Foreign Direct Investment

Albania offers a very friendly legislation as regards to foreign investors. The Law “On Foreign Investments” is based on the principles of equal treatment, non-discrimination and protection of the foreign investments. According to the Law:

  • There is no need for prior authorization from the government for the foreigners that want to establish a business in Albania;
  • There are no limitations in the share of foreign participation in Albanian companies and 100% foreign ownership is possible;
  • Foreign investors have the right to expatriate all funds and contributions of their investment, in kind;
  • They are permitted and treated based on conditions not less favorable than those afforded to domestic investments in similar circumstances, except land ownership, which is regulated by special law;
  • In any case, foreign investments are not treated any less favourably than foreseen by generally accepted norms of international law;
  • A company with foreign investment participation has the right to employ foreign citizens as well;
  • Foreign investments are protected by law from direct or indirect expropriation or nationalization measures, except for special cases defined by law in the interest of public use;
  • In all cases and at any time, investments are treated equally and impartially, and enjoy complete protection and security.

FDI INFLOW

Foreign direct investment flows have sustained the domestic economy.

In 2018, foreign investment was seen as the main catalyst for economic growth, given that FDI inflows reached 1 billion euros. FDI inflows increased by 13.7% compared to 2017. The energy sector is the leader in FDI inflow (46%) followed by the extracting industry (17%). FDI Inflow by country: Switzerland was in the first place (36%) followed by Netherlands (18%).

(mln euro)

Year 2014 2015 2016 2017 2018
Inflow 869 890 936 899 1,022

Source: Bank of Albania

FDI STOCK

Foreign Direct Investment Stock reached EUR 7.6 billion in 2018 with an increase of 18.7% compared to 2017. The biggest share to the stock belongs to energy sector (27%) followed by ICT (15%).

Stock by country: Switzerland 17% of the stock followed by Greece 16% and Netherlands 14%.

(Milione euro)

Year 2014 2015 2016 2017 2018
Stoku FDI 4,564 4,982 5,677 6,453 7,661

 

The Government of Albania, in accordance with the commitments under the European Union accession process, has adopted and implemented policies oriented toward creating a well-structured market economy capable of coping with competitive pressures and market forces once Albania joins the European Union.

The governmental policies are integrated in the Business and Investment Development Strategy 2014-2020. This strategy is aligned with the EU industrial policy as reflected by the “Europe 2020” document and the “South East Europe 2020” strategy.

The objectives indicated in the strategy for Foreign Direct Investment (FDI) are

  • to maintain a high level of FDI;
  • to achieve long-term sustainability of investment by promoting reinvestment and expansion of existing investments;
  • to increase the share of greenfield and export-oriented investments and;
  • to increase the share of value-added and high-tech investment.

The main pillars of the strategy are:

  1. A new focus on policies oriented toward business climate and SMEs;
  2. Industrial policy;
  3. Trade integration and export development;
  4. FDI promotion

The strategy promotes the development of a productive industrial sector, capable of processing raw materials in the country and increasing added value along the value chain by stimulating investment in this area, application of new technologies, clean production and increased professionalism that constitute the foundation of a competitive industry.

MAP REA

In the context of the Berlin process and the Trieste Summit the Western Balkans Six Prime Ministers have agreed to have a joint approach to furthering economic cooperation in the Western Balkans. The Multi-annual Action Plan for the Regional Economic Area (MAP REA) puts forward a structured agenda for regional economic integration promoting further trade integration, introducing a dynamic regional investment space, facilitating regional mobility, and creating a digital integration agenda. The MAP stems from the commitments undertaken within the framework of the Central European Free Trade Agreement (CEFTA) and South East Europe 2020 Strategy (SEE2020) and is based on CEFTA and EU rules and principles as reflected in the Stabilisation and Association Agreements (SAAs)

The implementation of the actions listed in the MAP will enable unobstructed flow of goods, services, capital and highly skilled labor, making the region more attractive for investment and commerce, accelerating convergence with the EU and bringing prosperity to all its citizens. The Regional Economic Area is based on the principles of non-discrimination, creating a level playing field for all within the region.

One of the pillars of the MAP is the Investment pillar. There is a significant potential to foster regional economic integration in Western Balkans Six economies, through the development of Regional investment reform agenda. The removal of barriers to regional investment offers the opportunity for economies of scale, geographically diversified businesses, and an overall more efficient allocation of resources within a regional market, thereby fostering the integration of companies from the region in international value chains.

Inventory of Investment Incentives in Albania

The Albanian Investment Development Agency, with the purpose of providing assistance to stakeholders, has compiled an inventory of investment incentives in our country.

In this summary you will find information on all the incentives undertaken by the Government of Albania in support of domestic and foreign business and investment promotion in Albania.

Some of these incentives, accompanied by an illustrative example, include: Subsidized Land Utilisation through the “€1 Symbolic Fee Contract”, Customs Duty Exemption​ for Technological and Economic Development Areas (TEDA), Reduced Value Added Tax (VAT) for Agritourism Activities, Reduced Value Added Tax (VAT) for Audio Visual Media, Reduced Value Added Tax (VAT) for Supply of Books, Reduced Value Added Tax (VAT) for Large Electric Vehicles, Value Added Tax (VAT) Exemption for Agricultural Machinery, Value Added Tax (VAT) Exemption for Agricultural and Veterinary Inputs, Value Added Tax (VAT) Exemption for Pharmaceutical Imports intended for Domestic Drugs Production, Value Added Tax Exemption (VAT) for the processing of goods, Reduced Profit Tax for Software Producers, Reduced Profit Tax for “Agritourism” Activities.

To get acquainted with the full inventory of investment incentives in Albania, visit the link: http://aida.gov.al/wp-content/uploads/pdf/Inventory_of_Investment_Incentives_in_Albania.pdf

Albanian Investment Development Agency
Tirana, 14.04.2020