Foreign Investors Association of Albania

Invest in ALBANIAInvest in ALBANIA

The Time is Now!The Time is Now!

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Where we are locatedWhere we are locatedLocation:South East Europe

Area: 28,000 sq.m

Population: 3.2 million

Avg Age : 31 yrs

Language: Albanian

Climate: Mediterranean &

Continental Temp Avg 6.80C-23.90C, Rainfall Annual Avg 1371.6mm

Location:South East Europe

Area: 28,000 sq.m

Population: 3.2 million

Avg Age : 31 yrs

Language: Albanian

Climate: Mediterranean &

Continental Temp Avg 6.80C-23.90C, Rainfall Annual Avg 1371.6mm

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Increasing StabilityIncreasing Stability

Memberships….

World Trade Organization (WTO) United Nations (UN)International Monetary Fund (IMF)European Bank for Reconstruction and Development (EBRD)Stabilization Association Agreement signed on 12 June 2006 (SAA)North Atlantic Treaty Organization membership to be signed (NATO) in October 2007

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Macroeconomic at a GlanceMacroeconomic at a Glance

Economic growth 6%

GDP per capita 2.615 USD

Inflation 2.2%

Budget deficit 4.9% of GDP

Stable currency 124 lek = 1 Euro, 95 lek = 1 USD (2007)

The unemployment at the end of 2006 reached 13.9%

High export growth rate, with the domination of imports in Foreign Trade (75 % of total volume of Export-Import)

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

InfrastructureInfrastructure

Main Government Priorities:Pan European corridor VIIIDurrës-Kukës-Morinë road linked to corridor VII will be ended 2009North-Central road (Hani Hotit-Shkodër-Gjirokastër-Kakavijë)

Source: Ministry of Public Affairs, Transport and Telecommunication, 2006Map of Corridor VIII Varna (Bulgaria) – Durrës (Albania)

Albania a natural crossroad for major transit corridors in Europe

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Market AccessMarket Access

Albania is a gateway of the SEE Free Trade Area- duty free access to 55 mil. PeopleFlight time from the

Albanian capital, Tirana to major European cities approximately within 2 hoursPorts - The main ports are Durresi, Vlora, Shengjini and Saranda.

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

A large majority of trade flows are A large majority of trade flows are still geared to the EU countriesstill geared to the EU countries

Exports to EU in 2004 as % of total

Albania* 89.6

BiH 55

Bulgaria 58.2

Croatia 64.6

Macedonia 56.4

Moldova 30.1

Montenegro 48.4

Romania 82.6

Serbia 54.5

SEE AVERAGE 70

Imports from EU in 2004 as % of total

Albania* 68.7

BiH 54

Bulgaria 54.1

Croatia 69.5

Macedonia 47.2

Moldova 32.8

Montenegro 43.7

Romania 76.4

Serbia 50.2

SEE AVERAGE 64

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Financial SectorFinancial Sector

15 Foreign BanksNational Commercial Bank (BKT), ProCredit Bank (Germany), Raiffeisen Bank, American Bank of Albania, Emporiki Bank, Credins, Banca Italiana di Sviluppo, Alpha Bank, International Commercial Bank, National Bank of Greece, First Investment Bank, Banka Popullore etc

International Financial Institutions which co-finance private and public sector projects: EBRD, IFC, WB…

Investment Protection: MIGA- World Bank, OPIC, Exim Bank, OECD, SACE, etc. 33

bilateral agreement

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Valuable Human ResourcesValuable Human Resources

66 66 0

82 93 25

77 83 60

75 83 20

76 85 30

77 79 47

72 81 27

0% 20% 40% 60% 80% 100%

Administration

Senior management

Legal

Finance

Sales marketing

Customer service

Technology

Speaking Foreign Languages

Italian English Other

Source: UNDP in Albania

55%74% 74%

0%

100%

2002- 03 2003- 04 2004- 05

Number of Students E nter i ng the U ni ver s i ty

Multilingual Work Force

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Liberal FDI Legal FrameworkLiberal FDI Legal Framework

No limitation on the percentage share of foreign participation in companies - 100 percent foreign ownership is possibleNo prior government authorization is needed and no sector is closed to foreign investment. Foreign investment may not be expropriated or nationalized directly or indirectly, Albania's tax system also does not discriminate against foreign investorsForeign investors have the right to expatriate all funds and contribution in kind of investments. Most favorable treatment according to international agreements is also provided

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Tax RegimeTax Regime

Government Reforms

Tax on Profits (from 1st January 2008) 10 %

Tax on Personal Revenues (from Sept 1st 2007)

From 0% to 10%

V.A.T 20%

Dividends, Interest, Royalties from patents

10%

Social and Health Insurance

-Employee

-Employer

31.2 %

20%

11.2%

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

7090.1

47.5 45 41.2

143

207.3

135

178

341

245

400

0

50

100

150

200

250

300

350

400

450

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

*

2006

**

FDI Track RecordFDI Track RecordFDI by sectors of economy

38%

8%

35%

5%

4%

10%

Manufacturing industry

Construction

Wholesale and retail

Transportation, storage. and communication

Real estate, renting ICT etc

Other

51.40%

25.90%

3.40%

2.40%

2.40%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Italy

Greece

Turkey

USA

China

FDI by Country of Origin (2005)FDI Track Record

(1995-2006) by mln USD

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Improving the business Improving the business environment - new opportunitiesenvironment - new opportunitiesRemove of Administrative Barriers

Government Achievement, policies etc

ConcessionHydropower Plants, etc

Draft-Law “On Incentives”

Initiative “Albania 1 Euro”

Industrial Parks and Free Zones

Ongoing implementation of the FTAEU & Balkans

SA Trade Liberalisation – late October- November 2006

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Why Foreign companies should Why Foreign companies should invest in Albaniainvest in Albania

Political Stability and economic growthHistorical and cultural linkagesGeographical proximityEasy access and crossroad to EU marketsExtensive language skills Available skilled labour forceTotal labour costs lower than comparable countriesPre accession AgreementAdaptable and flexible workforceLower costs of transport

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Investment opportunitiesInvestment opportunities

Investment Opportunities in Specific Sectors– Tourism and Infrastructure– Mining (chromium) and oil extraction: export oriented – Utilities: hydropower, electricity and water service sectors are

still in the process of privatization – Manufacturing: textile and garments, shoes and leather, agro-

processing – Financial services & Business support services : customer

contact centers, expert solution centers, data entry– Agriculture

Privatization

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Mineral resources as chrome, copper, nickel and coal Limestone estimated to 130 million tons of marble and stone reservesOil and Gas estimated at more than 400 mln tons. Since 1928 extracted and produced 40 mln tonAlbania’s natural resources include its Mediterranean climate and location and unspoiled

beaches, mountains, lakes, rivers, history, culture

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Tourism SectorTourism Sector

Coastline 450 kmGDP Contribution 4.7 % (2005)Albanian Tourism Industry generated around $1.9 billion in 2005, will grow to around $3.5 billion by 2015 *2006-2015 travel and tourism demand expected to grow in by 15.9 % per annum (in real terms) *Governments New Strategy for Tourism Development

Source: * World Travel and Tourism Council

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

The textile and garment sectorThe textile and garment sector

Lowest labor costs in Balkans and Eastern EuropeMore than 100 foreign companies Extensive tradition of garment production Qualified and adaptable labour force Application of modern technologiesBrand leaders The most important share in Albanian exports

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Service SectorService Sector

Service sector comprise 45.2%of GDPThe competitive advantages– Multi-lingual workforce (Italian 70%, English)

• Availability of skilled staff (65% of the population 15 and 65 years of age)

– Lowest labour costs in Europe• Compared to Eastern Europe, investors can save up to two-thirds of wage

costs and services wages in Albania are typically around one-fifth the level of West European countries.

– High quality office space– Advanced ICT infrastructure

• Multiple ISPs are innovative and offer fast DSL connections. GSM service full coverage

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Footwear and Leather Footwear and Leather

Fastest growth in exports worldwide 6th largest exporter of shoe uppers worldwideLowest labour costs in the Balkans and Eastern EuropeOver 20,000 skilled workers 100 shoe and leather companies Turnaround your design and export in just 24 hours55 million costumer market, next door

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

InfrastructureInfrastructure

Ministry of Transport and Telecommunication released:

-List of tenders for construction of roads, bridges across the country

Open to international tenders are roads :

Durres –FYROM - Bulgaria which will link:

- North to major European corridors

- South to Istanbul

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Privatization Opportunities in Privatization Opportunities in AlbaniaAlbania

In EnergyThe privatization of the power distribution sector at the Albanian Electro-energetic Corporate (KESH s. a.), and generation sector

In HydrocarbonsThe privatization of ARMO sh.a. through concession form The restructuring and privatization of Albpetrol s. a The privatization of the Oil Mechanic Factory s. a in Kuçove

In Water Supply and TransportationMother Theresa International Airport is given in concession for a 20 years period to the Consortium “Airport Partners”Durres Port cereal and grain terminal concession; Trainferry Terminal ConcessionWater supply systems in Berat and Kuçove

InsuranceINSIG – the only one state owned insurance company in the market. It operates in Albania, Kosovo and in Macedonia for the non-life insurance. 39% of shares owned by IFC and EBRD

F o r e i g n I n v e s t o r s A s s o c i a t i o n o f A l b a n i a

Welcome to Albania