BUSINESS ENVIRONMENT SURVEY FINDINGS
ALBANIA 2021-2022
Judicial System, Transparency, Corruption, Bureaucracy & Unfair Competition remain the main obstacles of the Doing Business in Albania
July 13th: Today, FIAA presented the findings of the Business Environment Survey (BES 2021-2022), which was conducted during spring 2022 within FIAA members and investors network in the country.
Main respondents of this Survey were important foreign businesses in the country in the sectors of financial services, energy and oil, telecommunications, consulting, trade etc. The Survey findings were presented at the presence of the Minister of Finance and Economy, Mrs. Delina Ibrahimaj, along with other distinguished guests and diplomatic representatives in Albania.
The findings presented today were made in comparison with the Previous Year Survey along with new elements brought in this year. In overall, findings show improvement in important areas such as Order and Security level provided in Albania, Roads Infrastructure and Energy Supply, Relations with the various institutions like Customs, Central Government, as well as further improvements in the Tax E-system along with the VAT reimbursement process.
However, the findings clearly show that still there is a lot of work to be done on improving the doing business environment in Albania. There are several critical elements which are perceived as not favorable by business. Issues like Judicial System, Transparency, Corruption, Bureaucracy & Unfair Competition, Registration of Properties Titles remain the main obstacles of the Doing Business in Albania. In addition, the business has responded that other obstacles in the doing business environment are also the Frequency of Changes in the Tax Legislation and the Level of the Expertise by the Public Officials. A more elaborated element was the situation of the Labor Market in Albania, showing that Business is struggling with shortage for qualified/skilled workforce. This is in line also with other reports in the country and with the everyday efforts encountered by business.
In his word, Mr Alessandro D’Oria, FIAA’s newly elected President addressed to the audience the importance of these Surveys for business with interaction and continuous cooperation with the Ministry of Finance and Economy.
He further stressed: “We have to recognize that the Government is pushing and is committed to improve the Doing Business Environment. At the same time, we have to admit that the challenges in front of us are many and very complex: the war, the pandemic that is not totally finished, the inflation, the energy prices and the difficulties to supply specific goods”.
Following the presentation of the Survey Findings, Minister Ibrahimaj acknowledged FIAA for this important survey which shows perceptions from the business towards the Government’s work and reforms in process and expressed that further improvements in the business climate remain priority of her work. She highlighted the importance of continuous communication with FIAA’s business network, with particular reference to the recommendations provided by FIAA in the White Book. In response of the findings, the Minister made a full panorama of the different reforms undertaken towards the improvement of the business climate considering them as encouraging and as a good tool to guide the government to continue further with improvements. She further added that the Justice Reform implementation will remain a key objective for the government, along with more reforms, fiscal incentives, qualified labor force and further improvement in the legal framework ensuring also a continuous cooperation with the business organizations.
Below there is a more elaborated version of the Survey findings along with some comparisons with the previous year.
When the businesses were asked to rate their perception on the Overall Business Climate from 0 to 100, where zero is unfavorable and 100 very favorable, the outcome on the situation for the 2021 was 40 points with just 1-point increase from 39 that was rated in 2019. However, the expectations for the current year seem to be a little more positive, but still falling below 50.
Overall Business Climate perception during 2021 which was rated with 40 points stated as unfavorable, refers to the most concerning obstacles like, Judicial System, Monopoly & Unfair Competition, Corruption, Government Bureaucracy and Informal Economy.
Another important topic in the Survey is the Situation of Labor Market in Albania, scoring Employee Turnover Situation with 58 and Expectation with 52. Underlined as a major problem in Albania, is access to local skilled or qualified people/ younger employees.
- Judicial System is still a major issue, with the Administrative Courts Performance Impact on Business scoring 39 same as in 2019 and Civil Courts Performance Impact with a minor increase, scoring 42 compared to 39 in 2019.
- Albanian Infrastructure, Energy Supply and Security present some slight increase compared to 2019 regarding the Albanian Road Infrastructure Impact to Business and Outages of Albanian Power Supply. The Impact of the Energy Market Liberalization scores a positively expectation with 57, but Legal Certainty in Registering Immovable Properties continues to be considered a problem scoring with 45.
- Tax System shows some positive results with the new e-tax System Functionality, VAT Reimbursement, Communication and Inter connectivity with Government Platforms, Self-care Platform and Tax Administration Responsiveness. In the negative perception are Technical Expertise of Tax Inspectors, Clarity of Rulings and Interpretations by Tax Authorities and in top of it the Frequency of Changes of the Tax Legislation and Practice and Impact to Business scoring 36.
- Relationship with Albanian Institutions has a slight progress compared with 2019, in particular for: Relations with Customs Administration and Relations with Central and Local Government. But continuing to score in the negative are: The Level of Expertise of Officials in Central /Local Units and Performing Capacities of Local/Central Institutions, Public Procurement System, Relation with Cadastre and Procedures for Licensing and Permits.
- Pro-Business Strategies and Incentives score 45 for Evaluation of the Investment-Stimulating Policies and Incentives related to Business; 57 for Expectations over the Newly Launched Foreign Investment Strategy 2021-2027; 57 for Level of Information and Access to Foreign Investment Strategy, and 57 for the Level of Information on New Business Opportunities, being all on the neutral zone scoring.
- Last topic of the Survey was the perception on Business Performance under COVID-19. Business estimate that Government Measures and Support have not been satisfactory scoring 48, the Operational Activities scoring 48, but with a more positive rate Business Performance during post pandemic scoring 53.
The event concluded with open discussions and questions to the Minister Ibrahimaj.