PRESS RELEASE
BUSINESS ENVIRONMENT IN ALBANIA
SURVEY FINDINGS 2023
Tirana, October 25th, 2023: Today, FIAA presented findings of the Business Environment in Albania Survey 2023 , which was conducted during August – September 2023 within FIAA members and foreign investors network in the country.
Main respondents of this Survey were important foreign businesses in Albania in the sectors of information and communication technologies, heavy industries & mining, energy and environment, financial services, trade, logistics, tourism, consulting services, etc.
The Survey findings were presented at the presence of the Minister of Finance and Economy, Mr. Ervin Mete and Minister of State for Entrepreneurship and Business Climate Mrs. Delina Ibrahimaj, along with other distinguished guests and diplomatic representatives in Albania.
The 2023 Survey findings on doing business in Albania were compared with the previous year survey’s findings. This year, the overall business climate perception is showing positive changes compared to the evaluation of the business climate during 2022. Specifically:
Foreign investors evaluate the current situation of doing business in Albania, with 46 out of 100 points, with an increase of 6 points when compared to 2022 (40 points), failing however to reach the mid line in the scale of favorability. There is however optimism when looking at their expectations for doing business in the country, scoring 52 points out of 100, with an increase again of 8 points, compared to 2022 (44 points).
From a global as well as national macroeconomic situation, foreign investors consider “the current depreciation of Euro and its impact to their business”, as well as “the impact of the current high inflation rate” as the two more severe issues with an impact in their business.
When looking at the domestic factors, there is a general improvement for all evaluated factors compared to the 2022 survey. The “Order and Security level necessary to their business” is the better performing dimension with 63 points out of a 100, in a scale where 100 points is the optimal level of performance (not a problem) and 0 points is the negative limit (severe problem). The impact of the “Albanian political climate” in foreign investor business operations in the country has also improved by 14 points, scoring 56 out of 100, in contrast to 42 during 2022.
Even the more problematic dimensions such as the “Transparency level in the governmental procedures”, “bureaucracy level faced by the business”, level of “Application of Laws and Regulations to the business” as well as the “Albanian Judicial System and its impact to the business” see an increase of at least 5 and up to 10 points, compared to the 2022 survey, however, still below the mid line of performance.
The energy supply and security evaluated dimensions also surpass the mid line of performance, with foreign investors evaluating the overall energy supply and impact to their business at 62 points out of 100.
Improvements are also noticed while assessing the foreign investor input over the tax system in the country. The “Responsiveness/functionality of the e-tax system and its impact in the business” emerges as the better performing dimension with 68 points out of 100, followed within similar lines (65 points in contrast to 54 in 2022) by the “Responsiveness / functionality of the Central Invoicing Platform. Foreign investors also positively evaluate the “VAT Reimbursement process that was applied to their business last year” (65 points out of 100).
It is noteworthy to mention that the only dimension scoring below the mid line of performance, is the “Frequency of changes of the tax legislation and practice and its impact to the business”, with 40 points out of 100, with a slight improvement from 2022 (36 points). On the other hand, a significant improvement is noticed in the “Relevance and clarity of rulings/interpretations issued by the tax authorities, which only “barely” surpassed the mid line of performance with 51 points, however with an improvement of 12 points, compared to 2022 (39 points).
While assessing foreign investors relations with Albanian Institutions, a pro-active climate is noticed in this regard. The relationships with institutions such as the Customs Administration, Local Government, Public Procurement System, scoring over 70 points in the scale of performance, can be especially highlighted in this regard.
The capacities of institutions, as well as the level of expertise of public officials, even though just barely over the mid line of performance with 52 points, has seen an improvement of 8 points compared to 2022 (44 points out of 100).
The situation regarding the Labor Market in Albania is the least performing based on foreign investors input, evaluating their access to local skilled/qualified labor and its impact to their business at 31 points out of 100 in the scale of performance, with a decrease of 7 points, compared to 2022 (38 points). Similarly, the qualification levels of the younger employees have also seen a slight decrease, scoring 41 points out of 100, compared to 43 points in 2022.
And finally, the situation regarding pro-business strategies and incentives feels “stale” at best, with foreign investors evaluating the impact of Albanian economic reforms and policies towards foreign business at 47 points (slight increase of 4 points compared to 2022), similarly to the evaluation of investment stimulating policies and incentives, again at 47 points (slight decrease of 2 points, compared to 2022).
Foreign Investors Association of Albania
Press Office