Albania calls for foreign investments: opportunities and challenges

by Dimitra Tsesi

Austrian Economics Center

On May 12^th 2014, Vienna Economic Forum held an important conference on Albania, the ‘’Vienna Economic Talks – Business and Investment Forum Albania’’- which was hosted by Austrian Economic Chamber. The event was attended by key figures of the Albanian Government such as the Prime Minister of Albania Edi Rama, the Minister of Economy, Mr. Arben Ahmetaj – the Minister of Energy Mr. Damjan Gjinkuri–and the Minister of Agriculture –Mr. Edmond Panariti. They were joined by Ms. Ellen Goldstein, the World Bank Director for the Western Balkans.

The Prime Minister of Albania Mr. Edi Rama in his speech presented the economic platform for the “rebirth” of his nation. The goal is to establish the foundations for “sustainable economic development” with the help of international financial institutions. “We are fully aware that Albania needs a radical change.” he said.

Mr. Rama’s new economic model seems to be a mix of liberalizing reforms and state interventionism. While he asserts the need for “an easy ground for foreign investment” he also emphasizes the importance of public investment –a “priority”, as he calls them–.

Mr. Rama stressed on what he considers two Albanian competitive advantages that need further development. Firstly, “Albania is the second richest European country in natural resources”. Secondly, he referred to the huge growth perspectives of the tourist sector. According to the PM, the government is designing new economic models in order to attract foreign tourists.

To underline the significance of his reforms, the PM used the formation of the National Economic Council as an example. This brand new organism discusses Albanian economic issues and advices the government in the decision-making process. He also highlighted the fact that his office works closely to the World Bank and the private sector.

In addition, Mr. Rama addressed his Austrian audience directly. ‘’We want to take advantage of the special relationship between Albania and Austria and to learn as much as possible from the Austrian experience in the field of vocational training”, said the PM. The Austrian bank sector is the second largest in Albania. The Austrian investments and Austrian companies play an important role too.

Nonetheless, Mr. Rama focused his interest not only on the economic positive side of these investments but also in “the different business culture” that Austrians bring to his country. Thus, “is the business experience what we need most”, said Mr. Rama

Naturally, this concern is related to the fact that Albania is facing the negative perception of the past regime and the allegations of widespread corruption. Mr. Rama acknowledged this situation and said that his government is taking steps to deal with it.

Mr. Rama concluded his remarks appealing to Europe. “This is the first year starting with no conflict in the Balkans. We want to collaborate with the neighbors and European Union. We want peace and cooperation. Albania needs Europe. The Balkans need Europe. But the most important is that Europe needs the Balkans. The Balkan area is free of conflict and eager to set up a new approach of cooperation”.

In turn, the Minister of Economy A. Ahmetaj called for competitiveness and new technology while the Minister of Energy and Industry, Mr. Gjinkuri called for the liberalization of the energy market and for transparency. Mr. Panariti, the Minister of Agriculture added that Albania needs the Austrian expertise and investments to boost the tourist sector and the country’s economy.

Taking a look at the economic data for the first quarter of 2014, helps us put the future of Albania in perspective. “The economic growth remains low and the Albanian economy continues to operate below its potential” says the Governor of the Bank of Albania, Mr. Ardian Fullani. This weak economic growth is putting pressure on both the budget and the public debt. It is also not helping the financial sector, with banks increasingly unwilling to lend.

In conclusion, it is clear that Albania is calling for foreign investments and new business opportunities. It is also clear that the Albanian market seems full of potential. The gradual integration in the European economic bloc has already started. What is not yet clear is whether the institutional and political climate of the country will allow the “rebirth” to happen and the private sector to thrive.