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flag Albania Albania: Foreign investment

In this page: FDI in Figures | What to consider if you invest in Albania | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

FDI flows towards Albania have been rising steadily since the early 2000s, averaging close to USD 1 billion per year for the period 2008-2017. Acccording to UNCTAD’s World Investment Report 2020, FDI inflows amounted to USD 1,3 billion in 2019, unchanged if compared to 2018 level. FDI stock reached USD 8,8 billion in 2019. These investments are essentially in the oil, metal ore, infrastructure, construction and telecommunications sectors. According to data by the Bank of Albania, the main investing countries are Switzerland (with investments related to the Trans Adriatic Pipeline), the Netherlands (due mainly to the Hydro Power Plants in Devolli River), Canada and Greece (the two largest telecommunication companies in the country have Greek capital). According to figures from the Bank of Albania, in the period January-September 2019 FDIs towards the country reached USD 898 million, a 7.3% increase compared to the same period the previous year.

Albania has set up reforms to boost FDI. The state has adopted a tax reform that is advantageous to foreign investors and aims at reducing corruption and administrative difficulties which can be discouraging to investors. The long-winded procedures to obtain operating licences in the trade, construction and tourism industries have slowed down investment progress. A lack of transparency in public procurement and poor enforcement of contracts also hinder FDIs to Albania. In addition, investments continue to suffer from the lack of infrastructure and poorly defined property law. The country declared to target foreign investment in the following sectors: energy and mining, transport, telecommunications, infrastructure and urban waste, tourism, agriculture and fisheries. Albania ranked 82nd out of 190 economies in the 2020 Doing Business report published by the World Bank, losing nineteen positions compared to the previous year.

 
 
Foreign Direct Investment 201720182019
FDI Inward Flow (million USD) 1,1491,2901,281
FDI Stock (million USD) 6,7427,8338,811
Number of Greenfield Investments* 365
Value of Greenfield Investments (million USD) 12188183

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

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What to consider if you invest in Albania

Strong Points
Albania's strong points are:

  • Economic dynamism with a growth rate of 2.24% in 2019 (IMF)
  • A strategic geographical position (with ports in the Adriatic and in the Ionian Sea)
  • Important natural resources (oil, chromium, copper and coal)
  • A young and low-cost workforce
  • The prospect of its integration into the European Union
  • A currency (lek) that is solid and stable against the euro
  • A competitive tax system
  • Free access to major markets (Albania is part of several FTAs with large markets, as well as the General System of Preferences)

Albania is a developing country that needs foreign investors to develop large parts of its economy, which offers many interesting opportunities.

Weak Points

Albania is one of the least developed countries in Europe and the Albanian economy remains fragile and highly dependent on external institutional support. The main obstacles to the country's development and the attraction of foreign investors are:

  • An ingrained informal economy with a considerable weight on GDP (56.7% in 2019 according to the ILO, latest data available).
  • A relatively poor population with below-European standards, and low public investment in education of 3.6% of GDP (World Bank, latest data available).
  • An economy that is not very diversified and highly dependent on agriculture (18.5% of GDP and 36.4% of jobs in 2019 according to the World Bank, latest data available).
  • High risk of corruption and organised crime undermining the rule of law.
  • Fiscal and customs systems failing.
  • A lack of modern infrastructure.
  • Recurring energy shortages causing power cuts.
Government Measures to Motivate or Restrict FDI
Legislative and fiscal reforms have been enacted in recent years, as well as new laws on public-private partnerships, public procurement, free trade zones, business registration and electronic signatures. The country has ratified the "Investment Charter": a Stability Pact initiative aimed at reforming the legal environment in order to facilitate FDI in the Balkans. Steps are also being taken to halve non-tariff barriers and shorten the time needed to register a business (currently 40 days to 8 days only). The government of Edi Rama, driven by its desire to join the European Union, is working to reform the country and restructure it to consolidate the dynamism of its economy. Reforms have thus emerged to reduce the country's fiscal deficit (in 2019, the government deficit reached 1.9% of GDP - IMF), to reorganise the key electricity sector and to increase pensions.

For a number of years, Albania has implemented measures to attract foreign capital. Guarantees such as equal treatment between nationals and foreign investors and tax measures such as the VAT exemption for international exports and services, as well as importing activities for imported goods and for re-export, are some of the key measures that have been adopted and should facilitate a more dynamic development of FDI in the country.
Bilateral Investment Conventions Signed By Albania
Albania has signed conventions for the protection of investment with: Greece, Germany, Italy, France, Austria, the Netherlands, the United Kingdom, Denmark, Sweden, Portugal, Belgium, Spain, Finland, Poland, Hungary, Slovenia, the Czech Republic, Switzerland, the United States, Turkey, Romania, Bulgaria, Macedonia, Croatia, Russia, Israel, Tunisia, Egypt, China, Malaysia, Serbia-Montenegro, South Korea and Kosovo.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Guaranteed.
Acquisition of Holdings
Possible.
Obligation to Declare
The Albanian Investment Development Agency (AIDA) in the country provides information about the authorizations required to set up business.
Competent Organisation For the Declaration
Agency for the Promotion of Investment
Requests For Specific Authorisations
No sector is closed to investment and no prior authorization from the government is necessary to be able to invest. There is no restriction on holdings; a company may be 100% foreign.

Find out more about Investment Service Providers in Albania on GlobalTrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
The Albanian Investment Development Agency (AIDA)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Albania
Globaltenders, Tenders & Projects from Albania
DgMarket, Tenders Worldwide
Other Useful Resources
Reasons to invest in Albania – Albanian Investment Development Agency
 
 

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Find out more about Investment Service Providers in Albania on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: July 2021