financing, for example, the concession of the Mother Teresa International Airport. This has created new exciting opportunities for foreign and local business. What are some of these alternative financing schemes and why should a UK-foreign investor invest in Albania? Minister Bumçi: The Albanian government has improved the country's infrastructure, focusing on areas that have potential for tourism development. During these last years roughly EUR 2 billion were invested in roads. The government is committed to providing the right conditions for business to compete and flourish. In order to encourage investment in the field of tourism, several laws have been approved, such as:

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The Law “On Foreign Investments” establishes a strong legal basis for the creation of favorable conditions for foreign investors. This new law will solve all property rights issues that may come up before or during the implementation of foreign investments in Albania.

Recently, we drafted a new tourism law in order to: • create a stimulating atmosphere for investment; • harmonise tourism regulations; • improve the business climate. Albania is ready to receive investment in : • Construction of quality hotels with four and five stars and tourist resorts • Development of golf courses • Opening of entertainment centres • Funding for developing water tourism • Funding for development of recreational winter sports activities The existing Cultural Heritage Law foresees the use of monuments for cultural and social activities, IBDE – Integrating World Markets

accommodating activities such as museums, libraries, art galleries, hotels, as well as bars and restaurants. Our aim is to cooperate with the private sector in reviving part of our historical buildings heritage, fully exploring their touristic potential as well as providing the financial support for necessary restoration and maintenance. So far, the Ministry is rapidly adopting the necessary legal framework, in order to pave the way for potential partnerships. IBDE: Despite great locations, warm and friendly people, good food and weather, the country still has challenges to overcome in order to attract more tourists to an ideal year-round tourism destination. What has been the progress so far in addressing some of these challenges? Minister Bumçi: The Albanian government has improved the country's infrastructure, focusing on areas that have potential for tourism development. The Government has invested heavily in public infrastructure to serve tourism development. Here I would like to mention the construction of Durres - Kukes

20 highway linking Albania with Kosovo, and further on into Serbia, which has substantially shortened the distance resulting in an impressive growth of tourist visits from the region to Albania. Regional studies have been approved which will offer long-term development in different areas of the country. Specifically, the World Bank Study in collaboration with the Albanian government and other stakeholders, entitled the Integrated Master Plan for Development of Southern Riviera has been approved and will guide the development of the Albanian Riviera. Albania’s strength will rest in creating value for tourists in a wide variety of geographic locations. This approach opens up the country to “discovery”, which: • •

offers a great variety of products and diversity to visitors. creates spaces for the diverse local culture to express itself, in particular the special customs and traditions of the various regions of the country. allows more provincial and rural communities to participate in and benefit from tourism and development. establishes the basis for geographic integration of Albanian tourism with that of the neighbouring countries – increasing visibility and allowing tourism to develop in provincial and rural areas, bringing development opportunities to a broader section of the population. permits the development of complementary special tourism markets (such as trekking, climbing, diving, agriculture, hunting and fishing, archaeology, culinary, festivals), within the existing infrastructure and proposed central tourism products.

IBDE: What are your main objectives for the future? Minister Bumçi: Our aim for the future is to: • Invest in various critical human resources from the public and private sector • Strengthen the presence of Albania at international tourism fairs, on the internet as well as in guidebooks and magazines • Continue maintenance of the core natural assets and investment in cultural preservation and cultural attractions to enhance tourism development. IBDE: This year marks the 100th Anniversary of the Declaration of Albania’s Independence. What special events have been organised and why should a tourist visit Albania this year? Minister Bumçi: The government has planned a rich programme to celebrate a century of Albanian independence. We are closely coordinating these activities with Kosovo, Albanians of Macedonia and the diaspora. There will be various exhibitions, fairs, film and theater festivals, sportive events, and commemoration of important historical events. The detailed programme has been drafted, approved and will be soon launched.

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Project of the Year 2011 Winners RealEX Awards September 2011

A new 5 star beach-front resort on Albania’s stunning Adriatic coast This stunning beach-front resort will offer holiday makers an amazing sanctuary at the most attainable prices. Offering residents and guests a wide-range of facilities including restaurants, bars, shops and beach/water-sport activities. Gated with 24 hour security, the resort is located in the centre of the exclusive Lalzit Bay. The international airport and Tirana are both less than 40 minutes drive away. High quality villas and apartments currently under construction are scheduled for delivery from 2013 onwards. Prices start from ₏30,000. Contact us: Tel: +44 (0)845 125 8600 (UK) Tel: +355 44 303 930 (Albania) Email: Disclaimer: All information and images are for illustrative purposes and subject to change as the development progresses. Subject to contract.


Business and Investment Opportunities in Albania By His Excellency Nasip Naço Minister of Economy, Trade and Energy It is my great pleasure to contribute to the UK-Albania Investment Forum organised by the Albanian Embassy in London in partnership with International Business and Diplomatic Exchange (IBDE). I was also delighted to attend and contribute to a high level UK-Albania Business Forum organised on 25 January 2012 by the British Embassy in cooperation with IBDE in Tirana. High level forums which engage my country with other partners, offer added value, providing the right environment to discuss progress on political and economic reforms, and to share in the experiences of other countries that have successfully integrated in the EU. In addition, this Forum will further promote and hopefully increase British interest for investment in Albania. Over the last two decades, Albania has undergone a tremendous political, institutional, and socio-economic transformation. The Euro-Atlantic integration process has been the driving force behind several institutional and structural reforms that have contributed to the ongoing democratisation of Albania, and naturally EU membership remains our priority. Albania’s economic growth rate has been one of the highest in Southeast Europe (SEE) since 2000, reaching an average of 6% per year with a peak of 8% in 2008. Without a doubt, the global financial crisis and the recent sovereign debt crisis in the Eurozone have had a direct impact on the growth rate of the Albanian economy and the volume of trade relations (including FDI) with our main trading partner, the EU single market and beyond. That said, the Albanian economy has managed to sustain a stable macroeconomic and financial environment - in contrast to other countries in Europe. Albania’s economy has continued to grow even during these turbulent years, whilst average inflation has been under 3%. Furthermore, neo-liberal polices implemented since 2005 by my government - aimed at the consolidation of an efficient, pro-business fiscal regime, together with a floating exchange rate regime for the Lek - have equipped the Albanian economy with the right automatic stabilisers and environment to handle both negative and positive forces from foreign markets, and, as a consequence, have increased the immunity of our

economy against the impact of the global and regional crises. Despite this context of financial crisis, it is encouraging that Albanian exports for 2011 grew by 20% compared with the previous year. We are all aware of the power of ICT (Information and Communication Technology) to spur growth and development; my country is fully committed to provide the right infrastructure and incentives to develop ICT in Albania. Addressing the challenges resulting from the openness of markets, economic orientation towards services, urbanisation, structural changes, and unemployment are the priority for Prime Minister Berisha’s government, which has already made important strides in these and other areas. EU integration is obviously the main strategic objective for the Albanian government and the Albanian people. The implementation of the Stabilisation and Association Agreement in general and the Free Trade Agreement and the Single Market in particular, necessitate the fulfilment of a series of specific European standards in all areas of our political and economic system. We believe that this liberalisation policy, with its objectives of: expanding and increasing trade volume through the elimination of trade barriers for Albanian products as well as increasing the volume of exports and diversification of export products through quality assurance and standards, will serve to strengthen the integration process of Albania into the European Union. So far the EU economic criteria have been met. This great achievement is also attributable to the neo-liberal agenda this government has pursued since 2005, including: improving business environment and supporting SMEs development; the introduction of ‘onestop shops’ for business registration and permits; egovernment; increasing labour flexibility; ICT policies; increasing access to credit with special supportive schemes, and lastly vocational training. Also we have successfully negotiated important free trade agreements such as CEFTA, EFTA, MTL (with Turkey), and the recent PanEuroMed. All in all, Abania is committed to becoming a very open, competitive emerging economy. IBDE – Integrating World Markets

23 With regard to FDI, 2010 signalled the highest level of FDI – around $1 billion for the year 2010 or a 15 % increase from 2009. During the period 2000-2008, the average contribution of FDI to GDP was 4%, but this contribution grew considerably through the year 20092010 to 8-10% of the Albanian GDP. Our government has passed two very important laws to stimulate FDI: firstly, the Law on Concessions 2006, and secondly the Law on the Protection of Foreign Investment. The first law served to create new business opportunities, whilst the latter law addressed the uncertainty and risk of investing in Albania. In particular, the energy sector has proven to be the most attractive for foreign investors. Some of the most prestigious foreign companies in this sector have already invested and await the production of electric energy which they can sell to the Albanian National Grid or export it to other markets in the region. For example, Austrian EVN won the concession to build a strategic hydroelectric dam (350 MW) at the Devolli waterfall costing around 920 million Euros. This is only one among 110 concessions for the construction of 310 dams of small, medium and big production capacity – together generating around 1450 MW. At the same time, we have given 15 licenses for the construction of wind farms, with a potential capacity of 1550 MW costing around $2 billion euros. Within a few months, the ministry which I head will open international tendering for the concession to construct two main dams in the Vjosa and Osum Rivers, expected to produce more than 450 MW. I urge UK investors to seize this great opportunity which my country offers. Energy security, together with the diversification of energy production, is very important for Albania and the region. We are managing this sector as a regulator and in partnership with private investors. Key in achieving energy security has also been the completion of energy inter-connection international lines: Elbasan-Tirana and Tirana-Podgorica (Montenegro). In the oil and gas sectors, which also present great opportunities for UK and other foreign investors, we have intensified investments to increase production. This has allowed the production of brut oil to increase by 20% in comparison with 2010. Also, there has been considerable progress in the implementation of the Hydrocarbon Agreement in the search-blocks for the identification of new gas and oil sources, both inland and off-shore. We are at the moment finalizing a report on the financial standing of Albpetrol where, within a short time, we want to privatize the main assets to the level of 100%. In this context, I am certain that the privatisation of this strategic state-owned-enterprise will raise interest among powerful UK companies. IBDE – Integrating World Markets

As regards the mineral sector, we recently completed a new legal package where, for the first time, procedures of tender to release licences and permits will be competitive. We hope this new regulatory framework will not only increase mineral production and exports, but will also incentivise the refinery industry, attract new investment in concentration and enrichment, and as a consequence increase employment. The Albanian government has sought to develop special economic zones – industrial parks and free trade zones, based on public and private partnership schemes. This will develop the Albanian economy, improving infrastructure and the introduction of advanced technology. Already, the government has identified nine economic and technological parks – eight industrial parks and one free trade park. This forum aims to strengthen cooperation between Albanian institutions and British investors. We especially need to concrete on the following areas: •

Operation and production within the apparel industry, production of shoes, furniture, metal, electronic assembly, etc. Investment in the extraction and exploitation of minerals such as chrome, cooper, nickel etc that are already being exported to Sweden, Italy, Germany, and the Czech Republic. Encouraging investment in commercial infrastructure for collection, storage, and processing standards for products exported to EU countries, which would also effect the improvement of the trade balance. Financing from major British banks in Albania on priority sectors, mainly in lending to SMEs, and enhancing investment in the energy sector, tourism, etc. Given the important role that the banking sector plays in the economy and business lending, we would welcome this as a very positive contribution.

In conclusion, allow me to express my conviction that this forum will further deepen the cooperation between our institutions and British investors. Our goal is to transform the Albanian economy as one of the most attractive places to do business.


Albania’s Sound Banking System Interview with Seyhan Pencabligil CEO and Board Member of BKT, Albania S.P. We have grown organically for more than a decade, at an annualized rate of 27%. Our strategic planning, till the end of 2015, foresees growth of 20% on average and a return of 25% on our equity. That will bring our market share to 25% within all segments in Albania; building our total assets to US$4 billion and our equity to US$325 million. While the gap between BKT and its followers is widening, we are getting closer to the number one position. We also evaluate acquisition opportunities with the ultimate target of acquiring at least one more banking license in the region.

IBDE: As in many countries across the globe, access to funding for SMEs in Albania remains challenging. This was also identified in IBDE’s recent report ‘Doing Business in Albania: Reforms and Opportunities’, of January 2012. What steps is BKT taking to increase access to funding for SME’s in the country, which represent the main engine for growth and economic prosperity? How does BKT strategy differ, if at all, from other micro-credit-oriented players?

IBDE: Banka Kombetare Tregtare (BKT) was chosen as the Bank of the Year for 2011 by ‘The Banker’, part of Financial Times. This follows a similar recognition by EMEA Finance in 2010. BKT, the oldest commercial bank in Albania, established in 1925, is also present in Kosovo, and has solidified its brand for financial excellence and customer trust. What are your market and growth projections? How do you plan to capitalise on the regional market, in particular within the Albanosphere (to use the term coined by journalist Tim Judah for Albanians living in the Western Balkans), and grow regionally?

S.P. BKT has traditionally been the commercial bank of Albania, primarily financing SMEs. We secured longterm funding from the European Fund for Southeast Europe to on-lend to SMEs. We have become the partner bank in the Italian SME programme and Agrobusiness programme of the Ministry of Agriculture. On the other hand, our foray into e-banking and other technological initiatives were challenging, but proved successful. In a small country with the developmental phase of infrastructure and low internet and fixed telephone penetration, BKT has introduced a wide range of e-banking and retail products since 2009. We introduced the first instalment credit card program, offering to the users a 2-12 months interest-free instalment option with cards equipped with the latest chip and pin technology. BKT is the first bank in IBDE – Integrating World Markets

26 Albania offering utility bills’ payment service through its internet branch. The number of our internet branch users quadrupled with enhanced functionalities. Our ATM’s have been turned into exchange offices. Moreover, as the sole winner of a tender opened by the government, BKT has signed an agreement with the Ministry of Finance and Ministry of Public Affairs/ Telecommunication and Transportation to help expand the emerging housing finance market in Albania. This subsidized home loans program for first home buyers has been very successful, with almost all mortgages in the country being disbursed under it. IBDE: BKT central operations are in Albania, but your bank is also present in Kosovo and the region. How would you compare the Albanian banking system with that of other countries in the region? What are BKT’s object-tives in the region and what changes do you look for in order to expand operations in other neighbouring countries? S.P. In the youngest state of Europe, Kosovo, we did not acquire an existing bank; instead, we established our branches from the ground up. With our expansion strategy in Kosovo, our market share very quickly reached 6%. Now that our operations in Kosovo are self-sufficient and profitable, we are open to further expansion possibilities in the Albanian-sphere. Regarding the Albanian banking system, I would say it is relatively well regulated with sound financials and compares well with the rest of the region. IBDE: At a time of Eurozone crisis, what is the role of the Euro currency in stimulating the liquidity and efficiency of capital markets in Albania and the region? To what extent are Southeast European trans-national operations in the region being impacted by the Eurozone crisis? S.P. In Albania, one-third of the population works in Greece and Italy and the banking systems of these countries have a considerable weight. Therefore, it is imperative that we have some abundant liquidity for any eventuality, which makes profitability all the more difficult. In the Albanian banking system, 14 out of 16 banks [are foreign owned banks] with 4 Greek banks, 1 Italian Bank, 1 Austrian Bank and 1 French bank. One way or another, all of these banks are affected by the Eurozone crisis either in terms of liquidity or due to counter-crisis measures applied by the European Banking Authority. These banks now face difficulties in further expanding their assets within Albania as with other regions in which they have a presence. However, BKT’s strong balance sheet enables us to cherry-pick

the best clients, while competitors are licking their wounds. Thus, we could grow the loan book faster than competitors, while keeping the non-performing loan ratio at a reasonable level. IBDE: As we discussed at the beginning of this interview, BKT is the oldest commercial bank in Albania, benefiting from almost a century of experience in the country. Your bank is in fact one of the key financial actors in the Albanian economy, which means that it is in a position to know the progress that the country has made during the post-communist transition, as well as the future obstacles and opportunities. Why should a foreign investor invest in Albania and why should he come first to BKT to secure a reliable and credible partner? S.P. The Albanian Government took many initiatives to promote FDI, proven successful over time, such as flattening the tax rate to 10%, establishing one-shop registry for new businesses etc... The authorities have a strong will to support FDI by all means possible. Meanwhile, FDI stock jumped to EUR 2.640 billion (28.4% of the country’s nominal GDP) by the end of 2010 compared with EUR 1.815 billion of 2007. Moreover, the Albanian economy was the best performing economy, with positive economic growth, in South-Eastern Europe in 2009 and 2010. Taking into consideration all of the above, a foreign investor who has general interest in South-East Europe, should ask himself/herself why he/she did not invest in Albania yet? As BKT, we are proud to have had annual growth rates and returns on equity that averaged in excess of 25 per cent p.a. for more than a decade now. This has been achieved despite the entrance of various international banks into the small Albanian market and regardless of the macro-economic conditions in the country and the world. BKT’s local knowledge and experience together with nation-wide network coverage both in Albania and Kosovo with 82 branches (23 in Kosovo and 59 in Albania) are key drivers for foreign investors in Albania in choosing BKT as the bank of first choice. Consequently, it is this stability in growth and mutually profitable relationship with our clients over a long period of time that should set us apart from our competitors.

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Albanian Economy

Development Perspectives in 2012 By Adrian Fullani Governor of the Bank of Albania lbania has maintained a positive development trajectory, despite an unfavorable international background. We have succeeded in weathering the storm of the global financial markets without major stresses on our macroeconomic balances and with limited and well-contained effects on our financial system. Furthermore, the Albanian economy has maintained its positive growth rates, albeit at a slower pace compared to the preceding period. Such development is testament to the solid fundamentals of the Albanian economy and the sound macroeconomic policies pursued in the recent years. I expect these trends to continue in 2012. Preliminary estimates for 2011 indicate a growth rate of close to 3%, supported mainly by strong external demand and some moderate fiscal stimulus throughout the year. On the other hand, domestic consumption and investment have remained subdued despite higher disposable incomes and the absence of major liquidity constraints. In particular, Albanian households have adopted a more cautious approach towards their savings and consumption behavior. At the same time, investment activity has been slow to pick up, reflecting weak domestic demand, tighter credit conditions within the banking system and investment overhangs in certain sectors of the economy, such as residential construction. The increased preference for savings and higher caution with investments has underpinned the trending improvement in our external imbalances. I think they will certainly be beneficial for maintaining healthy financial balances and macroeconomic equilibria in the long run. However, because they have acted as a constraint on growth recently, the path of private consumption and investment will be the primary growth determinant in the immediate future. The main macroeconomic balances have also improveed in 2011. Albania enjoys stable inflation, decreasing budget deficits, a liquid and well capitalized banking system, positive results in the balance of payments and increased foreign reserves. CPI inflation averaged around 3.5% in 2011, well within the Bank of Albania (BoA) target of 3+1%. Weak domestic inflationary pressures have counteracted the high rate of imported inflation and have thus contained its second round effects. In particular, underutilized capacities in the labor and capital markets have pushed businesses to


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improve labor productivity and decrease their unit labor costs. This encouraging development will increase the competiveness of our economy in the regional and global context. The fiscal outlook remains stable, as reflected in the downward trend of budget deficit and confirmed by the stable outlook given by rating agencies. While fiscal policy took on a countercyclical role at the height of the global crisis, it is clearly oriented now towards the long term sustainability of public debt. On the other hand, monetary policy has taken a more expansionary stance, as the economy is still performing below potential and the fiscal sector is retrenching. We have recently undertaken three policy rate cuts, for a cumulative effect of 75 b.p., and expanded our refinancing activities within the banking system, featuring higher maturities against an extended collateral base. Such a policy is expected to boost domestic consumption and investment and thus support economic activity in 2012. Against this background, I expect positive developments in 2012. Our economy is expected to grow, supported for the most part by a pickup in domestic consumption and positive external demand. Inflation is expected to remain subdued while fiscal balances and external sustainability are expected to improve. More encouragingly and from a longer term perspective, we are already witnessing structural improvements in the economy, with a reorientation of the economy away from services towards production activities. Concurrently, the financial system remains sound, with improved business practices and risk management capacities while financial balances in the economy are improving. Increased productivity, improved managerial capacities, and a focus on education are all hallmarks of a sound and efficient private sector. We know there are significant downside short-tomedium term risks to this scenario. Most noticeably, the sovereign debt crisis in Eurozone countries and the measures taken to resolve it will significantly constrain economic development in Albania. However, I remain confident about the short and long term developments of the Albanian economy, and on its behalf, the BoA will remain committed to price stability and to fostering a sound and efficient financial system.


AIDA: Promoting Foreign Investment and Innovation

Interview with Eneida Guria Executive Director, Albanian Investment Development Agency IBDE: AIDA was created and operates based on the Law nr.10303, 15th June 2010 “For the creation and organisation of AIDA”. This agency has been mandated by the government to fulfill two key missions: firstly, to attract foreign investment and provide other support services, and secondly to increase the competitiveness of the Albanian economy by assisting SMEs. Therefore, your direct contribution to the development of Albania could be found in the following areas: facilitation and support of FDI, stimulating competition within SMEs, and providing information about EU and regional markets to Albanian exporters. What would you say are your biggest achievements on the road to fulfilling the two mandated goals? E.G. During this first year of operation AIDA’s focus has been on the promotion of Albania’s business and investment climate at international and national events aiming to continue the positive trend on increasing FDI inflow in Albania during the past years. Work has also focused on building the AIDA brand and establishing the agency as a trusted partner and contact point for foreign investors who are looking at Albania for their future business projects as well as investors already operating in the country. At the same time AIDA has worked on building fruitful working relationships with all business associations within the country in its effort to support Albanian SMEs and exporters to compete more effecttively in the internal and external markets. Several workshops and roundtables have been held, continually to raising awareness of the mechanisms that Albanian businesses can use to improve their services and products. IBDE: Establishing good relations with investment promotion agencies (IPAs) in host countries is very important for foreign investors. IPAs could provide direct access to high level officials. What other assets i.e. qualified staff, analysis, consultancy, etc does your agency offer and why should a foreign investor partner with AIDA?

All of the above. AIDA staff is highly committed to providing investors with all the needed information and services in order to make Albania their next business project. As an IPA, AIDA provides information on all aspects of business in the country as well as assisting investors throughout their investment cycle and operations in the country. AIDA is directed by a Management Board, chaired by the Prime Minister, which consists of 5 ministers representing the most important sectors in the Albanian economy i.e. Minister of Economy, Trade and Energy, Minister of Finance, Minister of Public Works and Transport, Minister of Agriculture, Food and Consumer Protection, Minister of Tourism Culture, Youth and Sports as well as four very well-known representatives from the private sector. This format give us the opportunity to address investors’ needs and support investors even in complex projects and to be able to follow up with all authorities in order to facilitate investment into the Country. At the same time through close cooperation with the business community in the country we are able to recommend local partners, suppliers and other contacts needed for all types of projects. As a government agency, AIDA’s services are free of charge and aim at providing investors with a single point of contact model in order to save time and effort. The following are some of the services we provide: • • •

• •

Conducting studies and research on the business climate Providing information on the business conditions and opportunities in Albania Intermediating with the national and regional government agencies – providing know-how on the potential partners Identification of sites and buildings Project management support throughout the investment cycle

IBDE: The historic 100th Anniversary of Albanian Independence finds Albania transiting towards IBDE – Integrating World Markets

29 becoming a knowledge-based economy. This seems to be the goal of both the government and AIDA. You provide QNI services for the creation and support of an innovation culture and environment in the country. Albania already has made a great leap in the ICT sector and digitalisation. Could you highlight the progress in fostering innovation in the country and some of the challenges that need to be overcome? E.G. Albania has made great progress in adopting ICT solutions for an important number of services offered by Government Agencies bringing the country up to speed with business requirements. When talking to investors and highlighting the business climate in the country some of the most notable achievements are directly related to the ease of entry and operation of businesses in Albania such as business registration and licensing, online tax filing and payment, online public procurement, etc: •

The National Registration Center – one stop shop for business registration enabling company registration within 24 hours, for the cost of 100 ALL (less than 1 Euro) The National Licensing Center – All business licensing and permitting is done through this onestop shop for the cost of 100 ALL enabling information and follow up through the online Licensing National Register Online public procurement – In Albania all public procurement processes are done online in the most efficient and transparent manner providing direct contact with authorities thus saving time and cost for businesses. ( Online tax filing and payment has also provided for more transparent and efficient dealing with the tax authorities. (

AIDA’s Business Relay and Innovation Center focuses on building an innovation culture amongst Albanian SMEs by highlighting the advantages of innovation as well as providing innovation services to SMEs. More concretely AIDA manages the “Innovation fund” created by the Albanian Government to support SMEs to innovate and improve technology in order to better compete in the internal and external markets by creating also a network of business service providers under the guidance of this department within the Agency. Creating innovation awareness for SMEs as well as fostering innovation is in itself a challenge due to the costs associated with technological improvements, therefore AIDA/BRIC is working closely with national and international partners to support innovation amongst Albanian businesses. IBDE – Integrating World Markets

IBDE: AIDA provides for its clients comprehensive support for their investment projects by providing market analysis reports and other supportive services. Why should UK-foreign investors invest in Albania and which sectors would you recommend as having the most potential? E.G. Albania offers tremendous opportunities for investors looking to expand business operations and profits by placing their future business projects in Albania. As a start Albania has one of the lowest tax rates in the region and Europe at 10% (flat rate tax). Also, Albania has a young, dynamic, well educated, and very cost competitive work force . A very liberal FDI legal framework and Free Trade Agreements with countries of the region and EU gives access to a much larger market of around 65 Million consumers in SEE, made more accessible also by Albania’s geographic position, improving ports and roads infrastructure. Some of the most attractive sectors of the Albanian economy are: The Energy sector especially renewable energy highlighting Albania’s potential for hydropower production. Albania to date utilizes only 35% of its hydro-energetic potential. Domestic demand shows no indication of leveling off and the Vienna Institute for International Economic Studies predicts that growth in electricity consumption in Albania will continue to average 4% per year until 2020. Similarly according to the World Bank if Albania’s economy grows at 3-5 percent per annum, the amount of additional installed capacity required in the next 5 years might be around 470 MW. Considering Albania is a net importing country, while in addition bordering on net importing countries, presents the opportunity for profitable investments in this sector extending beyond that of the internal market demands. Tourism development is also in the focus of the Albania Government considering the yet underdeveloped tourism industry as well as the increasing number of tourists to Albania. Opportunities lie in developing tourist facilities to accommodate all types of tourism potential that Albania has from seaside resorts and hotels for maintaining tourism facilities. Other sectors with potential for UK investors include agriculture and the food processing industry, as well as natural resources taking into account that Albania is rich in both oil and minerals. However, we would like to invite the UK investor to explore with us all sectors of the Albanian economy and would like to assure them that in the Albanian Government they will find a truly investment friendly and supportive government. AIDA can be their point of entry into evaluating all opportunities that Albania has to offer.


A brief introduction: Boga & Associates, established in 1994, has emerged as one of the premier law firms in Albania, earning a reputation for providing the highest quality services to its clients. Boga & Associates operates in Albania and Kosovo (Pristina). Until early May 2007, the firm was a member firm of KPMG International and the Senior Partner/Managing Partner, Mr. Genc Boga was also Senior Partner/Managing Partner of KPMG Albania for almost 10 years. Our firm’s particularity is the multidisciplinary services it provides to its clients. Apart from the wide consolidated legal practice, the firm also offers a significant expertise in tax and accounting services with a keen sensitivity to the rapid changes in the Albanian and Kosovar business environment. The firm maintains its commitment to quality through the expertise and determination of a team of attorneys and other professionals with a wide range of skills and experience. The extensive foreign language capabilities of the team help to ensure that its international clientele have easy access to the expanding Albanian and Kosovar business environment. The firm provides services to a broad spectrum of regional and local organisations, including private and public companies, partnerships and government agencies as well as not-for-profit organisations. With its diverse capabilities and experience, the firm provides services to leading clients in most major industries, banks and financial institutions, companies engaged in insurance, construction, energy and utilities, entertainment and media, mining, oil and gas, professional services, real estate, technology, telecommunications, tourism, transport, infrastructure and consumer goods. The firm also has an outstanding litigation practice, representing clients on all levels of Albanian courts. This same know-how and experience has been drawn upon by the Legislature in the drafting of new laws and regulations. Boga & Associates acts as the World Bank’s local partner in the yearly publication of Doing Business that benchmarks Albanian’s business regulation. The firm is a contributor for Albania to International Law Office, a global source of analysis and legal developments to lawyers worldwide, and the correspondent for Albania at the International Bureau of Fiscal Documentation (IBFD) that operates on authoritative expertise on cross-border taxation. Boga & Associates is also a contributor to the Global Legal Group for publications in relationship with the International Comparative Legal Guide in several areas of practice; Getting the Deal Through for the Tax on Inbound Investments, and to IP Media Group for publications in World Trademark Review magazine. The firm is member of World Services Group (WSG) a global association of top providers of professional business services, as the exclusive law firm for Albania. It is a member of Meritas, a global alliance of independent, full service law firms distinguished by quality. Chambers and Partners, an international legal market ranking company specialising in publishing research-based guides to the legal profession, recognises Boga & Associates as one of leading law firms of 2011 in all areas of practice in the ranking for Albania, more specifically in the field of Corporate/Commercial, Dispute Resolution, Intellectual Property, Projects and Real Estate. Since 2005, according to International Financial Law Review ranking (an international legal market ranking company), Boga & Associates is ranked as an Albanian top tier firm on financial and corporate law. The firm is also ranked amongst the leading Albanian firms in the 2011 Mergers and Acquisitions rankings of International Financial Law Review. Corporate Intl Magazine, one of the primary monthly titles for international business leaders, awarded to Boga & Associates the “Law Firm of the Year 2010 in Albania for Banking & Finance, Dispute Resolution Advisory, Immigration and Tax Law”. The firm is also winner of the “Global Legal Award Real Estate Advisory Excellence in Albania” for 2010.

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Excellence and Commitment in Law Interview with Genc Boga Managing Partner, Boga and Associates IBDE: Why should a foreign investor from the United Kingdom choose Boga & Associates to provide high quality legal, tax, and accounting services when investing in Albania and the region of the Western Balkans? What makes your firm the most credible and trustworthy legal partner? G.B. Boga & Associates has emerged as one of the premier law firms in Albania. Since its establishment, the firm has dealt with the most important projects in the country and advised internationally renowned companies on their business opportunities in Albania from both legal and tax perspectives. Clients benefit from our years of advisory experience in almost all industry sectors covering all legal areas. We have acquired a solid expertise in handling high-profile and sensitive matters and in-depth and wide-reaching sector focus as well as practical and commercial knowledge. This expertise derives from an experienced and integrated professional staff, a culture of striving continually to improve the quality of service we offer, and a pragmatic, constructive and proactive attitude. Above all, we listen to clients’ needs and act accordingly. To date our expertise has been regularly praised by our clients and peers in prestigious ranking companies such as IFLR 1000 - the Guide to the World’s Leading Financial Law Firms, the firm being recognised for 8 consecutive years as a top tier firm in corporate and financial law. In Chambers & Partners – Chambers Europe - Europe’s Leading Lawyers for Business, the firm and our team of professionals are continuously listed as leaders in their respective fields of expertise. IBDE: Peter Barlett, WSG Chair said, “I am pleased to welcome Boga & Associates as the law firm member for Albania. With a great knowledge of Albania and the region, the firm will provide WSG members and clients access to important resources.” Your firm has already successfully expanded its operations in Kosovo. What is your medium-term strategy to expand in other countries of the region such as Macedonia and Montenegro? G.B. Yes, we are also present in Kosovo (Pristina) and have already built a reputation as a leading firm with extensive industry experience constantly providing a IBDE – Integrating World Markets

full range of services. Over the years, we have been effectively and efficiently involved in most important projects in the country. Our understanding of local legislative frameworks enhances our ability to deliver comprehensive legal advice. Applying this approach over the years has seen us grow from a Tirana based law firm on into a Pristina office. To date, Boga & Associate has provided assistance to a large number of sector projects. Among many others, the firm was involved in the concession of the International Airport of Pristina, the sole international airport of the country - one of the biggest and the most important projects in Kosovo. Another important transaction which was successfully handled by our team of professionals in Kosovo, relates to Standard Bank Plc in connection with several loans extended to local companies, for financing the acquisition of an asset in Kosovo in a privatisation process, and the operation of the asset upon conclusion of the privatisation. Launching of the office in Kosovo, came along with our clients’ needs, who despite their business activity in Albania, expanded their business operations in Kosovo. This is the philosophy we will approach in considering our potential expansion into neighbouring countries. Should there be any shift of our client’s activity into these other countries, we are ready to engage with and work towards meeting this operation activity by expanding our network. We frequently cooperate with many firms in the region whenever multi-jurisdiction work is assigned to us. Therefore, when we talk about a medium to long term expansion of our activity, we’re not just talking about having offices in some important cities across the region; we mean being able to put together all our resources and respond to our client’s needs, at any time. IBDE: In 2007 and 2008 Chambers and Partners, an international legal market ranking company awarded Boga & Associates “Best Law Firm in Albania” for: Business Law, Dispute Resolution, Real Estate, and Intellectual Property Rights. Such awards highlight your strong expertise in the economic and political environment in Albania. Also it means that you know the Albania Judiciary System inside-and-out and are able to comment on its progress to date. How will the creation

SERVICES AT A GLANCE Areas of practice: LEGAL: Banking and Financial Law Commercial Law Competition Law Construction Law Intellectual Property Law Energy and Utilities Employment Law Electronic Communication and Entertainment Environmental Law Intellectual Property Law Litigation and Alternative Dispute Resolution Procurement Law Real Estate Law TAX: Tax Advice Tax Audit Services Tax Compliance ACCOUNTING: Accounting Advice Bookkeeping Services Forensic services Managing partner: Genc Boga Partners: Sokol Elmazaj, Alketa Uruรงi, Renata Leka, Mirjeta Emini, Gerhard Velaj. Languages spoken: Albanian, English, French, Italian, Greek. OFFICES: Albania Deshmoret e 4 Shkurtit Str. P.O. Box 8264 Tirana, Albania Tel: +355 42 251 050 Fax: +355 42 251 055 Kosovo: Nene Tereza Str. Entry 30, No. 5 Pristina, Kosovo Tel: +381 38 223 152 Fax: +381 38 223 153 Email: Web:

33 of the Administrative Courts (expected to be promptly approved by the parliament) improve the efficacy of the Albanian Judiciary System? G.B. Establishment of specialised courts, as in the specific case the Administrative Courts are without doubt necessary to any judicial system – resolution of administrative disputes is expected to go faster and more efficiently. This initiative in Albania reflects the recommendations of the Council of Europe and European Commission to establish standards on judicial review of public administration activity. Administrative courts are expected to enhance the transparency of administrative decisions and can play an important role in the fight against corruption. The new provisions introduced by the draft law are reflected through two components. The first belongs to the judicial process, and the other component belongs to the organisation of the administrative proceedings system. The creation of the Administrative Court shall facilitate and therefore increase access to the court by the individuals or businesses that claim to have been harmed by the state’s administrative actions. On the other hand the organisation of the Administrative Court guarantees a fast and effective judicial examination of the claims presented in a relatively short period, not exceeding two months in the first instance courts, and one month in the court of appeal.

IBDE: Boga & Associates also provides high quality tax services. The tax system in Albania includes income tax, profit tax, tax on real estate, value added tax (VAT) and excise tax. VAT is one of the most important taxes at the level of 20% in Albania since 1997. Profit tax is at the level of 10% - the lowest in Europe, reduced by 50% starting from 1st of January 2008. This reduction was part of the so-called ‘flat tax’ regime introduced by PM Berisha’s government. Another most recent fiscal change is the reduction from 20 to 15% of the monthly rate social contributions payable by the employer. How would you say the introduction of the lowest ‘flat tax’ regime in Europe has affected a foreign investor’s preference to invest in Albania? Have you had a surge in foreign client contracts since 2008? G.B. The introduction of the “flat tax rate” of 10 percent definitely enhanced the competitive environment between countries in both the East and West of Europe, focusing on the creation of the best possible conditions for foreign investors. Since the year 2008, we have been a testimonial to a significant growth in Foreign Direct Investment (FDI) flows to Albania. As a consequence, we have experienced sustainable growth in terms of the volume of domestic and foreign businesses seeking to pursue their activities in Albania.

at or contact us at IBDE – Integrating World Markets


SIGAL: Your Appropriate Partner in an Appropriate Country for Investment

Interview with Avni Ponari CEO, SIGAL UNIQA Group AUSTRIA IBDE: Established in 1999, SIGAL UNIQA has grown considerably from an initial personnel of five to a business group made up of seven insurance companies with a staff of 900 including agents, and with a private pension fund. In addition it has expanded regionally in Albania, Kosovo, and Macedonia. SIGAL has the lion’s share of the insurance market (34.7%) and benefits from foreign investment and expertise from UNIQA Group Austria (owning 68.64% SIGAL shares) - a prestigious financial and insurance company in Central and Eastern Europe. What would you say has given SIGAL the edge in this sector? A.P. There is always a reason to create something. It was in 1992, the time when Albanians separated themselves from a dictatorial centrally-controlled economic system, in which the basic idea was that the state was in charge of everything. This was the biggest dogma of that regime. At the beginning of the post-Communist period there was no notion of insurances and the insurance market was nonexistent. At the time, I had recently graduated from the Marine Faculty and had joined the Command of the Albanian Float at the Ministry of Defense, which was one of the most difficult jobs but which had its own beauty and romance. After the publication of a column in one of the newspapers of the time entitled: “Argjino Zguro Vizits the Seventh Continent,” it was destiny that directed me to the first insurance company created in Albania, a state-owned one named INSIG that lacked a Marine Department of which I took charge. After 2 years I was nominated as the Head of the Tirana Branch in the state owned company - a position I held until 1997. Communist Albania had a considerable commercial and military flotilla. Due to its obligations under international law the state had to ensure them, the only IBDE – Integrating World Markets

sector during communism where this tool to secure risk was allowed. When the first London based brokers looked at Albania as an emerging economy with a myriad of opportunities, they also contacted the state owned company where I used to work and I was given an invitation for a one-month training course in Marine & Aviation at Marsh McLennan which I attended and successfully completed. The time was ripe for the creation and later expansion of the Albanian insurance market though the foundation of SIGAL which also had attracted a lot of interest from foreign investors. Here in London I received training and met with important business leaders who did not hesitate to share their experiences. One of them was Simon Both Masson, of the company Marsh McLennan who was the person who supported me and continues to do so. When I expressed my idea of applying for an insurance license to my friend Simon he told me, “Ok, but it will be very difficult. Did you think in depth about it because you will lose lots of money?” He also added “You are the one who knows your own strength, the London market will support you”, and it really did support me in all directions. We started our business activity with a capital of 400,000 USD while the competitor’s was over 14 Million USD. We had a staff of 5 people and the competitor had a staff of 1000 trained people who had a minimum experience of 5 years. Tenacity makes everything possible! Our first client was a friend of mine who engaged me by saying “I took off a state burden as I will have all insurances done at SIGAL now”. The first year was a successful one because along with the broker Marsh McLennan, we achieved insurance cover for all road infrastructure projects and various other projects. Also all banks became our clients. In this way the balance in the reports changed

36 quickly and by the end of 2000 we owned 30% of the market, a share that we still have nowadays even though 8 non-life insurance companies now operate in the market together with 3 life insurance companies. IBDE: SIGAL is the only Albanian insurance company to have 60.46% of the total volume within the insurance market. Your company has made an important contribution in educating the population on how to manage risk and uncertainty. What have been the main obstacles in increasing voluntary insurance in a country with a developing insurance market and dominated by compulsory insurance policies? A.P. It is true than in Albania and in the region there is a lack of insurance culture. People do not know insurances and as a result do not understand it. They consider insurances to be like other taxes and this is a problem that needs to be addressed with informational campaigns. In our work we have always had two basic slogans: the first one is ‘If you want to be insured there is only one name, SIGAL.” This catchy slogan was very successful and we became a recognized brand within six months. The second slogan has to do with motivating our employees for face-to-face contacts with existing and potential clients as the basis in achieving high results. On the one hand, we at SIGAL UNIQA try to provide the best customer service and products for our clients. On the other, we have always kept our end of the bargain by paying claims on time, including claims from voluntary insurance that is becoming more popular. We are stimulating and advertising the purchasing of voluntary private insurance by sticking to a simple principle: return the object in its previous state; so preserving our name and service to the business. IBDE: SIGAL UNIQA has a presence in Albania, Kosovo, and Macedonia. These countries are characterized by a fast developing insurance market. Is your company planning to expand in other countries within the region such as Montenegro? A.P. SIGAL was the first company that acquired foreign shareholders. The Albanian-American Fund of Enterprises became part of SIGAL in 2003 and was a partner that supported SIGAL’s management and made it possible for SIGAL to be audited according to the standards of IFRS therefore being more transparent and closer to the public. We have also been the first in launching new products throughout the entire region. We are now part of UNIQA Group AUSTRIA. Montenegro was our fourth stage in developing the business but since UNIQA already has a presence here,

we thought that it wasn’t necessary, and for this reason we are working hard in these other three countries in order to improve the service quality and what is even more important: to guarantee investments for all foreign stakeholders. We offer all types of insurance for unlimited amounts because our partners trust in us and in our alliance with UNIQA Group Austria. IBDE: To what extent has the Eurozone crisis impacted the growth of the insurance market in the country? The Albanian insurance market (Life and non-Life) grew only by 1.81% in 2010, however, SIGAL Life and nonLife grew by a much higher 7.78%. What is the prospect for growth and opportunities? And why should UKEU Investors use SIGAL as their main insuring partner when investing in Albania. A.P. The euro zone crisis had an impact also in Albania but not a financial one. The crisis in Albania was mostly a moral and media one. A certain gap was created in the construction industry. This crisis has been sensed within this sector mainly due to constructors themselves rather than from a negative impact in the economy. For 50 years we had an ideological principle built in and difficult to shake off. I think that the crisis in this particular industry has its roots in this principle. The basis of the dictatorial ideology was to develop everything based on our strengths. Constructors were mistaken as they all started to build: everyone built concrete factories, brick factories, just as everyone established transport companies and everyone bought heavy machinery. As a small country and market, Albania was quickly sated with construction projects as demand for new apartments stalled. Currently the construction boom has ceased expanding though as yet has avoided a fullblown burst. Still, this has had a negative effect on the banking system in particular, as the number of bad-loans has increased to 18% of the total, and additionally in the economy because the construction sector was the main engine of economic growth and employment. Nevertheless, the entire economy experienced changes and growth in all sectors, a modest one but in specific sectors the growth was significant. We are a developing country in the heart of Europe and we won’t go in reverse but rather ahead and growing. Albania is a small country but with huge resources. The main segments are tourism, which is still underappreciated, agro-business, farming, energy and minerals are supportive fields. Considering these factors, Albania will soon be one of the most developed countries in the region and in Europe. These are all political and financial guarantees for foreign investors. SIGAL UNIQA Group AUSTRIA is the appropriate partner in an appropriate country for investment. IBDE – Integrating World Markets

Vitrina University has built its ethos upon values and principles based on the requirements of the Bologna Declaration. The University’s philosophy encompasses cooperation at an international level, through the organization of joint activities with foreign universities, including academic exchanges amongst students and academic staff. The academic staff of Vitrina University, as graduates of the world’s most prestigious universities, enjoy an international reputation. Our programmes of study combine the best experiences of Albanian and International Universities. Teaching practice in our University extends beyond the boundaries of Albania, as foreign academics and lecturers contribute their European experiences through the seminars organized on the Vitrina University Campus. Our main goal is: aspiring towards perfection in our teaching process.

 The Faculty of Educational Science

Master of Science Degrees: • • • •

Finance – Banking Civil and Commercial –Law Political Communication Electronics

Vitrina University is already involved in a vocational training project to qualify at least 250 tourist guides. Developed in collaboration with several partner organizations such as the Union of Albanian Entrepreneurs and Union Agencies and Tour Operators, Discovery Albania, Conservationists of Menv Group, etc., this intensive course is intended to create a network of human resource services while providing additional Tourist Guides in Albania. Vitrina University is promoting these ideas and projects in all schools in Albania, as well as in our public institutions in Central Government.

 The Faculty of Engineering  The Faculty of Law  The Faculty of Economy-Tourism  The Faculty of Political Science  The Faculty of Architecture  The Faculty of Medicine

Professional Masters Degrees: •

Marketing Management

Criminal Law

Local Government and Executive Management


Vitrina University is also involved in the campaign for Territorial Promotion and Tourism "Welcome To Albania" which is being organized in all Albanian cities and further afield in major cities throughout the region and worldwide wherever there is a significant presence of immigrants and Albanian Diaspora. Contributing to our country's economic and social development infuses our personal commitment to family, community, as well as institutions.

For more information please visit us at


Economic Development and Investment Opportunities in Tirana Introduction Tirana general data, geographical and strategic position Tirana is Albania's capital and the country’s largest and most populated city. As a result, Tirana is the economic, administrative, political, social and cultural center of the country. Tirana’s geographic location and importance means that is the convergence point of key highways that link the country to the north and south, and west to east. Proximity to the port of Durres is another of Tirana’s competitive advantages, and makes the Albanian capital stand out in what can be described as an

emerging and dynamic Western Balkans region/market. Foreign visitors can access Tirana very easily via the modern Mother Teresa International Airport, only 15 minutes away from the centre of Tirana. This airport is also a success story for public and private partnership scheme (PPPs) in Albania, and serves to highlight that fact that Albania have embraced PPPs as an alternative way of financing important projects. Foreign investors ‘ interest also has to do with Albania’s proximity to the West and cheap skilled labour, especially in Tirana in which has 75,000 students studying at 27 private and public universities. The goal of Albania is to become a knowledge-economy and Tirana is leading the way towards this.

Tirana & Albania




28 748 km2

42 km2 (0.15%)


3 142 065

614 901 (20% of the total)

Population Growth rate

0.27% (2011)

2% (2009)

Population natural growth

15% (2009)

27% (2009)

Urban population

1 541 500 (49% of the total)


Income / capita (annual)

457 692 ALL

705 744 ALL

Labor force

1 103 000

213 440 (19%)











233 000

26 337 (11,3% of the total) – 80%

New Constructions




420 000 000 $

52% (of the total)

businesses VIP

IBDE – Integrating World Markets

39 New vision and strategy of the Basha’s administration 3.


5. Lulzim Basha, Mayor of Tirana

Mayor Lulzim Basha came to power with a forwardlooking program that intends to improve the quality of life, developing Tirana as a friendly city for business and investment, and introducing policies to boost employment and re-vitalized the construction sectorthrough the issuing new permission via an improved ‘one-stop-shop’ permit agency. Tirana has enormous economic potential also because is in the midst of a major revitalization project of its infrastructure. Moreover Tirana offers a concentrated of qualified cheap and young work force. Tirana inherits naturally a very favored position for attracting domestic and foreign investment. The main strategic economic goals Tirana is aiming for are the following: •

Highly sustainable and balanced economic growth giving priority to a competitive and efficient green economy. Expansion of economic development and innovation by supporting the economy with knowledge and innovations. All-inclusive economic development, by creating new jobs and social and territorial cohesion.

and studies to date on location in the field of business, the initiatives proposed their diversification in the city. Identifying and supporting priority sectors that generate added value to the local economy through the development of a Long Term Strategy for Sustainable Development and a clear policy on the use of municipal assets in view of local services and local businesses aiming at a balance between economic development and the social one. Supporting new businesses through the creation of credit guarantee schemes and promoting various forms of public-private partnership (PPP). Investing in infrastructure (physical, logistics, ICT, improved concepts of business areas, potential areas of development and various forms of publicprivate partnership).

Measures aiming to improve the business climate and reduction of the local tax burden New policies and incentives for business are being promoted in Tirana under the leadership and vision of the new City Mayor, Mr. Lulzim Basha. These policies are aiming to create a zone with tax advantages by reducing to the minimum tax burdens for businesses in general. In October 2011, it was made effective the elimination of about 60 types of local taxes and tariffs out of 85 in total that existed previously. Two very important decisions passed in 2011, which aim to provide fiscal incentives for new labour intensive businesses in order to increase employment. Specifically, new businesses employing over 50 employees are exempted from some main local taxes for a period of four years. Moreover, construction companies, which employ more than 75 employees, will enjoy a reduction by 30% of the infrastructure impact tariff. The implementation of the “one-stop-shop center” in

Short and midterm objectives of the Tirana Municipality 1.


Providing a friendly environment for local businesses by simplifying administrative procedures and regulatory reform, in order to encourage and promote, in intergovernmental cooperation. Supporting local and foreign business, promoting fair competition, avoidance of tax evasion through various promotional campaigns and awareness, updating the socio-economic statistical information

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40 February 2012, is offering support to the businesses for the start-up phase and is aiming to add more transparency, to simplify and streamline all administrative procedures including business and tax registration, licensing and permits. National registration procedures will significantly simplify and reduce the cost of services for business registration, reducing in a single day period required to register a new business. The issuance of permits and licenses required for specific activities will last not more than 7 days. This reform along with the completion by mid of the current year of the new urban master plan will enable the issuance of building permits in not more than 45 days, as compared to more than 360 days needed currently and 20 days less than the regional average. This project and all related initiatives aiming the promotion of foreign and domestic business will make Tirana, as stated by Mr. Basha: “the most business friendly territory in the region”.

Focus on infrastructure – urban plan and innovation The New Urban Plan of Tirana, expected to be finalized by the middle of this year 2012, will have at his heart the need for modification of the economic development model taking into account the forces and opportunities created by globalization and the intensive competition that derives, especially strong amongst important cities in the Balkans to attract foreign investors and finance major projects in particular on infrastructure and services. Doing Business Albania Report 2012 shows that Albania ranks last in all economies, (183) taken into consideration, in terms of obtaining a building permit. New regulatory reforms were not made in this field, and with the approval of the new law "On Territorial Planning" dated 23.04.2009, which repealed the existing law "Urban Planning", in Tirana dealing with the construction permits will be easier, only in 45 days. Regarding business start up (ranked at 61 points) and paying taxes (ranked 152), Tirana Municipality reduced 60 taxes and tariffs and created a new one stop shop centre in order to reduce time, costs by simplifying procedures and reducing documentation. With a special focus on protecting investors ( ranked 16 in Doing business report 2012 ) and attracting new green field investments, near the Municipality of Tirana with the adaption of the new structure, has been created a Directorate of Foreign Investment Promotion which assists and offer tailored services to the investors. A basic concept of this urban plan is that of polycentric development of Tirana that will create new centers and spaces in the city in order to reduce the

concentration and stress of the center, and highlight new opportunities for private investment and PPPs. Tirana has a strategic need for the establishment of other centers with added administrative, educational, and socio-cultural services. This would facilitate and attractant new commercial services, business services, and recreation services and spaces.

The New Urban Plan will identify and project five new poles: • •

A new pole is planned to be the area in the north of the existing Tirana Train Station. A second pole to develop is the area between the Aviation Field and Kombinat. This new pole is a necessity for the western part of Tirana. The third pole is located in the south western part of Tirana, the area below the dam of the Lake of Tirana, which offers great opportunities for recreational, commercial, and business services, as well for construction. A fourth pole for development is located in the southeast of the city, where the presence of the University of Tirana Campus (Student City) will create exciting new opportunities for business and investors. Finally, the eastern part of the city, where the ‘Mother Teresa’ hospital is located together with a busy industrial goods park, can become the fifth pole of the polycentric Tirana of the future.

Major strategic projects being implemented: To address and effectively respond to some major urban challenges: improvement of public infrastructure, public transport, strategic urban development, transfer and adoption of better technologies to generate sustainable economic growth, Municipality of Tirana has identified and is working on the design and implementation of the four major projects outlined below: IBDE – Integrating World Markets

41 1.

Multimodal passengers’ hub

Cooperation, for the Feasibility Study and preparation of Concession Documents. Eventually this project will be a PPP and concessionary one. The approximate project value is 30 million Euros. The municipality of Tirana will ensure the usage of the terminal and discipline the transport operators accordingly.

2. Tirana Northern Boulevard and River Project (TNBRP).

The new multimodal passengers’ hub will be built in an area of approximately 85,000 m2 and will include the new train station, a new inter-urban bus station, commercial and other multipurpose facilities. The Bus Terminal will cover all public transport communications to the Northern, Western and SouthWestern parts of Albania, representing more than 75% of the passengers’ flows using public transport in the country. Three of the operating urban bus routes, which transport around 100,000 passengers annually, pass in this area. The project will be financed by European Bank for Reconstruction and Development, EBRD. An amount of 500.000 Euro is granted by the Italian Fund for IBDE – Integrating World Markets

The city’s central North/South axis (Boulevard Deshmoret e Kombit – Zogu i Pare) will be extended from the Tirana old Train Station to Tirana River approximately 1.8 km and about 1.5 km to the Paskuqan Lake in the North, resulting in a green boulevard running through the city center between the two main parks: the existing “Parku i Liqenit” in the South and the future “Parku i Paskuqanit” in the North. The urban area impacted by this project comprises 14km² (which is 1/4 of the size of the actual city) producing massive potentials for urban restructuring, new urban developments and the urgently needed formation of new recreational space. It is a project that will be financed in the form of grants or soft loans and PPPs. The value of this project is predicted to be around 80 million Euros. An international competition took place at the beginning of March 2012 in Tirana where seven of the most prestigious international architecture and planning studios presented their projects on this vital new axis

42 and urban planning of the area. The decision for the winning project was given by an international Jury composed by 9 known professionals from different fields and chaired by the famous Architect, Daniel Libeskind. The jury gave a runoff decision between the “Grimshaw Architects, UK” and “DAR Group International, UK Office). The final decision will be given based second phase of Q&A with the studios and on the comments done by the citizens of Tirana at the Exhibition of the Models.


Two tram lines: East – West (Kinostudio – Kombinat) and South – North (Sheshi Nene Tereza – Multimodal passengers hub).

This project includes the construction of two tram lines that will connect the east of the Tirana with its west, and the north with the south, which currently are the public transiting directions with the largest passengers flow. It will be a Light Rail Transit system (LRT) and the approximate length of both lines will be about 19 km. The expected numbers of passengers are 60,000 per day on line 1, and 40,000 per day on line 2. The project will be financed with soft banking loan. We aim to implement this project under a PPP scheme as DBOT (Design-Build-Operate-Transfer) or similar. All major

technical components including the rolling stock shall be supplied by a private concessionaire. Operation shall also be performed by a private concessionaire. The project value will be around 150 million Euros.

4. Tirana Techno Park The Techno Park will be built in an area of approximately 30,000 m2. It will be the first of this kind in Albania and aims to congregate in a single place a variety of national and international companies investing in Technology, Research & Development, Science and Innovation Projects. The Techno Park will be equipped with the necessary infrastructure, and Mayor Basha’s administration is planning to pass the necessary incentives to encourage the start-up phase of enterprises, which in turn will generate employment. Also, the Techno Park will aim at improving the cooperation between educational institutions such as the plethora of private and public universities operating in Tirana and private enterprise. This will better prepare students to find a job when they graduate, maximizing mutual benefits and synergy. The preferable financing scheme is either through a soft loan or a commercial loan with reasonable interest rates, and will be operated as a PPP/concessionary project. The estimated project value is around 20 million Euros.

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