Clarifying the legal framework can drive investment in Albania
FIAA: How would you describe the investment climate in Albania for foreign investors?
Mr. Pedrazzi: A lot of improvements have been made in the past and the situation is evolving positively. Nevertheless, there is still a lot to do in order to make Albania more competitive and able to attract more foreign investment that is crucial for the country. The common point of interest both for FIAA members and for the institutions is clear: We have to work together to make further improvements.
What are the top priorities for improvement?
One competitive advantage in Albania is the low cost of labour compared to other countries, especially as far as manufacturing and services are concerned. Albania should put in place the conditions that enable foreign investors to further develop manufacturing and services. We need a clear and stable legal framework and an environment that ensures the fair application of the law. This is the point on which we have to work together with the institutions. The rule of law is key.
Second, foreign investors need to have a level playing field with local companies. Foreign investors are used to working with high standards but here in the local market they very often have to compete with informality. Many developing countries are in the same situation, but it is something that we have to improve as soon as possible. Through regulatory and legal authority, we have to create a level playing field.
In your position as CEO of Intesa Sanpaolo Bank Albania, what are the challenges that you are facing in the operating environment?
The role of the banking system is to finance the real economy. But demand for loans in Albania is low because businesses – both local and foreign – do not yet have enough confidence in the future. We see a lot of interest in energy projects, for example, but regulatory uncertainty is stopping investment. If FIAA, banks and the institutions are together able to make the regulatory framework clear, several million euros of investment can quickly be attracted in the energy sector. This example can be extended to other sectors.
What are Intesa Sanpaolo’s main opportunities in Albania?
Banking is getting more and more difficult because of stricter regulation. Nevertheless we now have a perfect positive storm: Low energy prices, liquidity, and very low interest rates. This is an extraordinary opportunity for Albania. The key point for banks is to be unafraid of financing good projects and to select the best investments. To preserve loan quality, we need good monitoring tools and processes, and good people.
And what is the availability of human capital in Albania?
Human capital is an advantage that Albania has over neighbouring countries. Here in Albania, young people are eager to grow, they have a good level of education, and many of them with experience abroad, including in the Anglo-Saxon world. That is something that we can leverage a lot. Also, I think women can add value, not because they are better, but because their way of thinking is complimentary. In Intesa Sanpaolo, the majority of our managers are women.
How do you foresee the development of the Albanian economy in 2015?
The economy of Albania is closely linked with the economies of neighbouring countries, especially Italy and Greece. If their economies pick up, Albania must catch the moment. Albania has manufacturing, and services for international operators are also quite important, including call centres.
In the next few years, energy can be a source of growth, though the construction of new power plants requires a couple of years. And I truly believe in agriculture. Albania must increase investments in agriculture, raising the level of technology to compete with more advanced countries. And tourism is another unbelievable opportunity.