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FM AMEMBASSY TIRANA
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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
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RUCPCIM/CIM NTDB WASHDC

UNCLAS SECTION 01 OF 09 TIRANA 000053 
 
SIPDIS 
 
STATE FOR EEB/IFD/OMA 
STATE FOR EUR/SCE 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC
 
 
SUBJECT: INVESTMENT CLIMATE REPORT: PART ONE 
 
TIRANA 00000053  001.6 OF 009 
 
 
¶A. OPENESS TO FOREIGN INVESTMENT 
 
Overview 
-------- 
 
Albania is open to foreign investment and increasing FDI is a top 
priority for the Albanian government. Albania has put in place a 
liberal foreign investment regime, including a 10 percent flat 
corporate and income tax and has taken measures to improve the 
business climate by streamlining business procedures through 
e-government reforms.  These improvements along with NATO membership 
and progress toward EU integration have contributed to the increase 
in investor interest during the last couple of years.  Promising 
sectors for foreign investors and include: energy (including 
alternative energies), mining, transportation, telecommunications, 
and tourism.  The country's geographic position places it at the 
crossroads of western and eastern Europe.  A stable U.S. ally, 
Albania is a member of NATO, the WTO and is in the process of 
applying for candidate status in the European Union. 
 
Although FDI has increased during the last couple of years, it still 
remains among the lowest in the region with a significant part of it 
coming from privatizations. Despite progress in reforms the major 
factors hindering FDI seem to remain the same: widespread 
corruption, weak law enforcement, insufficiently defined property 
rights, lack of developed infrastructure, a sluggish government 
bureaucracy and frequent changes in the legal framework.  Foreign 
companies continue to face significant challenges in entering the 
market, particularly in areas that touch on property rights. Despite 
advancements government bureaucracy and inefficiency greatly hampers 
the ability to hold successful, open and transparent government 
tenders. 
 
Legal Framework 
--------------- 
 
The legal framework to encourage investment is already in place. 
Law 7764 "On Foreign Investment," dated November 2, 1993, was 
designed to create a favorable investment climate for foreign 
investors in the country.  The law offers considerable guarantees to 
all foreigners (either physical persons or legal entities) willing 
to invest in Albania.  Such 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 percent foreign ownership is 
possible. 
-Foreign investment may not be expropriated or nationalized directly 
or indirectly, except for designated special cases, in the interest 
of public use and defined by law. 
-Foreign investors have the right to expatriate all funds and 
contributions in kind of their investments. 
-Most favorable treatment for investors according to international 
agreements is also provided under Albanian law. 
 
There are limited exceptions to this liberal investment regime, most 
of which apply to broadcasting, health services and legal services. 
Restrictions on the purchase of real estate are also notable: 
agricultural land cannot be purchased by foreigners, but may be 
rented for up to 99 years; commercial property may be purchased, but 
only if the proposed investment is worth three times the price of 
the land.  There are no restrictions on the purchase of private 
residential property. 
 
The key piece of legislation that addresses the activities of 
companies and establishes the type of legal structure under which 
companies may operate is the new law of 2008 "On Entrepreneurs and 
Commercial Companies," that replaced the law of 1992. The new law 
brings Albanian legislation in line with the EU's acquis 
communitaire and reflects amendments of other Albanian legislation 
like the Civil Code, the Law on National Business Registration 
Center, Labor Law, Law on Securities and other important laws. The 
most common type of organization for foreign investors is a limited 
liability company. Other forms of business entities allowed under 
the current law are joint stock companies, joint ventures, unlimited 
partnership, limited partnership and sole entrepreneur enterprises. 
 
Administrative and Judicial Overview 
------------------------------------ 
 
The National Business Registration Center, functional since 
September 2007, serves as a one-stop-shop for business registration. 
Starting a business became easier with online publishing of forms 
and procedures, reduction of the registration cost, and the 
consolidation of tax, health insurance, and labor registration into 
a single application. Licensing for businesses has been streamlined 
 
TIRANA 00000053  002.6 OF 009 
 
 
with the opening of the Business Licensing Center in July 2009. As a 
result, many licenses were abolished and a broad simplification of 
licensing procedures has been completed in many sectors including, 
mining, hydrocarbons, public works, health, agriculture and the 
environment. 
 
Albania's tax system does not discriminate against foreign investors 
and no distinction is made between foreign and domestic investors. 
The on-going reform in the sector aims at increasing the efficiency 
of the tax administration and reducing corruption. 
 
Albania has improved public procurement by approving a new law and 
introducing e-procurement. The new law takes into account the 
principles of non-discrimination and equal treatment, transparency, 
and legal protection of interests of bidders on public contracts. 
Direct tendering has been abolished and criteria to identify 
abnormally low bids have been introduced. The Public Procurement 
Advocate was established as an independent institution reporting to 
parliament. However, it has no particular executive powers and its 
functions duplicate the monitoring tasks of the PPA. Decisions on 
appeals are taken by the same unit of the PPA that is responsible 
for interpreting the law and giving advice to contracting 
authorities. Current procedures for handling complaints still do not 
meet recognized international standards. Despite progress, its 
application is hampered by technical problems, the insufficient IT 
capacity of many contracting authorities and corruption in drafting 
tender documents.  Companies continue to experience issues with 
transparency in specifications and communication in competing for 
public tenders.  Overall, the improvements in the public procurement 
legislation are advancing while the proper enforcement of the law is 
still a work in progress. 
 
 
Privatizations & Concessions Overview 
------------------------------------- 
 
The law "On Concessions," No. 9663, dated December 18, 2006, 
established the necessary framework for promoting and facilitating 
the implementation of privately financed concessionary projects 
enhancing transparency, fairness, efficiency and long-term 
sustainability in the development of infrastructure and public 
service projects.  One of its major amendments includes a better 
regulation for unsolicited proposals and of public-private 
partnerships in general.  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; 
c) production and distribution of water, treatment, collection 
distribution and administration of waste water, irrigation, 
drainage, cleaning of canals, dams; 
d) collection, transfer, processing and administration of solid 
waste; 
e) telecommunication; 
f) education and sport; 
g) health; 
h) tourism and culture; 
i) prison infrastructure; 
j) recycling projects, rehabilitation of land and forests, in 
industrial parks, housing,governmental buildings, service of 
maintenance of IT and data base infrastructure; 
k) natural gas distribution; 
l) management contracts or provision of public services including 
those related tosectors specified above. 
 
In order to promote investments in priority sectors the GOA may 
offer concessions to local or international investors for the 
symbolic price of one euro.  The GOA, with the approval of the 
Minister of Economy, authorizes concessions in other sectors besides 
the ones listed above.  The law does not apply to concessions that 
require a separate operating license unless that is included in the 
framework of the concession agreement. 
 
The privatization process of the past 19 years has almost come to an 
end with only a few large privatizations remaining. Privatization 
forms include public auctions and public tenders. 
 
Following some large privatizations which were finalized in 2009, 
the GOA will most likely start the procedures for the privatization 
of 100 percent of the state-owned insurer INSIG (following the 
failure of negotiations with the winner in early 2009 for the sale 
of 61 percent of the shares, EBRD and IFC exercised the put option 
for their 39 percent and GOA became the owner of 100 percent of the 
INSIG shares.) In addition, the GOA has announced its intention to 
fully privatize Albpetrol, the state-owned company that manages and 
administers all the existing gas and oil fields in Albania. The 
 
TIRANA 00000053  003.4 OF 009 
 
 
company also has the right to sign petroleum agreements with 
interested parties for the existing gas and oil fields.  In 
addition, the GOA will also privatize through an auction the 16 
percent of state owned shares of the fixed line monopoly 
Albtelecom. 
 
The GOA does not screen foreign investments and the United States 
enjoys a popular image in Albania.  Both the business community and 
public generally welcome American firms and their products. 
Companies interested in entering the Albanian market should contact 
Albanian Business and Investment Agency Albinvest.  Albinvest 
provides direct assistance to investors, promotes SMEs, Albanian 
exports and FDI. 
 
Albanian Business and Investment Agency (ALBINVEST) 
Blv. "Gjergj Fishta", Pall. Shallvareve, Tirana, Albania 
tel: +355 4 252 886; fax: +355 4 222 341 
e-mail: info@albinvest.gov.al 
[www.albinvest.gov.al] 
 
International Indicators 
------------------------ 
 
 "Doing Business 2010," a report of the World Bank and IFC that 
evaluates the regulations affecting ten areas of everyday business 
and assesses ease and equal opportunity for businesses in 183 
economies.  Albania has continuously moved up in their rankings as 
highlight below.  Albania has also improved its ranking on its MCC 
scorecard and for the first time passed the median score for control 
of corruption for its class. However, there has been a slight 
decrease in Transparency International's corruption index for 
Albania. 
 
In June 2007, Moody's Investors Service assigned Albania its 
first-ever sovereign rating of 'Ba1' for foreign-currency bonds and 
an issuer rating of 'B1' for debt obligations of the government. 
Despite the fact that Albania was rated below its neighbors 
Macedonia and Montenegro, an international sovereign credit rating 
was considered as a recognized benchmark for international financial 
institutions that Albania could be judged by internationally 
accepted standards.  In December 2009, despite the global financial 
crises, Moody maintained its rating of GOA debt at B1 and forecasted 
a stable outlook for the future. 
 
TI Corruption Index:2009=3.20, 2008=3.40, 2007=2.90 
Heritage Economic Freedom:2009=63.70, 2008=63.30, 2007=61.38 
World Bank - Ease of Doing Business(rank):2010=82.00, 2009=86.0, 
2008=135.00, 2007=120.00 
 
(All MCC are ranked as above/below median of zero and are for fiscal 
year noted) 
MCC Government Effectiveness: 2010= 0.08, 2009=0.00, 2008=-0.15, 
2007=-0.33 
MCC Rule of Law: 2010=-0.24, 2009=-0.22, 2008=-0.20,2007=-0.47 
MCC Control of Corruption: 2010=0.09, 2009=-0.12, 2008=-0.30, 
2007=-0.34 
MCC Fiscal Policy: 2010=-4.20, 2009=-3.60, 2008=-3.98, 2007=-4.41 
MCC Trade Policy: 2010=85.80, 2009=75.80, 2008=63.20, 2007=57.40 
MCC Regulatory Quality: 2010=0.60, 2009=0.24, 2008=0.01, 2007=-0.01 
 
MCC Business Start Up: 2010=0.98, 2009=0.97, 2008=0.97, 2007=0.39 
MCC Lands Rights Access: 2010=0.87, 2009=0.81, 2008=0.73, 2007=n/a 
MCC Natural Resource Management: 2010= 97.29, 2009=79.65, 2008=79.43 
2007=n/a 
 
¶B. CONVERSION AND TRANSFER POLICIES 
 
The Bank of Albania (BOA) formulates, adopts and implements the 
foreign exchange policy of Albania and maintains a supervisory role 
in foreign exchange activities in accordance with the Law On the 
Bank of Albania No. 8269 dating 1997 amended in July 2002, the 
Banking Law No. 9662 dating December 206 which regulates the 
operation of commercial banks, and the Regulation on Foreign 
Exchange Activities (FX Regulation). 
 
Currency 
-------- 
 
The Albanian currency, the lek, is freely convertible at banks and 
exchange bureaus. The Albanian foreign investment law guarantees the 
right to transfer and repatriate profits from Albania into freely 
usable currency and at a market-clearing rate. Foreign exchange is 
easily found at a legal market-clearing rate. Most transactions are 
carried out in cash and both the dollar and euro are legally and 
commonly used. The lek follows a floating free regime.  After 
remaining quite stable versus the Euro and appreciating against the 
US dollar, in 2009 it lost ground on both. It has depreciated almost 
 
TIRANA 00000053  004.4 OF 009 
 
 
13% against the Euro from January to the end of 2009 and to a lesser 
degree against the US dollar due to the U.S. currency fluctuations 
in the international market. The average exchange rate for the U.S. 
dollar in 2008 was $1= 90.1 while in 2009 it was $1= 95.1.  For the 
euro the average exchange rate in 2008 was 1=122.5 lek and in 2009 
1=131.4. 
 
Foreign Exchange Regulations 
---------------------------- 
 
As a general rule, the Banking Law does not impose any restrictions 
on the purchase, sale, holding, or transfer of monetary foreign 
exchanges. However, the Law on the BOA authorizes it to temporarily 
restrict the purchase, sale, holding, or transfer of foreign 
exchanges if the BOA so decides, in order to preserve the foreign 
exchange rate or its official reserves. In practice, the BOA has not 
used such measures in an overly restrictive manner and aims to 
achieve European standards for banking systems. In 2009, BOA 
tightened supervision rules over liquidity transfers by domestic 
banks to their foreign mother banks due to the financial global 
crisis, the widespread lack of liquidity in the international 
banking sector and its negative effects over the domestic market. 
 
Under the FX Regulation, foreign exchange transactions are those 
involving the exchange, purchase or sale of foreign currency in cash 
through a personal account or that of a third party, including the 
repayment of a loan in a currency different from the one in which 
the loan was granted or accepted. 
 
Foreign exchange transfers abroad can only be carried out by 
licensed entities (domestic banks, foreign bank branches and foreign 
exchange offices) that are required to report their foreign exchange 
activities to the BOA regularly. These entities are also obliged to 
complete and keep all documentation required for transfers abroad 
 
Although the FX Regulation provides that residents and non-residents 
may transfer capital within and into Albania without any 
restrictions, capital transfers out of the territory of Albania are 
subject to certain documentation requirements. Physical persons must 
submit a request indicating the reasons for the capital transfer, 
the amount of capital transferred outside the territory of Albania, 
and the address to which the capital is to be transferred. Such 
persons must also submit a declaration on the source of the funds to 
be transferred. Legal entities must submit a request setting forth 
the reason for the capital transfer, the source of the funds, the 
amount to be transferred, and the address to which the capital is to 
be transferred; a document from the foreign entity explaining this 
transfer (if such a document exists); the decision by the legal 
entities' relevant decision-making body on carrying out the capital 
transfer; the legal entities' registration decision; and, a 
certificate issued by the tax office certifying that the legal 
entities has settled its tax obligations toward the tax 
authorities. 
 
In May 2008, Parliament passed a new law "On Money Laundering and 
Terror Financing," which lowers the threshold for reporting 
financial transactions to the FIU from the current $20,000 to 
$15,000 for cash transactions (thereby ensuring compliance with EU 
standards). Both Albanian and foreign citizens entering or leaving 
the country must declare assets in excess of Lek 1, 000,000 (approx 
USD 10,000) in hard currency and/or precious items. Failure to 
declare such assets is considered a criminal act and punishable by 
confiscation of the assets and detention. 
 
 
¶C.  EXPROPRIATION AND COMPENSATION 
In the post-communist period, expropriation has been limited to land 
needed for infrastructure projects, such as roads and airports. 
However, compensation has generally been below market value and some 
owners have complained publically about the slow compensation 
process and low payments. 
 
The restitution process of properties confiscated during the 
communist regime started in 1993 and is heading towards its 
completion after multiple postponements.  Critics charge that the 
process and several cases have been mishandled due to corruption and 
the process has been stalled due to lack of political will. Several 
U.S. citizens and residents have long-running disputes with the 
government regarding restitution for property.  Many property cases 
end up in the courts and drag on for years without a final 
decision. 
 
In 2006 the Albanian Parliament amended the July 2004 law on 
property compensation and restitution. The law aimed to give a new 
impetus to the process that was stalled for some time and to resolve 
any competing land ownership claims resulting from communist-era 
expropriation of land.  Since 2006, GOA has twice extended the 
 
TIRANA 00000053  005.4 OF 009 
 
 
deadline for filing property claims. The final deadline was July 
2009 and currently the only way to file a claim is through a court 
decision.  In December 2009, Parliament approved a new law which 
extended the deadline for claims review from the National Agency for 
Restitution and Compensation to December 2011. This should mark the 
end of the restitution process for the entire process but is not 
expected to be fully over to 2014. 
 
The GOA has presented three methods of compensation for 
expropriation claims: 1) restitution, 2) compensation of property 
with similarly valued land in a different location, and 3) cash 
settlement/financial compensation.  In 2007 and 2008, the GOA 
distributed a total of $10 million in financial compensation. In 
2009, the amount increased to $13 million but it is still considered 
inadequate given the large number of compensation requests. The 
Restitution and Compensation Agency has completed the property 
valuation mapping for the entire country in order to move forward 
with the compensation process.  Physical compensation has not 
started yet despite GOA claims that it has identified public assets 
to be used for this purpose. 
 
 
¶D.  DISPUTE SETTLEMENT 
 
The Government of Albania has made efforts to handle investment 
disputes in an appropriate manner but issues continue to hamper 
effective resolution of disputes.  The judicial system is viewed by 
the business community to be slow and inefficient in its handling of 
investment disputes.  Albania has signed major arbitration 
agreements and is legally obligated to enforce international and 
domestic arbitration agreements. 
 
Legal System 
------------ 
 
Albania has a civil law system similar to that of most other 
European countries. The Albanian Constitution provides for a clear 
separation of legislative, executive and judicial branches, thus 
sanctioning the independence of the judiciary. Civil Procedure in 
Albania is governed by the Civil Procedure Code enacted in 1996. The 
civil court system consists of District Courts as the first instance 
courts, appellate courts as the second instance courts, and the 
Supreme Court, as the third instance court. Outside of the court 
system, there is another special court, namely the Constitutional 
Court which, upon request, reviews whether laws or subsidiary 
legislation are in compliance with the Constitution and also 
protects and enforces constitutional rights of citizens and legal 
entities. The District Courts are organized in special sections for 
adjudication; family disputes, commercial disputes and the section 
for administrative disputes. Parties may appeal the judgment of the 
first instance courts within 15 days while the Appellate Court 
judgments might be appealed within 30 days to the Supreme Court. 
 
Albania does not have a commercial code, legislation is encapsulated 
in a series of commercial laws. Relevant laws include; Foreign 
Investment Act, Commercial Companies Law, Bankruptcy Law, 
Environmental Law, Corporate and Municipal Bonds, Transport Law, 
Maritime Law, Secured Transactions Law, Employment Law, Taxation 
Procedures Law, and of specific industries Banking Law, Insurance 
and Reinsurance Law, Concessions Law, Mining Law, Energy Law, Water 
Resources Law, Waste Management Law, Excise Law, Oil and Gas Law, 
Gambling Law, Telecommunications Law, Value Added Law, Sports Law, 
etc 
 
Albanian have enacted and introduced laws and subsidiary legislation 
in respect to property rights and contract rights. The courts and 
the court bailiffs are the authorities empowered by law to (i) issue 
the writ of execution and (ii) enforce in practice the claims of 
parties described in the writ of execution. According to the 
Albanian Civil Procedure Code foreign court judgments are recognized 
and enforced by the Court of Appeal in a summary proceeding. 
 
Bankruptcy 
---------- 
 
Bankruptcy is governed by Law 8901, dated May 23, 2002, "On 
Bankruptcy" amended in May 2008.  It is similar in organization to 
German bankruptcy law.  The Bankruptcy Law, as amended, aims at 
finding a proper solution through the reorganization or liquidation 
of insolvent businesses. It sets out non-discriminatory and 
mandatory rules for the repayment of the obligations by a debtor in 
a bankruptcy procedure. The new insolvency law established time 
limits during insolvency, professional qualifications for insolvency 
administrators, and an Agency of Insolvency Supervision to regulate 
insolvency administrators. A simplified insolvency procedure for 
small businesses was introduced as well.  In reality, the law on the 
bankruptcy has reportedly never been utilized and there have been no 
 
TIRANA 00000053  006.4 OF 009 
 
 
bankruptcy procedures so far. Generally, there exists only a 
voluntary liquidation procedure. 
 
Arbitration 
---------- 
The Government of Albania accepts binding international arbitration 
clauses in specific investment agreements, and in many cases it has 
been a party to arbitration disputes in foreign or international 
arbitration tribunals, as agreed in the investment agreements. 
 
Albanian has signed and ratified the New York Convention.  In order 
to have a settlement recognized a case must be brought before the 
Court of Appeals in order to have the order to enforce directed to 
the court bailiffs. This is necessary because winning parties cannot 
directly communicate with bailiffs to enforce settlements/awards. 
 
 
A new law on commercial arbitration is still in draft form and aims 
at regulating all domestic and international arbitration procedures 
and transposes the provisions of UNCITRAL Model law, which in its 
turn incorporates comprehensively the New York Convention 
provisions. This means that to date international proceedings 
arbitration can be conducted based on the aforementioned ratified 
international conventions. Domestic arbitration continues to be 
governed by the provisions on the Civil Code Procedure which is more 
or less in line with UNCITRAL arbitration. There is a private 
arbitration centre (MEDART), a service center established under a 
World Bank funded legal and judicial reform project in 2001. 
 
An alternative to the dispute settlement via the courts in Albania 
is private arbitration or mediation. Parties can engage in 
arbitration when they have agreed to arbitrate according to a 
Dispute Resolution clause integrated in the original agreement, or 
through a separate Arbitration Agreement or by mutual agreement at 
any time when the dispute is evidenced. Legislation distinguishes 
arbitration of international disputes from arbitration of domestic 
disputes in that the parties involved in an international dispute 
may agree to settle through either a domestic or foreign arbitration 
tribunal. Under the Albanian Constitution, ratified international 
agreements prevail over the domestic legislation. Albania has signed 
and ratified the 1966 Convention "On the Settlement of Investment 
Disputes" between States and Nationals of Other States (Washington 
Convention) as well as the Convention of 1958 "On the Recognition 
and Enforcement of Foreign Arbitral Awards" (New York Convention). 
It has also ratified the 1927 Convention and the European Convention 
on Arbitration (Geneva Convention). 
 
¶E.  Performance Requirements and Incentives 
 
Albanian law generally does not establish performance requirements 
or detailed incentives for foreign investors. One important 
exception concerning performance requirements is the investment 
requirement relating to the purchase of commercial property by 
foreigners.  Such a purchase can be made only if the investor plans 
to improve the value of the property by three times the purchase 
price. 
Legal incentives include: 
 
-  Equal treatment of foreign and domestic investors 
-  Full profit and dividend repatriation (after taxation) 
-  Funds from the liquidation of a company may be repatriated 
-  Bilateral agreements on the promotion and protection of 
reciprocal investments 
-  Double taxation treaties 
 
 
In order to attract FDI, the GOA has applied a set of liberal fiscal 
policies and has developed incentives for investors that include: 
 
-  Reduction of corporate tax from 20 to 10 percent as of January 
2008; 
-  Reduction of the fiscal burden of social security contributions 
payable by employers from percent to 15 percent as of May 2009 
-  Tax exemption of dividends designated for investments. 
-  Importers of machinery and equipment are eligible for VAT 
deferral if the machinery and equipment will solely serve its 
taxable economic activity (Instruction of the Minister of Finances 
No.3, dated 30.01.2006.) 
-  Apparel producers are exempt from VAT on raw materials as long as 
the finished product is exported. This is based on Law 7928, dated 
April 27, 1995, "On Value Added Tax," Article 25/6. 
-  Subsidized leases of state-owned premises: Investors are eligible 
to lease state-owned property such as land or buildings at rents 
below market rates.  In the case of production activities, the level 
of rent reduction will be made according to the level of investment 
made and the number of new jobs created.  This is based on the 
decree of the Council of Ministers, No. 315, dated April 24, 2006 
 
TIRANA 00000053  007.6 OF 009 
 
 
"On the leasing of state enterprises and institution's property." 
-  Incentives are regulated by Law 9374, dated April 21, 2005, "On 
State Aid," for the implementation of important projects, to 
facilitate the development of specific economic activities, and to 
promote national culture and heritage conservation.  "On State Aid" 
applies to all sectors of manufacturing and services and all 
measures undertaken by central and local government, as well as 
other entities acting on behalf of the state, that confer benefits 
to particular enterprises, except those acting in the agriculture 
and fisheries sectors. 
 
Energy Sector Incentives 
------------------------ 
 
Investors establishing new, or rehabilitating existing power 
generation plants with an installed power capacity of more than 5 MW 
using liquid or solid combustibles, are entitled to an exemption of 
custom duties on imported machinery and equipment used in the 
capital investment.  They can 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.  This is based on Law 
8987, dated December 24, 2002, "For the creation of facilitated 
conditions, concerning the establishment of new plants for the 
production of electric energy." 
 
The law on concessions established the necessary framework for 
promoting and facilitating the implementation of privately financed 
concessionary projects enhancing transparency, fairness, efficiency 
and long-term sustainability in the development of infrastructure 
and public service projects. It aims to better regulate unsolicited 
proposals and the public-private partnership in general.  The law 
applies to a wide-range of sectors. 
 
There are not excessively onerous visa, residence, or work permit 
requirements, or any similar requirements inhibiting foreign 
investors' mobility. There are no discriminatory or preferential 
export policies and import policies affecting foreign investors. 
There are no requirements in Albania for foreign investors to 
purchase from local sources or to export a certain percentage of the 
output.  One of the non-tariff barriers which reportedly is one of 
the major concerns of the business community are the reference 
prices (alternately called market p `Q Qermits p may be purchased, but onlyie land.  There are no restrictions 
on the purchase of private residential property.  Both foreign and 
domestic investors continue to experience significant issues in 
resolving property disputes arising from unclear or incomplete 
documentation. 
 
Foreigners can acquire concession rights on natural resources and on 
resources of the common interest, as defined by the law on 
concessions. For some business operations licenses are needed. The 
National Licensing Center (NLC) became functional on July 2009 and 
the center serves as a one stop shop for business licenses. More 
information on the types of licenses and application procedures can 
be found at www.qkl.gov.al 
 
Based on the Law No. 9723, dated 03.05.2007 "National Registration 
Center" and following the opening of the National Registration 
Center for Businesses (NRC) on September 2007, business entities can 
be registered in a single place and in one day for one euro. More 
information on NCR can be found at www.qkr.gov.al .  Both NLC and 
NRC were established with assistance from the Millennium Challenge 
Corporation Albania Threshold Program, as e-government initiatives, 
and save investors valuable time in establishing and carrying out 
business operations, while also increasing transparency and reducing 
 
tunities for corruption. 
 
Business Types 
-------------- 
 
The foreign and domestic investors have numerous options available 
for organizing business operations in Albania. According  to the new 
Law No. 9901, dated April 14, 2008 "On Entrepreneurs and Commercial 
 
TIRANA 00000053  008.4 OF 009 
 
 
Companies" ("Commercial Law") and Law No. 9723, dated 03.05.2007 "On 
National Registration Center", the legal types of business entities 
that can be registered with NRC are as follows: 
 
Entrepreneur 
 
The Sole Entrepreneur trades under his own name and such trade must 
be registered as a business name. Individuals interested in 
establishing this type of business should file an application and an 
identification document with the NRC in the district where the 
business will be conducted. The application form includes the 
identification data, address, type of business and exemplar of the 
sole proprietor's signature. 
 
Unlimited Partnership 
 
All partners are unlimitedly and jointly liable for the debts of the 
entity. Creditors can claim against a partner for the debts of the 
partnership, only if they have failed in their claims against the 
partnership as a whole. In unlimited partnerships, the partners are 
all considered administrators of the partnership, unless the 
contrary is stipulated in the bylaws. Each partner represents the 
partnership with third parties. An unlimited partnership should 
issue annual financial reports. The rights, duties and obligations 
of partners are governed by written bylaws, which should be filed 
with the National Registration Center 
 
Limited Partnership 
 
A limited partnership, which is seldom used in practice, consists of 
one or more general partners (unlimited) with unlimited liability 
and one or more limited partners whose liability is limited to the 
amount of their agreed contributions of the initial capital. A 
limited partner may not take part in the management of the 
partnership even if he is given a proxy, otherwise he incurs 
unlimited liability. The Articles of Incorporation of the limited 
partnership should contain: 
- The total amount or value of the contributions of all partners; 
- The amount or value of the contribution made by each general or 
unlimited partner; 
- The percentage of the participation of all general partners and of 
each limited partner in the partnership's profits and in the 
remaining value after its dissolution. 
- All decisions are made in conformity with the Articles of 
Incorporation. 
 
Limited Liability Company (Shpk) 
 
This is the most common legal form of conducting business in 
Albania. Its members enjoy limited liability and, unless the 
articles of the bylaws provide otherwise, members have the right to 
transfer their shares to other persons, upon decision of three 
fourths of the shareholders. It can be established by one or more 
partners, legal or natural persons, who are responsible for losses 
only to the extent of their contribution to the capital of the 
company. The minimum required capital for this form of company is 
approximately $1 USD. The capital is divided into shares and there 
are no mandatory requirements for their nominal value. The 
contributions to capital can be in cash or in any asset, tangible or 
intangible. The law does not permit contributions in services. 
Administrators nominated through the General Assembly of the 
shareholders manage the limited liability company. Extraordinary 
decisions, increases or decreases in the share capital, mergers and 
acquisitions are to be approved by at least three quarters of the 
capital shareholders. The law requires annual financial statements 
to be prepared by the company. The transformation of this form of 
business into unlimited and limited partnership is subject to 
decision of general assembly of the shareholders that takes valid 
decisions upon majority vote of 3/4 of shareholders and after 
approval of financial statements for the last two years. 
 
Joint Stock Company 
 
Its capital is divided into shares, with shareholders held 
responsible for losses only to the extent of their contribution to 
the capital. The minimum initial capital required is ALL 2 million 
for companies with no public offering, and ALL 10 million for public 
offerings. The Commercial Law provides for the adoption by joint 
stock companies of a flexible administration system. This type of 
companies may choose to adopt either the "monistic" system (with a 
board of directors/administrators conducting both management and 
supervising functions) or the "dualistic" system (with board of 
directors/administrators and supervisory board conducting 
supervising functions). The supervisory council exercises control 
over the board of director's performance. This council should have 
not less than 3 and not more than 21 members. The capital is fully 
subscribed when the partners have promised to bring assets to the 
 
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company in cash or in kind for an amount equaling the capital. In 
the moment of the subscription, at least one quarter of the nominal 
value of the shares representing contributions in cash must be paid 
in. Payment of the remaining value shall be made in installments 
upon the decision of the management bodies of the company. Shares of 
contributions in kind must be fully paid in at the moment of 
subscribing. The law does not permit contributions in services. The 
shares of a joint stock company may be ordinary or privileged 
 
Branches and Representative Offices 
 
Under the Commercial Law, a foreign investor can also operate in 
Albania through a branch or representative office. The branch or 
representative office should be registered in the National 
Registration Center and should have a legal representative empowered 
by the head office to administer the office. For tax purposes, the 
branch is treated in the same manner as an Albanian entity. 
 
Joint Ventures 
 
Albanian legislation recognizes the joint ventures under the term of 
simple company, since it is based on an agreement only and no legal 
personality is granted to this partnership. Joint ventures are 
foreseen by the provisions of the Civil Code (articles 1074 -1112) 
and may be concluded by two or more persons, whether individuals or 
legal entities, foreign or national, agreeing to engage in an 
economic activity in order to share profits deriving there from. 
There is no minimum capital requirement. Partners are liable to 
perform the contributions provided in the contract. Unless otherwise 
agreed, every partner may take part in the management of the 
partnership and has full power to carry out any acts which are 
within the scope of the partnership. Every partner is entitled to 
receive its share of the profits after the accounts have been 
approved, unless otherwise agreed. Partners are jointly responsible 
for fulfilling the obligations imposed upon them by law and by the 
partnership agreement; unless they prove they were not at fault. 
 
PLEASE SEE FOLLOW-ON CABLE FOR PART 2 
 
 
WITHERS