Investment Climate

A potential candidate country for EU accession, Albania is a member of World Trade Organization since 2000 and a NATO member country since April 2009.
Albania has achieved strong economic positive growth despite the global economic and financial crisis with a GDP growth of 6% for the period 2000 - 2009, and of more than 3% for years 2010 and 2011 respectively.
Strategically located in the Western Balkans, with its developing market economy, low tax burden and its young, educated and cost competitive workforce, Albania offers many opportunities for investors. Albania’s natural resources include significant hydro, solar and wind power capacity, large tracks of agricultural land and over 400 km of coastline with excellent tourism potential. The country is rich in oil and gas and is endowed with valuable mineral deposits such as copper, iron and chrome ores.
Well anchored structural, legal, fiscal and administrative reforms focusing on trade liberalization and ease of doing business, have boosted investors’ confidence in Albania. According to UNCTAD World Investment Report 2012, in 2010 the number of foreign direct investments received by Albania amounted to $1051 million, and in 2011 amounted to €1031 million. According to the same report, Albania ranks in the countries with the highest performance index meaning that the number of foreign investments received was above expectations and this thanks to improvements in its investment climate.
The focus for the future development of the Albanian economy will remain on attracting FDIs with a focus on sectors where the Albanian economy has unexploited potential both in terms of natural resources as well as in developing sectors that are yet underperforming
such as renewable energy, tourism, agribusiness, infrastructure and services. Albania has adopted a liberal framework which has been designed to create a favorable investment climate for foreign investors. Albania has also signed a considerable number of Bilateral
Investment Treaties with different countries such as United Kingdom, France, Germany, Italy, Austria, Switzerland, United States, China, Russia, Israel, Egypt, Malaysia, Cyprus, Kuwait, Turkey, Serbia etc.



Table 1 (FDI Inflow)

Source: World Investment Report UNCTAD 2012, Bank of Albania




Table 2 (FDI Stock)

Source: World Investment Report UNCTAD 2012, Bank of Albania


Business Climate

Albania has successfully completed its threshold program, aimed at improving government effectiveness and transparency and strengthening the rule of law through implementing online tracking systems, such as:

  • an e-procurement system that handles all procurements over $4000 in value. The system has cut procurement costs and increased competition;
  • an e-filing system for paying personal income tax, used by two-thirds of all taxpayers, which has increased revenues while drastically reducing opportunities for corruption;
  • a national planning registry used to manage building permit applications with greater transparency;
  • a non-stop shop National Licensing Center.

FDI Legal Framework

General provisions

Albania has a liberal framework which encourages investments. Law No. 7764, dated 02.11.1993 “On Foreign Investments”, was designed to create a favorable investment climate for foreign investors. The law offers guaranties to all foreigners (either physical or legal persons) willing to invest in Albania. The provisions include:

  • ??No prior government authorization is needed and no sector is closed to foreign investment;
  • There is no limitation on the percentage share of foreign participation in companies – 100% foreign ownership is possible;
  • Foreign investment may not be expropriated or nationalized directly or indirectly, except in special cases, in the interest of the public use as defined by law;
  • Foreign investors have the right to expatriate all funds and contributions in kind of their investment;
  • In all cases and at all times investments will have an equal and unbiased treatment, and will have complete protection;
  • In any case foreign investment will have a treatment equal to what common international practice allows;
  • Special state protection through replacement with full rights of foreign investors by the Albanian state in legal and civil conflict with private third-party.

“Foreign investor” is understood to mean:

a) every physical person that is a citizen of a foreign country; or

b) every physical person that is a citizen of the Republic of Albania but who has always resided outside the country; or

c) every legal entity founded according to the laws of a foreign country, which directly or indirectly seeks to carry out or is carrying out an investment in the territory of the Republic of Albania in accordance with its law; or has carried out investment in accordance with laws that have taken effect since 31.7.1990 to the present.

Special state protection

In September 2010, the parliament approved several amendments to the law that provide special protection for foreign investment in the tourism, energy and agriculture sectors. This state special protection is not granted a priori but is granted only after occurrence of a dispute through a decision of the Council of Ministers following a request presented by a respective minister and the foreign investor. More particularly, special state protection is granted to investments related to:

  • a concession agreement based on the Albanian Concession Law no. 9663, dated 18.12.2006 “On concessions’ as amended;
  • an immovable property, made available to the foreign investor by the Albanian state ;
  • an immovable property over which the foreign investor has rights based on a valid, legal, public document or act issued by a competent state-entity or public authority, where such investment exceeds or is foreseen to exceed the value of EUR 10 million.

Under the special state protection, the foreign investor is substituted in the judiciary process by the Albanian state and any injunction order issued by the court shall be executed over state properties.

The protection may also include the state’s commitment to take over the obligations of the foreign investor sentenced by the court in favor of private third parties. Additionally, after the foreign investor is granted the protection:

  • ??The court cannot rule on the confiscation or suspension of the activities on the related goods (assets) of the foreign investment. If the court has already adopted these measures, it is obliged to follow the request of the State Attorney to replace them with other measures;
  • If the court transfers the foreign investor’s rights over the real property in favor of third private parties, the Council of Ministers may decide, for the public interest, to expropriate the third parties and transfer the real property to the foreign investor.


Special state protection

The major Albanian legislative acts governing copyright and intellectual property are Law on “Industrial Property”, No. 9947, dated 7.7.2008 and the Law on “Copyright and Related rights”, No. 9380, dated 28 April 2005 (amended).

The Law on “Copyright and Related Rights” is applicable to local or foreign persons and legal entities and governs the rights and the obligations of participants in the creative, productive and commercial activities.

The law on “Industrial Property” governs the acquisition of industrial property rights and protects copyrights, patents, trademarks, stamps, marks of origin, industrial designs and geographical indications. The provisions of the law are equally applicable to foreign persons or legal entities that are resident of member countries of:

  • International treaties and conventions where Albania is a member;??
  • Countries which are members of the World Trade Organization; or
  • Countries where the mutual or regional reciprocity principal with Albania is applicable.

Furthermore, Albania has ratified the Marrakesh Agreement and has become signatory to the World Trade Organization’s Trade Related Intellectual Property Rights (TRIPS) agreement.

Concession Law

The law “On Concessions” No. 9663, dated December 18, 2006 (amended), establishes a very competitive procedure in awarding concessions aimed at promoting and facilitating the public-private partnership in delivering public services and implementing infrastructure public works. The law allows for transparent procedures for the implementation of the contracts.

The law applies to a wide range of sectors, including:

a) transport (railway system, rail transport, ports, airports, roads, tunnels, bridges, parking facilities, public transport);

b) generation and distribution of electricity and heating, natural gas distribution;

c) treatment, collection, distribution of water, administration of waste water, irrigation, drainage, cleaning of canals, dams;

d) collection, transfer, processing and administration of solid waste;

e) telecommunication, service of maintenance of IT and data base infrastructure;

f ) education and sport;

g) health;

h) tourism and culture;

i) prison infrastructure;

j) recycling projects;

k) rehabilitation of land and forests;

l) industrial parks, housing, governmental buildings;

m) management contracts or provision of public services including those related to sectors specified above.

The Government, with the approval of the Minister of Economy, authorizes concessions in other sectors besides the ones listed above.

Privatization Opportunities

An on-going privatization process presents opportunities in strategic sectors: mining, energy generation, oil and gas, transport and finance. This has attracted several major foreign investors. The privatization strategy for sectors of primary importance explicitly seeks qualified foreign firms as strategic investors for these key sectors.

Investment Incentives

Albanian law does not establish specific incentives for foreign investors; foreign investors can benefit from the existing incentives available to the domestic companies.

Incentives are regulated by the Law No. 9374, dated 2.04.2005 “On State Aid” (amended) which primarily aims at promoting the implementation of important projects, facilitating the development of certain economic activities and promoting culture and the heritage conservation.

The law “On State Aid” applies to all sectors of manufacturing and services and all measures undertaken by central and local governments, as well as other entities acting on behalf of the State, that confer benefits to particular enterprises, except those acting in the sectors of agriculture and fisheries.

The State Aid may take the form of subsidies or grants; exemptions, reductions, deferrals or tax credit and other fiscal contributions.

The most significant incentives for investors in Albania are:

The law on concessions

In order to promote investments in priority sectors for the economic development of the country, the Government of Albania may offer concessions to local or international investors for the symbolic price of one euro. In these cases the state property – assets, natural resources, economic activities – are provided at a price of 1 Euro;

According to Decision of the Council of Ministers No. 529, dated 08.06.2011 “On the criteria, procedure, and mode of leasing, emphyteusis or other form of contract of state property”, the price of the lease or emphyteusis on state property, can be set at the symbolic price of 1 euro if industrial production activities, of an investment value of or more than 10 million Euro, are to be carried out on a state property, or when it comes to solving social and economic problems in particular areas. The terms and conditions for bidding for these contracts are subject to a Council of Ministers decision to be approved on a case by case basis;

Encouragement of power production

According to the Law No. 8987, dated 24.12.2002 “On creation of facilitating conditions, concerning the establishment of new factories for production of energy”, investors establishing new power generation plants, or rehabilitating existing ones, with an installed power capacity of more than 5 MW using liquid or solid combustibles, are entitled to an exemption on custom duties on imported machinery and equipment used in the capital investment.

They will also be reimbursed for the customs and excise duties paid on the import of liquid or solid combustibles used in the production of electric energy.

The machinery and equipments imported for investment purposes benefit from a deferral of total VAT payment for a 12 month period (Law No. 7928 of 27 April 1995 as amended by Law No. 9856 of 26 December 2007). Taxable person is entitled to full credit of VAT only when the imported machinery and equipment exclusively serve to the taxable activity;

Apparel producers are not subject to VAT for services provided to their contractors provided that products under the scheme are re-exported. This is based on Law 7928, dated April 27, 1995, “On Value Added Tax,” Article 25/6. They are also exempted from VAT on raw materials as long as the finished product is exported;

GREEK LAW DIGEST REPUBLIC OF ALBANIA MINISTRY OF INTEGRATION Union of Chambers of Commerce and Industry of Albania
Nomiki Bibliothiki ALBANIA INVESTMENT DEVELOPMENT AGENCY Foreign Investors Association of Albania



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