Keep Us Strong WikiLeaks logo

Currently released so far... 143912 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
AORC AS AF AM AJ ASEC AU AMGT APER ACOA ASEAN AG AFFAIRS AR AFIN ABUD AO AEMR ADANA AMED AADP AINF ARF ADB ACS AE AID AL AC AGR ABLD AMCHAMS AECL AINT AND ASIG AUC APECO AFGHANISTAN AY ARABL ACAO ANET AFSN AZ AFLU ALOW ASSK AFSI ACABQ AMB APEC AIDS AA ATRN AMTC AVIATION AESC ASSEMBLY ADPM ASECKFRDCVISKIRFPHUMSMIGEG AGOA ASUP AFPREL ARNOLD ADCO AN ACOTA AODE AROC AMCHAM AT ACKM ASCH AORCUNGA AVIANFLU AVIAN AIT ASECPHUM ATRA AGENDA AIN AFINM APCS AGENGA ABDALLAH ALOWAR AFL AMBASSADOR ARSO AGMT ASPA AOREC AGAO ARR AOMS ASC ALIREZA AORD AORG ASECVE ABER ARABBL ADM AMER ALVAREZ AORCO ARM APERTH AINR AGRI ALZUGUREN ANGEL ACDA AEMED ARC AMGMT AEMRASECCASCKFLOMARRPRELPINRAMGTJMXL ASECAFINGMGRIZOREPTU ABMC AIAG ALJAZEERA ASR ASECARP ALAMI APRM ASECM AMPR AEGR AUSTRALIAGROUP ASE AMGTHA ARNOLDFREDERICK AIDAC AOPC ANTITERRORISM ASEG AMIA ASEX AEMRBC AFOR ABT AMERICA AGENCIES AGS ADRC ASJA AEAID ANARCHISTS AME AEC ALNEA AMGE AMEDCASCKFLO AK ANTONIO ASO AFINIZ ASEDC AOWC ACCOUNT ACTION AMG AFPK AOCR AMEDI AGIT ASOC ACOAAMGT AMLB AZE AORCYM AORL AGRICULTURE ACEC AGUILAR ASCC AFSA ASES ADIP ASED ASCE ASFC ASECTH AFGHAN ANTXON APRC AFAF AFARI ASECEFINKCRMKPAOPTERKHLSAEMRNS AX ALAB ASECAF ASA ASECAFIN ASIC AFZAL AMGTATK ALBE AMT AORCEUNPREFPRELSMIGBN AGUIRRE AAA ABLG ARCH AGRIC AIHRC ADEL AMEX ALI AQ ATFN AORCD ARAS AINFCY AFDB ACBAQ AFDIN AOPR AREP ALEXANDER ALANAZI ABDULRAHMEN ABDULHADI ATRD AEIR AOIC ABLDG AFR ASEK AER ALOUNI AMCT AVERY ASECCASC ARG APR AMAT AEMRS AFU ATPDEA ALL ASECE ANDREW
EAIR ECON ETRD EAGR EAID EFIN ETTC ENRG EMIN ECPS EG EPET EINV ELAB EU ECONOMICS EC EZ EUN EN ECIN EWWT EXTERNAL ENIV ES ESA ELN EFIS EIND EPA ELTN EXIM ET EINT EI ER EAIDAF ETRO ETRDECONWTOCS ECTRD EUR ECOWAS ECUN EBRD ECONOMIC ENGR ECONOMY EFND ELECTIONS EPECO EUMEM ETMIN EXBS EAIRECONRP ERTD EAP ERGR EUREM EFI EIB ENGY ELNTECON EAIDXMXAXBXFFR ECOSOC EEB EINF ETRN ENGRD ESTH ENRC EXPORT EK ENRGMO ECO EGAD EXIMOPIC ETRDPGOV EURM ETRA ENERG ECLAC EINO ENVIRONMENT EFIC ECIP ETRDAORC ENRD EMED EIAR ECPN ELAP ETCC EAC ENEG ESCAP EWWC ELTD ELA EIVN ELF ETR EFTA EMAIL EL EMS EID ELNT ECPSN ERIN ETT EETC ELAN ECHEVARRIA EPWR EVIN ENVR ENRGJM ELBR EUC EARG EAPC EICN EEC EREL EAIS ELBA EPETUN EWWY ETRDGK EV EDU EFN EVN EAIDETRD ENRGTRGYETRDBEXPBTIOSZ ETEX ESCI EAIDHO EENV ETRC ESOC EINDQTRD EINVA EFLU EGEN ECE EAGRBN EON EFINECONCS EIAD ECPC ENV ETDR EAGER ETRDKIPR EWT EDEV ECCP ECCT EARI EINVECON ED ETRDEC EMINETRD EADM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID ETAD ECOM ECONETRDEAGRJA EMINECINECONSENVTBIONS ESSO ETRG ELAM ECA EENG EITC ENG ERA EPSC ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EIPR ELABPGOVBN EURFOR ETRAD EUE EISNLN ECONETRDBESPAR ELAINE EGOVSY EAUD EAGRECONEINVPGOVBN EINVETRD EPIN ECONENRG EDRC ESENV EB ENER ELTNSNAR EURN ECONPGOVBN ETTF ENVT EPIT ESOCI EFINOECD ERD EDUC EUM ETEL EUEAID ENRGY ETD EAGRE EAR EAIDMG EE EET ETER ERICKSON EIAID EX EAG EBEXP ESTN EAIDAORC EING EGOV EEOC EAGRRP EVENTS ENRGKNNPMNUCPARMPRELNPTIAEAJMXL ETRDEMIN EPETEIND EAIDRW ENVI ETRDEINVECINPGOVCS EPEC EDUARDO EGAR EPCS EPRT EAIDPHUMPRELUG EPTED ETRB EPETPGOV ECONQH EAIDS EFINECONEAIDUNGAGM EAIDAR EAGRBTIOBEXPETRDBN ESF EINR ELABPHUMSMIGKCRMBN EIDN ETRK ESTRADA EXEC EAIO EGHG ECN EDA ECOS EPREL EINVKSCA ENNP ELABV ETA EWWTPRELPGOVMASSMARRBN EUCOM EAIDASEC ENR END EP ERNG ESPS EITI EINTECPS EAVI ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID ELTRN EADI ELDIN ELND ECRM EINVEFIN EAOD EFINTS EINDIR ENRGKNNP ETRDEIQ ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD EAIT ECONEINVEFINPGOVIZ EWWI ENERGY ELB EINDETRD EMI ECONEAIR ECONEFIN EHUM EFNI EOXC EISNAR ETRDEINVTINTCS EIN EFIM EMW ETIO ETRDGR EMN EXO EATO EWTR ELIN EAGREAIDPGOVPRELBN EINVETC ETTD EIQ ECONCS EPPD ESS EUEAGR ENRGIZ EISL EUNJ EIDE ENRGSD ELAD ESPINOSA ELEC EAIG ESLCO ENTG ETRDECD EINVECONSENVCSJA EEPET EUNCH ECINECONCS
KPKO KIPR KWBG KPAL KDEM KTFN KNNP KGIC KTIA KCRM KDRG KWMN KJUS KIDE KSUM KTIP KFRD KMCA KMDR KCIP KTDB KPAO KPWR KOMC KU KIRF KCOR KHLS KISL KSCA KGHG KS KSTH KSEP KE KPAI KWAC KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KPRP KVPR KAWC KUNR KZ KPLS KN KSTC KMFO KID KNAR KCFE KRIM KFLO KCSA KG KFSC KSCI KFLU KMIG KRVC KV KVRP KMPI KNEI KAPO KOLY KGIT KSAF KIRC KNSD KBIO KHIV KHDP KBTR KHUM KSAC KACT KRAD KPRV KTEX KPIR KDMR KMPF KPFO KICA KWMM KICC KR KCOM KAID KINR KBCT KOCI KCRS KTER KSPR KDP KFIN KCMR KMOC KUWAIT KIPRZ KSEO KLIG KWIR KISM KLEG KTBD KCUM KMSG KMWN KREL KPREL KAWK KIMT KCSY KESS KWPA KNPT KTBT KCROM KPOW KFTN KPKP KICR KGHA KOMS KJUST KREC KOC KFPC KGLB KMRS KTFIN KCRCM KWNM KHGH KRFD KY KGCC KFEM KVIR KRCM KEMR KIIP KPOA KREF KJRE KRKO KOGL KSCS KGOV KCRIM KEM KCUL KRIF KCEM KITA KCRN KCIS KSEAO KWMEN KEANE KNNC KNAP KEDEM KNEP KHPD KPSC KIRP KUNC KALM KCCP KDEN KSEC KAYLA KIMMITT KO KNUC KSIA KLFU KLAB KTDD KIRCOEXC KECF KIPRETRDKCRM KNDP KIRCHOFF KJAN KFRDSOCIRO KWMNSMIG KEAI KKPO KPOL KRD KWMNPREL KATRINA KBWG KW KPPD KTIAEUN KDHS KRV KBTS KWCI KICT KPALAOIS KPMI KWN KTDM KWM KLHS KLBO KDEMK KT KIDS KWWW KLIP KPRM KSKN KTTB KTRD KNPP KOR KGKG KNN KTIAIC KSRE KDRL KVCORR KDEMGT KOMO KSTCC KMAC KSOC KMCC KCHG KSEPCVIS KGIV KPO KSEI KSTCPL KSI KRMS KFLOA KIND KPPAO KCM KRFR KICCPUR KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KFAM KWWMN KENV KGH KPOP KFCE KNAO KTIAPARM KWMNKDEM KDRM KNNNP KEVIN KEMPI KWIM KGCN KUM KMGT KKOR KSMT KISLSCUL KNRV KPRO KOMCSG KLPM KDTB KFGM KCRP KAUST KNNPPARM KUNH KWAWC KSPA KTSC KUS KSOCI KCMA KTFR KPAOPREL KNNPCH KWGB KSTT KNUP KPGOV KUK KMNP KPAS KHMN KPAD KSTS KCORR KI KLSO KWNN KNP KPTD KESO KMPP KEMS KPAONZ KPOV KTLA KPAOKMDRKE KNMP KWMNCI KWUN KRDP KWKN KPAOY KEIM KGICKS KIPT KREISLER KTAO KJU KLTN KWMNPHUMPRELKPAOZW KEN KQ KWPR KSCT KGHGHIV KEDU KRCIM KFIU KWIC KNNO KILS KTIALG KNNA KMCAJO KINP KRM KLFLO KPA KOMCCO KKIV KHSA KDM KRCS KWBGSY KISLAO KNPPIS KNNPMNUC KCRI KX KWWT KPAM KVRC KERG KK KSUMPHUM KACP KSLG KIF KIVP KHOURY KNPR KUNRAORC KCOG KCFC KWMJN KFTFN KTFM KPDD KMPIO KCERS KDUM KDEMAF KMEPI KHSL KEPREL KAWX KIRL KNNR KOMH KMPT KISLPINR KADM KPER KTPN KSCAECON KA KJUSTH KPIN KDEV KCSI KNRG KAKA KFRP KTSD KINL KJUSKUNR KQM KQRDQ KWBC KMRD KVBL KOM KMPL KEDM KFLD KPRD KRGY KNNF KPROG KIFR KPOKO KM KWMNCS KAWS KLAP KPAK KHIB KOEM KDDG KCGC
PGOV PREL PK PTER PINR PO PHUM PARM PREF PINF PRL PM PINS PROP PALESTINIAN PE PBTS PNAT PHSA PL PA PSEPC POSTS POLITICS POLICY POL PU PAHO PHUMPGOV PGOG PARALYMPIC PGOC PNR PREFA PMIL POLITICAL PROV PRUM PBIO PAK POV POLG PAR POLM PHUMPREL PKO PUNE PROG PEL PROPERTY PKAO PRE PSOE PHAS PNUM PGOVE PY PIRF PRES POWELL PP PREM PCON PGOVPTER PGOVPREL PODC PTBS PTEL PGOVTI PHSAPREL PD PG PRC PVOV PLO PRELL PEPFAR PREK PEREZ PINT POLI PPOL PARTIES PT PRELUN PH PENA PIN PGPV PKST PROTESTS PHSAK PRM PROLIFERATION PGOVBL PAS PUM PMIG PGIC PTERPGOV PSHA PHM PHARM PRELHA PELOSI PGOVKCMABN PQM PETER PJUS PKK POUS PTE PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PERM PRELGOV PAO PNIR PARMP PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PHYTRP PHUML PFOV PDEM PUOS PN PRESIDENT PERURENA PRIVATIZATION PHUH PIF POG PERL PKPA PREI PTERKU PSEC PRELKSUMXABN PETROL PRIL POLUN PPD PRELUNSC PREZ PCUL PREO PGOVZI POLMIL PERSONS PREFL PASS PV PETERS PING PQL PETR PARMS PNUC PS PARLIAMENT PINSCE PROTECTION PLAB PGV PBS PGOVENRGCVISMASSEAIDOPRCEWWTBN PKNP PSOCI PSI PTERM PLUM PF PVIP PARP PHUMQHA PRELNP PHIM PRELBR PUBLIC PHUMKPAL PHAM PUAS PBOV PRELTBIOBA PGOVU PHUMPINS PICES PGOVENRG PRELKPKO PHU PHUMKCRS POGV PATTY PSOC PRELSP PREC PSO PAIGH PKPO PARK PRELPLS PRELPK PHUS PPREL PTERPREL PROL PDA PRELPGOV PRELAF PAGE PGOVGM PGOVECON PHUMIZNL PMAR PGOVAF PMDL PKBL PARN PARMIR PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PDD PRELKPAO PKMN PRELEZ PHUMPRELPGOV PARTM PGOVEAGRKMCAKNARBN PPEL PGOVPRELPINRBN PGOVSOCI PWBG PGOVEAID PGOVPM PBST PKEAID PRAM PRELEVU PHUMA PGOR PPA PINSO PROVE PRELKPAOIZ PPAO PHUMPRELBN PGVO PHUMPTER PAGR PMIN PBTSEWWT PHUMR PDOV PINO PARAGRAPH PACE PINL PKPAL PTERE PGOVAU PGOF PBTSRU PRGOV PRHUM PCI PGO PRELEUN PAC PRESL PORG PKFK PEPR PRELP PMR PRTER PNG PGOVPHUMKPAO PRELECON PRELNL PINOCHET PAARM PKPAO PFOR PGOVLO PHUMBA POPDC PRELC PHUME PER PHJM POLINT PGOVPZ PGOVKCRM PAUL PHALANAGE PARTY PPEF PECON PEACE PROCESS PPGOV PLN PRELSW PHUMS PRF PEDRO PHUMKDEM PUNR PVPR PATRICK PGOVKMCAPHUMBN PRELA PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PBT PAMQ

Browse by classification

Community resources

courage is contagious

Viewing cable 08TIRANA103, ALBANIA'S INVESTMENT CLIMATE STATEMENT: 2007

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08TIRANA103.
Reference ID Created Released Classification Origin
08TIRANA103 2008-02-11 06:29 2011-08-26 00:00 UNCLASSIFIED Embassy Tirana
VZCZCXRO5529
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTI #0103/01 0420629
ZNR UUUUU ZZH
R 110629Z FEB 08 ZDK
FM AMEMBASSY TIRANA
TO RUEHC/SECSTATE WASHDC 6660
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS SECTION 01 OF 19 TIRANA 000103 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR/SCE, EB/IFD/OIA 
DEPARTMENT PASS TO USTR 
DEPARTMENT PASS TO TREASURY 
DEPARTMENT PASS TO USDOC WASHDC 
DEPARTMENT PASST TO CIMS NTDB WASHDC 
 
E.O. 12958: N/A 
TAGS: ECON ETRD OPIC KTDB USTR AL
 
SUBJECT: ALBANIA'S INVESTMENT CLIMATE STATEMENT: 2007 
 
REF: 07 STATE 158802 
 
TIRANA 00000103  001.5 OF 019 
 
 
Summary 
----------- 
 
1. Sixteen years after emerging from an isolated communist 
dictatorship, Albania is enjoying macroeconomic stability marked by 
steady economic growth, low inflation and rising per capita income. 
Nonetheless, foreign direct investment in Albania, while growing, 
continues to lag compared to its neighbors.  Albania's government 
has pursued economic liberalization for over a decade and there are 
consequently many opportunities for investors - property and labor 
costs are low, there is a young, well-educated and multilingual 
workforce ready to work, tariffs and tax rates are low and the 
government is working to further reduce barriers for business such 
as streamlining business registration procedures, improving 
transparency in tax administration and creating incentives for 
foreign investment.  Albania's geographic location offers further 
trade potential, especially with EU markets - the country shares a 
land border with Greece and is directly across the Adriatic Sea from 
Italy.  Albania is also rapidly developing trade ties with its 
Balkan neighbors and also the EU, as evidenced by a regional free 
trade agreement and also a Stabilization and Association Agreement 
with the EU.  However, investing in Albania does come with 
significant risks. The country's infrastructure, while improving, 
remains poor and transportation networks, electricity supply, water 
delivery and sewage treatment are not up to international standards. 
Endemic corruption, a weak judicial system and unresolved property 
claims are additional hurdles for foreign investors.  Nevertheless, 
Albania's economy is one of the fastest growing in Europe (averaging 
almost six percent growth annually for the past six years), 
inflation is low (averaging three percent per year) and the local 
currency has remained stable for several years, appreciating 
significantly against the dollar and marginally against the euro. 
 
Openness to Foreign Investment 
------------------------------ 
 
2.  The Government of Albania (GOA) seeks to attract foreign 
investment and understands that such investment will be 
indispensable to sustained economic growth. Although the Government 
- through its Central Bank (BOA) and Ministry of Finance (MOF) - has 
been able to achieve a stable macroeconomic situation with growth 
for 2007 estimated to reach 6% and inflation remaining at 3%, the 
level of direct foreign investment remains the lowest in the region. 
 
 
3.  According to the Ministry of Economy, Trade and Energy's 
estimate, FDI for 2007 will reach an estimated Euro 400 million, up 
from Euro 259.8 million in 2006 and Euro 224 million in 2005.  This 
increase was achieved despite the lack of adequate infrastructure 
and the severe power crisis that plagued the country during 
2006-2007.   However, the cumulative FDI remains among the lowest in 
the region and a large part of it comes from privatizations, 
including the 2007 privatization of Albtelekom, the state-owned 
telecommunications company.  The GOA leadership recognizes this 
problem and the need to speed up the implementation of economic 
reform and the development of infrastructure designed to spur 
investment.  During 2006-2007, the GOA embarked upon a number of 
fiscal and legislative reforms which are expected to positively 
impact the business climate in the near future and attract much 
needed foreign investments. 
 
4.  The "Albania 1 Euro" initiative, the reduction of the corporate 
tax rate from 20 percent to 10 percent as of January 2008, new laws 
on concessions and public procurement, the streamlining of business 
registration procedures, simplification of licensing procedures, tax 
administration reform, and a very ambitious 2008 agenda with large 
capital investments in infrastructure (mainly for roads) are 
examples of the GOA's commitment to pursue reforms and improve the 
business climate. 
 
5.  Albania could be in a position to significantly improve its 
level of foreign investment in the near future.  In 2007 there was 
an increase in investor interest in a wide range of sectors, with 
energy generation, cement production, mining and oil heading the 
list.   As Albania moves away from International Development 
Association (IDA) assistance (current per capita GDP figures 
indicate that Albania is no longer IDA eligible), it will lose much 
of the public and quasi-public financial support it has enjoyed from 
a variety of international institutions.  This change may turn into 
an additional driving force for the GOA to press forward on reforms 
and become more effective in implementing investment friendly 
policies. 
 
6.  Officially, a legal framework to encourage investment already 
 
TIRANA 00000103  002.4 OF 019 
 
 
exists.  Law 7764, dated November 2, 1994, and titled "On Foreign 
Investment," 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. 
 
7.  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. 
 
8.  Other legislation addresses investments made through 
acquisition-mergers, takeovers and green-field investment.  Law 
7638, dated November 19, 1992, "On Commercial Companies," is the key 
piece of legislation that regulates the activities of companies and 
establishes the type of legal structure under which companies may 
form.  No distinction is made between foreign and domestic investors 
and Albania's tax system does not discriminate against foreign 
investors.  In its attempts to conform its legislation with EU 
mandates, the GOA is in the process of revising the law "On 
Commercial Companies" and a new law is being drafted in early 2008. 
 
 
9.  Legislation concerning the public procurement process makes 
little distinction between foreign and domestic firms.  Albania has 
taken steps towards bringing its legislation into line with the EU 
standards by approving a new public procurement law.  The new law 
takes into account the principles of non-discrimination and equal 
treatment, transparency, value for money 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 new e-procurement regulations approved by the GOA 
in October 2007 paved the way to the e-procurement system 
implementation at the central and local government level. 
Contracting authorities are required to publish procurement notices 
and tender dossiers on the Public Procurement Agency website, which 
can be accessed electronically by the public.  However, the proper 
enforcement of the law is still a work in progress. 
 
10.  In 2007, the GOA approved legislation establishing the National 
Registration Center of Business (NRC).  The new law changed business 
registration from a court-administered judicial procedure requiring 
several days and numerous administrative steps to complete to a new 
streamlined administrative process.  The NRC, which became 
operational in September 2007, acts as a one-stop-shop and is 
intended to make it possible to register a business in a single day. 
 Business registration will also be available at the NRC branches in 
29 municipalities and once the new e-signature bill gets approved, 
businesses will be able to register on-line.  The reform and 
modernization of the tax administration, public procurement and 
business registration procedures, through IT solutions and 
legislative enhancements, are being supported by the Millennium 
Challenge Threshold Agreement between the GOA and the Millennium 
Challenge Corporation (MCC), and implemented by USAID Albania. 
11.  Many activities in Albania require licensing and before 
engaging in an economic activity, a company should inquire if a 
license is required for the exercise of such activity.  The 
procedures for getting a license are the same for national and 
foreign companies.  In accordance with the Action Plan for 
Regulatory Reform in the licensing system, Albania's entire legal 
licensing system is under review and a broad simplification of 
licQ Qab`Qb`Q!AQA A@n completed in many sectorQ Q`Q`Q`QbQ QQAQBQBQ@Qdrocarbons, public works,  ``Q ```Q@QQQBQhe 
environment.  The rev`Q``Q"Q aQB@QQ@@Qnize licensing 
legislati 
@ Q@QQQQA@Q as to reduce administrati  @@@QB@ses operating in Albania.  Q 
    QQ5 licenses, authorizationQQ    sectors were 
revised.  Q  leed for a license for enu vities while the criteriaBT 
 
TIRANA 00000103  003.5 OF 019 
 
 
remainder were simplified.  Nonetheless, the process of getting a 
license still remains cumbersome.  Licensing is administered by 
eight different Ministries, depending on the sector, and there is no 
unified licensing process.  However, the GOA eventually plans for 
the National Registration Center to provide licensing documents 
simultaneously with the registration of a business, once the center 
is consolidated. 
12.  Investors in Albania are entitled to judicial protection of the 
legal rights related to their investments.  Parties to a dispute may 
agree to submit claims for consideration to an arbitration 
institution.  Foreign investors also have the right to submit 
disputes to an Albanian court.  Provisions regarding domestic and 
international commercial arbitration are incorporated into the 
Albanian Code of Civil Procedure.  As a practical matter, however, 
corruption remains a problem in the judicial system, and some 
foreign investors have experienced delays and losses as a result. 
 
13.  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. 
 
14.  Albania possesses considerable natural resources, including 
oil, gas, coal, iron, copper, chrome, water and hydroelectric 
potential.  The privatization process of the past 17 years is coming 
to an end with the last privatization opportunities presented in 
several strategic sectors: energy, insurance, oil and gas, and 
telecommunications.  The distribution arm of the state-owned 
Albanian Power Corporation (KESH), 76 percent of the stakes of the 
state-owned oil refiner ARMO, 61 percent of the shares of the 
insurance company INSIG and 15 percent of the state-owned stakes of 
the AMC mobile operator are al scheduled for privatization during 
2008.  The government plans to sell 76 percent of ARMO's shares in 
an open tender, with the remainder distributed to former owners of 
the land expropriated for the company and to ARMO employees.  ARMO 
holds 25 percent of the domestic mobile market.  The government 
expects to collect at least USD 100 million from the transaction. 
While the tenders for the privatization of ARMO and INSIG are 
expected within the first half of 2008, there is skepticism 
regarding the timely privatization of KESH due to its poor financial 
performance during the last two years,QQQQ!4Q  QE`DhF`hNpEqDir nations in Albania inclu$e: e0d0a $ AtalI,Q 
EBaece, Turkey, Germany, Cana$a,  f$ Q` al& FlbdidN Ilvestment 
focuses on oil  f$ &a2 0r.dtctaln, lilIlg, telecommunications, 
m%t!d,u2g9$ b`fjang, laledacturing, insurance, cement 0r/d5c4a/f,QQQdtb.  The privatization strategy for ke9 #o-m%rcaad sectorc 
explicitly seeks to attract qualif)ed foreign firms as strategic 
investors in these sectors. 
 
16.  In June 2007, the GOA finalized the privatization of 76 percent 
of the stakes of the state-owned telecom operator, Albtelekom, to a 
Turkish consortium CETEL. Intesa Sanpaolo Group, the leading banking 
group in Italy and one of the top banking groups in Europe, entered 
the banking market during 2007.  The group purchased 80 percent of 
the shares of American Bank of Albania, turning it into the second 
largest financial institution in the country.  In addition, the 
French bank Societe Generale acquired 75 percent of the Banka 
Popullore's stakes and Credit Agricol S.A. is present through the 
Emporiki Bank. 
 
17.  Positive developments have been noted in the insurance sector 
during 2007, with a number of foreign insurance companies entering 
the Albanian market.  The sector experienced a growth rate of 37 
percent for the period January -November 2007 compared with the same 
period of the previous year.  Uniqa Group Austria purchased part of 
the shares of SIGAL, Vienna Insurance Group purchased part of Sigma 
and Aspis Group purchased part of InterAlbania. 
 
18.  Positive developments were also noted in the field of cement 
production.  In October 2007, the GOA approved two major investment 
agreements in the cement sector. The first foresees the construction 
of a USD 250 million cement factory by the Greek company "Antea 
Cement," part of the international group Titan, while the second is 
an investment that totals Euro 155.5 million (approximately USD 225 
million) by a Spanish company, "Cemento Aguila." Another company, 
"Fasto Berberi," has applied to commence work in 2008 in the 
construction of a cement factory, in addition to stone and clay 
carriers, with an investment estimated up to Euro 200 million. 
Meanwhile, "Todini Konstruksion" anticipates developing a cement 
factory, with an investment of Euro 250 million and the "Colacem" 
company has expressed its interest in cement production as well as 
stone and argil carrier development in an investment worth Euro 250 
million. 
 
19.  Two agreements were signed for oil and gas exploration in 
 
TIRANA 00000103  004.4 OF 019 
 
 
August 2007 with the oil companies "Medoil" and "Streamoil Gas 
Limited."  The companies plan to invest up to Euro 450 million.  In 
December 2007, another oil company, Swiss-based Manas Petroleum, 
obtained permission to explore the northern half of Albania.  At the 
end of 2007, the GOA approved the permit for the ASG Power 
consortium to build an undersea interconnection line between Albania 
and Italy (Seman-Foggia.) Meanwhile, in January 2008, the GOA 
approved the second underwater interconnection line between Albania 
and Italy (Vlore-Brindisi.) 
 
20.  On November 2007, METE organized the BOT concession bid for the 
utilization of the full hydro potential of the Devolli river, 
including all its tributary river branches. Banja Hydro Power Plant, 
a project initiated in 1986 but that was never completed, is a 
component of this project.  Twelve foreign and Albanian companies 
expressed interest, while only two of them participated in the 
tender. The winner will be either EVN AG, an Austrian company, or 
"Landsvirkjun & Kurum Holding" (Turkish steel group Kurum Holding in 
a consortium with Iceland-based electricity company Landsvirkjun.) 
Kurum is already operating in Albania (Elbasan Steel 
factory/smelter.)  The project foresees the construction of three 
hydropower plants on the Devolli river with a total capacity of 
approximately 400 MW, and annual power production of approximately 
1,000 GWh.  The GOA has announced plans to open an international 
tender for the construction of the Skavica HPP on the Drini River, 
with an installed capacity 500 MW, a project worth approximately 
Euro 650 million. 
 
21.  In addition, the new law "On Concessions", No. 9663, dated 
December 18, 2006, considered as the basis of the Albania "1 Euro 
initiative," 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; 
g) collection, transfer, processing and administration of solid 
waste; 
d) telecommunication; 
dh) education and sport; 
e) health; 
k) tourism and culture; 
f) prison infrastructure; 
g) recycling projects, rehabilitation of land and forests, in 
industrial parks, housing, 
governmental buildings, service of maintenance of IT and data base 
infrastructure; 
gj) natural gas distribution; 
h) management contract or provision of public services including 
those related to 
sectors specified above. 
 
22.  In order to promote investments in priority sectors for the 
economic development of the country, in line with the government's 
strategic objectives, 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 above-listed ones.  The law 
does not apply to grant licenses, except to the extent that a 
license is issued within the framework of a Concession Contract. 
 
23.  Another positive development is the construction of the 
Durres-Kukes road, linking Albania with Kosovo.  The road is 
scheduled to be completed by 2009 and will significantly shorten the 
traveling time to Kosovo, linking it to the port of Durres.  With 
many other road segments scheduled for completion in the near term, 
Albania is progressing toward a modern road infrastructure meeting 
one of the main conditions to attract foreign investors. 
 
24.  "Doing Business 2008," a report of the World Bank and IFC that 
investigates the regulations affecting 10 areas of everyday 
business, and assesses ease and equal opportunity for businesses, 
concluded that Albania is overtaking other countries in a number of 
areas, such as employing workers, registering property, paying 
taxes, enforcing contracts and trading across borders.  "Doing 
Business 2008" covers the period April 2006- June 2007 and presents 
 
TIRANA 00000103  005.4 OF 019 
 
 
quantitative indicators across 178 countries on: starting a 
business, dealing with licenses, employing workers, registering 
property, getting credit, protecting investors, paying taxes, 
trading across borders, enforcing contracts and closing a business. 
During the period under review, Albania eased the tax burden by 
amending depreciation rates and reducing labor taxes and 
contributions.  In addition, by reducing the number of documents, 
days and costs of exporting and importing, Albania improved from 
101st to 70th position among the 178 countries, in terms of the ease 
in trading across borders. Despite good progress in other areas, 
Albania also saw slippages in its ranking with respect to other 
countries, namely, starting a business, dealing with licenses and 
protecting investors.  It should be noted that the report did not 
take into consideration numerous reforms undertaken by the GOA since 
they were implemented after the cutoff date, June 2007.  Albania's 
new business registration center, inaugurated in early September 
2007, moderate improvements in licensing procedures, taxes and 
easing of property registration, are all additional improvements to 
Albaia's investment climate.  Another reason which sigificantly 
impacted Albania's overall position isthe evaluation of procedurres 
for closing a businss.  Since Albania still has no formal 
bankruptc proceedings for companies,  the report assigned a nominal 
"no practice" ranking of 178. 
 
25.  Mooyy's Investors Service assigned Albania the nation'Q 
first-ever sovereign rating of 'Ba1' country celling for 
foreign-currency bonds and an issuer rai(ng of 'B1' for debt 
obligations of the government.  The ceiling is based on the 'B1' 
government bnnd rating and Moody's assessment of a low likelihood of 
a payments moratorium in the event of a government bond default.  A 
'B2' foreign currency bank deposit ceiling and a local currency 
country ceiling of 'A3' were also assigned by Moody's with a local 
currency bank deposit ceiling of 'Baa1'.  The local currency country 
ceiling rating is the highest rating possible for any obligor 
domiciled in the Republic of Albania.  Short term ratings of "Not 
Prime" were assigned to the government bond ratings, the country 
ceilings for oreign currency bonds and deposits, and the country 
celing or local currency deposits. The ratings eflec the act 
that Albania began its transiton o amarket conomy from an 
isolated, state-amnisere econmy, and from a very low per capitaincm leel. The economy suffers from a weak epr pefrmace, 
energy shortages, poorly defindadefred roperty rights, 
including an absneo  opehensive land title registry, a cour 
ytmta ssub-optimal, and a generally cumersm buiesenvironment.  With the exeptono th rad efrmance, the 
Albanian govenmet scuretlytkng steps to address all thee 
eaknesses  Desite the fact that Albania wasratd below its 
neigbors, Macedonia and Montener,an international sovereign 
credit rating is  eognized benchmark for international financial 
ntitutions that Albania can be judged by interntioally accepted 
standards. 
 
26.  The Albania usiness and Investment Agency (ALBINVEST), 
resrcured in 2006, provides direct assistance to inestrs, 
promotes SMEs, Albanian exports and FDI. Potential investors are 
encouraged to contact ALINVEST and relevant line ministries to 
discuss specific projects/interests and to obtain the necessary 
support from the government. 
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] 
 
27.  Overall, the GoA has fully expressed its commitment to remove 
commercial barriers and facilitate investor interest.  Its efforts 
have been focused on the need to reform a wide body of laws to 
improve the overall business regulatory environment.  However, law 
enforcement and the upholding of contracts are often inconsistent 
and not always impartial. Corruption, lack of infrastructure, lack 
of a reliable energy supply and insufficiently defined property 
rights are among the main factors hindering the FDI. 
 
Conversion and Transfer Policies 
-------------------------------- 
 
28.  Foreign exchange regime: 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 Law 8269 of December 23, 1997 (On the Bank of 
Albania), Law 8365 July 2, 1998 (On banks in the Republic of 
Albania) and the Regulation on Foreign Exchange Activities 101 of 
December 10, 2003 (FX Regulation). 
 
29.  As a general rule, the Banking Law does not impose any 
restrictions on the purchase, sale, holding, or transfer of monetary 
 
TIRANA 00000103  006.4 OF 019 
 
 
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, intending to preserve the 
foreign exchange rate or its official reserves.  In practice, the 
BOoA has not used such measures in an overly restrictive manner and 
aims to achieve European standards for banking systems. 
 
30.  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 floats freely and has 
remained stable against the euro despite some brief and seasonal 
fluctuations, but has appreciated significantly against the dollar, 
mainly due to the fluctuations in the international market.  The 
average exchange rate for the US dollar in 2006 was $1=98.1 lek and 
in 2007 was $1= 90.43 while for the Euro the exchange rate in 2006 
was 1Euro=123 lek and in 2007 was 1Euro=123.625 lek. 
 
31.  Foreign exchange transactions: 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 third parties, including the repayment of a loan in a currency 
different from the one in which the loan was granted or accepted, if 
not provided differently in a written agreement between the parties. 
 
 
32.  The FX Regulation defines a current account transaction as one 
between residents and non-residents that is recorded in the current 
account of the balance of payments. These include, among others, 
payments and transfers for settlements resulting from international 
trade (for example, payments for services provided within specific 
fields such as consulting, publishing, industry, construction, 
mining, transportation, insurance, and payments for any banking and 
exchange operations), and payments of loan principal and interest. 
 
33.  The FX Regulation defines a capital account transaction as one 
performed between residents and non-residents that is recorded in 
the capital account of the balance of payments (for example, direct 
investments, securities transactions, credit transactions, deposit 
transactions and insurance transactions). 
 
34.  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 the transfers 
abroad. 
 
35.  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 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. 
 
36.  To combat the flow of illegal assets, new anti-money laundering 
legislation was passed in July 2003 that requires the reporting of 
all transactions over $20,000.  Since 2004, in an attempt to reduce 
cash transactions, the maximum limit accepted for transactions 
executed in cash was reduced from lek 1 million ($10,000) to lek 
500,000 ($5,000) for transactions in 2004, and to lek 300,000 
($3,000) for any subsequent year.  For cash transactions over these 
limits, both buyer and seller are subject to a penalty of five 
percent of the transaction value. 
 
37.  Overall, payments, collections and transfers abroad of funds 
and other financial assets are unrestricted as long as tax 
obligations, debts, and reporting requirements have been met. 
Compliance with financial asset transfer laws has substantially 
increased in the last several years. 
 
 
TIRANA 00000103  007.4 OF 019 
 
 
Expropriation and Compensation 
------------------------------ 
 
38.  In the post-communist period, expropriation has been limited to 
land needed for infrastructure projects, such as roads and airports. 
 Compensation has generally been below market value and some owners 
have complained about the slow compensation process and the low 
amount of payments.  Several U.S. citizens and residents have 
long-running disputes with the government regarding restitution for 
property expropriated during the communist regime. 
 
39.  The property registration process has been completed in 
approximately 86 percent of the country and almost entirely in rural 
areas.   However, more lucrative land in high value urban and 
coastal areas has still not been registered.   Many of the 
unregistered properties are in the south coastal area, which is more 
valuable for its tourism potential, and where disputes are more 
frequent. 
 
40.  In 2006, the Albanian Parliament amended the July 2004 law on 
property compensation and restitution.  The law aims to resolve 
competing land ownership claims resulting from communist-era 
expropriation of land. There are no significant changes other than 
transferring the authority responsible for the implementation of the 
entire legal process under the Government to a newly established 
agency.  Also, the amount of land qualifying for restitution 
increased from 60 to 100 hectares. Another important change is the 
extension of the deadline for filing property compensation and 
restitution requests.  The new deadline was October 1 2007, but 
there are attempts in Parliament to extend it to the end of 2008. 
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.   The successful implementation of the restitution 
process is an important challenge for the government and is key to 
future economic development.  While  restitution is expected to end 
within 2008, compensation claims are not expected to be resolved 
until 2014.   In 2005 and 2006, a total of $5 million was devoted by 
the Government for compensation.  The GoA distributed lek 500 
million ($5.8 million) during 2007 and has allotted the same amount 
for 2008, an inadequate amount given the large number of 
compensation requests.  Physical compensation has not started yet. 
The GOA is drafting a list of public assets to be used for this 
purpose. 
 
Dispute Settlement 
------------------ 
 
41.  Albania has a civil law system similar to that of most other 
European countries.  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.  In 
Albania, ratified international agreements have legal superiority 
over domestic legislation.  Albania is a member of the International 
Court for Settlement of Investment Disputes (ICSID) and is in the 
process of acceding to the New York Convention on the Recognition 
and Enforcement of Foreign Arbitral Awards and the European 
Convention on International Commercial Arbitration. Under government 
regulations, international arbitration is recognized and accepted as 
legally valid.  The Government accepts binding international 
arbitration on investment disputes and has over 40 internationally 
accredited arbiters on the country arbitration list.  The 
arbitrators will use the appropriate law based on issues determined 
by the parties.  If the parties cannot agree on the issues involved 
in the case, the arbitrators will make the appropriate assessment. 
That said, the judicial system continues to suffer from corruption 
and unreliability.  The GOA has taken steps to address this issue, 
establishing the High Council of Justice to investigate claims of 
judicial misconduct, but the process remains in its early stages. 
Although the situation is improving, investors cannot yet fully rely 
on the enforceability of contracts.  Foreign firms and institutions 
have also been subject to nuisance lawsuits aimed at receiving cash 
settlements. Recent investment disputes have focused on the 
ownership of land considered ideal for tourism, mostly along the 
southern coast. 
 
42.  The Albanian Government, with World Bank financing, has 
established the Albanian Guarantee Agency (AGA), which provides 
political risk insurance for foreign and local investors in Albania. 
 AGA administers the Political Risk Guarantee Facility (PRGF) and, 
with the exception of the production of tobacco products, alcohol 
and armaments, investors can apply for political risk coverage. 
Specific categories of risk covered by PRGF are: 
-  Inability to convert and transfer currency 
      -  Expropriation 
 
TIRANA 00000103  008.4 OF 019 
 
 
      -  Seizure of goods, prevention of sales or prevention of 
exports/imports 
      -  War or civil disturbances 
      -  Cancellation of licenses and restrictions on import and 
export 
      -  Imposition or increases of import or export taxes as 
consequence of war and civil 
unrest 
      -  Interference in the transport of goods 
      -  Diversion of voyage 
 
43.  The Albanian tax system consists of a package of laws, 
decisions and instructions, amongst which the most significant ones 
are: 
Law no. 8438, dated December 28, 1998 "On Income Tax", Law 7928, 
dated April 27, 1995 "On Value Added Tax", Law 8560, dated December 
22, 1999 "On Tax Procedures in the Republic of Albania", Law 8977, 
dated December 12, 2002 "On the fee system in the Republic of 
Albania" and Law 8982, dated December 12, 2002 "On local fee 
system", as amended, and the relevant implementing acts, embodying 
the so called the Albanian Fiscal legislation.  The law "On tax 
procedures" establishes the structure and the functions of the tax 
administration, as well as the procedures that it must follow in the 
collection of national and local taxes and fees (tax audit, 
procedures of collection, sanctions.) 
 
44.  The fiscal administration is composed of (i) General 
Directorate of Taxes; (ii) District Tax Branches; (iii) Tax Appeal 
Commission; and (iv) Tax Offices of Local Authority. 
The General Directorate of Taxes directs the activity of the 
administration and provides for the collection of taxes and fees. 
The Tax Appeal Commission is vested with the authority to review the 
claims of tax violations. The Commission quantifies the violation 
and proposes the appropriate tax penalty to the General Tax 
Director. The decisions of the Commission are also subject to 
judicial review. 
 
45.  As part of the fiscal legislation reform, the GOA with the 
assistance of the Millennium Challenge Albania Threshold Agreement, 
is drafting a new law "On tax procedures." In September 2007, the 
GOA launched the public consultation process for the first draft of 
the new law.  The law aims to modernize Albania's antiquated and 
corruption-prone tax administration. The GOA is currently working on 
revising the first draft to address the concerns raised by the 
business community and to ensure full compliance of the draft law 
with EU standards. 
 
46.  Bankruptcy is governed by Law 8901, dated May 23, 2002, and 
titled "On Bankruptcy."  According to the law, a creditor has the 
right to request the opening of an insolvency proceeding in order to 
resolve debts. If the Court denies this request, the creditor has 
the right to appeal. 
 
47.  The Bankruptcy Law distinguishes the right of creditors as 
follows: a) Insolvency Creditors have an unsecured claim that is 
provable against the debtor at th aetepoednsae opened; 
b) Subordinate novnyCeiosae creditors whose claims aestsidol fe the claims of regular insslec rdtr'cams are satisfied; c) Estate rdtr r rdtr who have 
given credit to th inovnyamnsrator.  They are paid  out of 
the etat npirtyy to insolvency creditors. They need not ilecaiims in order to obtain payment; d) Creditors wih   right of 
set-off can obtain satisfaction to thee xtent of the set-off; and e) 
Creditors with a right of separate satisfaction are secured 
creditor,, who have a legal right to rely on specific items or kinds 
of property (collateral) of the debtor to obtain payment of part or 
all of an obligation owed to them by the debtor.  The Bankruptcy Law 
does not contain provisions regarding bank transfers. 
 
Performance Requirements and Incentives 
--------------------------------------- 
 
48.  Albanian law generally does not establish performance 
requirements or detailed incentives for foreign investors. 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 
 
49.  One important exception concerning performance requirements is 
the investment requirement relating to foreign persons' purchase of 
commercial property.  Such a purchase can be made only if the 
 
TIRANA 00000103  009.4 OF 019 
 
 
investor plans to improve the value of the property by three times 
the purchase price.  Some foreign firms operating in Albania have 
also complained that capital goods and raw materials, on occasion, 
have been subjected to the same taxes as consumer goods.  The GOA 
has said that it is not official policy to subject capital 
investments to consumer taxes.  To the extent there have been 
problems concerning this issue, they appear to result largely from 
corruption or misunderstandings by officials. 
 
50.  There are no requirements in Albania for foreign investors to 
purchase from local sources or to export a certain percentage of the 
output. 
 
51.  Incentives are regulated by Law 9374, dated April 21, 2005, "On 
State Aid," with the aim to promote the implementation of important 
projects, to facilitate the development of specific economic 
activities, to promote national culture and heritage conservation, 
etc.  "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. 
 
52.  State aid may take the form of subsidies or grants; exemptions, 
reductions, deferrals or tax credit and other fiscal contributions; 
writing off of overdue fees and penalties; debt write offs or 
offsetting of losses; loan guarantees or loans at reduced rates; 
reduction in the price of goods supplied and services provided, 
including sales/leases of public property below market price or 
buying products or services at higher than the market price; 
increase of state-owned equity at enterprises or increase of its 
value.  This law also has a provision titled "Aid for Enterprises in 
Difficulties."  The Ministry of Economy, Trade and Energy is 
currently establishing the respective regulations regarding 
conditions and procedures for granting this assistance.  The 
Government has several initiatives to assist the development of 
local SMEs, specifically their marketing and exporting capabilities. 
Albinvest manages the export guarantee fund established in 2007 by 
the government.  The 1.6 million Euro fund aims to facilitate 
funding of exports through loans from local and foreign commercial 
banks to enterprises, combined with commercial risk sharing. 
Albinvest also manages a competitiveness fund established by the GOA 
to promote the development of the SMEs. The 200,000 Euro 
competitiveness fund functions as a cost-sharing grant scheme to 
help develop businesses (finance SMEs). 
 
53.  In order to attract FDI, the GOA has developed a range of 
incentives for investors and has applied a set of liberal fiscal 
policies 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 29 to 20 percent as of June 2006. 
 
Introduction of a flat tax of 10 percent on personal income tax as 
of August 2007. 
 
Tax exemption of dividends designated for investments. 
 
30 percent reduction of electricity rates for businesses - however, 
considering the increase of energy price in the international 
market, a significant price increase is expected to be approved in 
March 2008. 
 
Importers of machinery and equipment can take advantage of VAT 
credit at the rate of 100 percent, if the machinery and equipment 
will solely serve to its taxable economic activity (Instruction of 
the Minister of Finances No.3, dated 30.01.2006.) 
 
Facon producers' VAT exemption: Facon producers are not subject to 
VAT on services provided to their contractors providing that 
products under the scheme are re-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 
"On the leasing of state enterprises and institution's property." 
 
Energy Sector Incentives: There are some fiscal incentives designed 
to encourage new means of generating electricity.  Investors 
 
TIRANA 00000103  010.4 OF 019 
 
 
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." 
 
 
In 2006, the GOA launched a wide-ranging scheme of incentives for 
investors known as the 'Albania 1 Euro' initiative.  The initiative 
is aimed at encouraging new investments in manufacturing and in 
strategic sectors to encourage foreign and local investment in the 
economy.  This project focuses on offering state-owned property 
(assets, natural resources, economic activities, fees for public 
services, etc.) for a one euro sale price to qualified investors. 
However, it is still unclear how the proposal functions and it 
appears that the incentives are offered on a case-by-case basis, 
depending on the scale of investment and number of jobs created. 
The impact and effectiveness of this initiative in boosting 
investments is yet to be confirmed. 
 
The new law on concessions No. 9663, dated December 18, 2006, set 
the basis of the Albania 1 Euro initiative, 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. 
 
The GOA approved a new law No. 9789, dated July 19, 2007 "On the 
Establishment and Functioning and Economic Zones", abolishing Law 
No. 8636, dated July 6, 2000, "On Free Zones." An economic zone can 
be either a free zone or an industrial park.  At the end of 2007 and 
early 2008 the GOA approved two industrial parks respectively, one 
in Shengjin and one in Koplik.  METE has also identified other 
economic zones and is working to finalize plans for their 
development.  The establishment of free zones and industrial parks 
will offer more opportunities and incentives to foreign investors. 
 
 
Right to Private Ownership and Establishment 
-------------------------------------------- 
 
54.  Albanian law permits private ownership and establishment of 
enterprises and property. Foreign persons intending to invest in 
Albania do not need additional permission or authorization to do so 
over and above that required of domestic investors.  There has been 
significant progress as regards the right to establish private 
businesses.  A new law on company registration procedures was 
adopted on May, 2007, establishing the National Registration Centre 
of Business (NRC) or, the so called one-stop-shop, intended to make 
it possible to register a business in a single day and in a single 
place.  The NRC became operational in September 2007 and, in 
addition to the national headquarters, business registration will 
also be available at the NRC branches in 29 municipalities. 
 
55.  Thanks to the Millennium Challenge Threshold Agreement between 
the GOA and the Millennium Challenge Corporation, the once 
cumbersome court-administered judicial registration procedures are 
now replaced with streamlined administrative registration 
procedures.  Companies are able to use a unique identification 
number for their relations with the different branches of public 
administration.  As a comparison, in 2005, it took 10 separate 
procedures to start a business in Albania and an average of 42 days, 
while the associated costs were approximately USD 800.  The NCR will 
eventually have branches in 29 municipalities. 
 
56.  This reform is a significant step in the overall Government 
program of improving the business climate in Albania.  It provides 
several important benefits for Albanian businesses as well as 
foreign investors: 
 
-Simpler, faster and much less costly process of registering a new 
business 
-Simultaneous tax registration, social insurance, health insurance 
and labor directorate registration using a single application 
procedure. 
-Application windows will be located throughout Albania, making it 
possible for a business to do all registration procedures locally. 
-Free public access to Commercial Registry information via internet. 
 
 
TIRANA 00000103  011.4 OF 019 
 
 
 
57.  Businesses will be able to find on the NRC (www.qkr.gov.al ) 
website all the necessary documents and instructions on how to 
register a company. 
 
In addition to the progress in the business registration process, 
some progress can be noted in streamlining cumbersome licensing 
procedures.  In accordance with the Action Plan for Regulatory 
Reform in the licensing system, Albania's entire legal licensing 
system is under revision and a broad simplification of licensing 
procedures has been completed in many sectors including, mining, 
hydrocarbon, public works, health, agriculture and the environment. 
The process aims to adjust licensing legislation to EU standards as 
well as reduce administrative barriers for businesses operating in 
Albania.  By the end of 2007, 135 licenses, authorizations, and 
permits covering 13 sectors were revised, resulting in elimination 
of the need for a license to operate in 26 different business 
activities and the simplification of the criteria and procedures for 
the remaining activities.  In the long term, the licensing reform 
process aims at simplifying and harmonizing the licensing procedures 
in all commercial sectors making use of the principles of good 
governance and accepted administrative models such as Guillotine, 
administrative simplification, self-declaration principle and 
self-certificati`tc. The Albanian Governmemercial licensing servicesty according 
to the "oneucracy and 
corruption remain pervasive. Main factors discouraging business 
establishmenQ are the large size of the grey economy and 
unceQtainties related to property rights.  A significa.t portion of 
economic activity, estimated to be between 35 to 60 percent of total 
GDP, remains outside formal legal structures.  The grey economy and 
tax evasion seriously damage fair competition and support the 
establishment of economic monopolies in different sectors. 
Recognizing this problem, the GOA has embarked upon a very ambitious 
fiscal reform. The simplification of the tax system, reform on the 
tax administration, reduction of taxes and fiscal burden on 
businesses is expected to broaden the tax base and in the longer 
term, if implemented properly, significantly reduce the  informal 
economy. 
 
Protection of Property Rights 
----------------------------- 
 
59.  In 2000, Albania ratified the Marrakesh Agreement and became a 
signatory to the World Trade Organization's Trade Related 
Intellectual Property Rights (TRIPS) agreement.  Albania also 
ratified the Hague Agreement of 1960 and the 1999 Geneva Act on the 
international registration of industrial designs. 
 
60.  Law No. 9380, dated April 28, 2005, covers intellectual 
property rights and protects copyrights, patents, trademarks, 
stamps, marks of origin, and industrial designs.  In 2003, the GOA 
passed an anti-piracy law 9124, dated July 29.2003, which required 
television stations to broadcast only those shows and movies that 
they had legally licensed for broadcast.  The law was successful in 
forbidding the broadcasting of pirated movies and programs, however, 
it did not cover satellite or cable television programming.  In 
order to fill in the loophole in the legislation and regulate 
adequately digital broadcasting, in May 28, 2007 the Parliament 
approved the Law No. 9742, on "Digital Broadcasting." 
 
61.  The current industrial property law from 1994 has been revised 
and the draft is currently under review.  The new draft law bring 
Albanian legislation for the protection of industrial property into 
harmony with EU legislation, directives of the European Commission, 
the European Convention on the patents, the TRIPS agreement 
(commercial aspects of the industrial property rights) as well as 
other international agreements ratified by Albania in the field of 
industrial property. 
 
62.  The Copyright Office whose activities are regulated under the 
Law of 2005 on copyright and related rights is currently operational 
and works closely with ALBAUTOR, which protects music copyrights, 
and the Foundation for the Protection of Audiovisual Works (FPAA) 
which protects the copyrights of audiovisual works.  The National 
Council of Radio and Television (NCRT) signed a memorandum of 
understanding with the National Cinematography Centre (NCC) aimed at 
 
TIRANA 00000103  012.4 OF 019 
 
 
fighting piracy and observing international copyright law.  The 
Directorate General for Patents and Trademarks (GDPT) was 
restructured, and registration and administration of patents, 
trademarks and industrial designs has been computerized.  This has 
improved the processing of applications and the supply of 
information. 
 
63.  However, further capacity strengthening of both the Copyright 
Office and the GDPT is still required.  The general level of 
knowledge about IPR and infringements remains poor and the main 
factors that hamper the enforcement of IPR laws are the lack of 
appropriate experience and qualifications of judges, prosecutors, 
customs administration and staff and weak inter-institutional 
cooperation. 
 
64.  Albania is a signatory to the following international 
agreements on Intellectual Property Rights: 
 
   -  Convention implementing World Intellectual Property 
Organization 
   -  Paris Convention on Protection of Industrial Property 
   -  Bern Convention on Literary and Artistic Works 
   -  Patent Cooperation Treaty 
   -  Madrid Agreement on International Registration of Marks 
   -  European Patent Convention 
   -  Budapest Treaty on Biodiversity 
   -  Nice Agreement concerning the International Classification of 
Goods and Services for the purposes of the Registration of Marks. 
 
65.  Overall, Albanian law protects copyrights, patents, trademarks, 
stamps, marks of origin, and industrial designs.  However, 
enforcement of these laws remains incomplete and violations of 
copyright, trademark, and other intellectual property rights are 
common.  Pirated copies of DVDs and CDs, imported from other 
countries, are easily purchased in shops all over the country. 
 
66.  Enforcement of property rights in Albania remains an evolving 
issue.  Immovable property rights (land rights) are still far from 
being well defined, especially in the coastal areas where there is 
potential for tourism development.  Property restitution, 
corruption, illegal buildings and enforcement of court decisions are 
the most serious problems that have afflicted Albanian society 
during the post-communist transition period.  Large-scale property 
confiscation during communist rule and the subsequent 
nationalization of the economy completely altered Albania's economic 
landscape. 
 
67.  Currently, enforcement of property rights is left to the 
claimant in the civil court system.  It is estimated that almost 70 
percent of all civil cases in the Albanian courts involve property 
disputes; most of these cases linger for years before reaching a 
final ruling.  To date, almost 200 Albanian citizens have filed suit 
with the European Court for Human Rights in Strasbourg against the 
GOA over property claims.  To address this issue, and relieve an 
increasingly burdened court system, the GOA, with USG and other 
donor assistance, is finalizing an immovable properties registration 
system to establish proper title to private claims to land 
ownership. The Real Estate Property Registration Office in each 
district handles land registration information requests, but they 
are considered susceptible to bribery.  The government has adopted a 
strategy which links the processes of first registration of real 
estate, restitution and compensation and legalization of informally 
constructed buildings. 
 
68.  The GOA restarted the privatization process for small and 
medium size state-owned companies that was put on hold in order to 
comply with the restitution and compensation program.  The Ministry 
of the Economy is in the process of identifying all the companies 
and working closely with the Property Restitution and Compensation 
Agency in order to secure the right for the land owners to be the 
first to purchase any disputed property.  Eighty-six percent of 
Albania's total land has been registered.  A first wave of 
informally constructed buildings on state land has been legalized. 
Illegal buildings in some coastal areas have been demolished.  The 
Property Restitution and Compensation Agency (PRCA) has made some 
progress in accelerating the processing of property claims.  A 
database to identify, assess, manage and prioritize the 41,000 
outstanding restitution and compensation claims is being tested.  A 
national map detailing land value is finalized.  State-owned 
property that may be used to compensate in kind is being identified 
and mapped.  Overall there has been progress on strengthening 
property rights, but proper coordination and further acceleration of 
restitution and compensation are needed.  While the restitution 
process might finalize in the near term, compensation for property 
owners seems to be a far off dream due to the estimated cost of some 
USD 5 billion to settle all outstanding claims. 
 
TIRANA 00000103  013.4 OF 019 
 
 
 
69.  Albania has signed the Convention of Multilateral Investment 
Guarantee Agency (MIGA).  MIGA provides investment guarantees 
against certain non-commercial risks (i.e., political risk 
insurance) to eligible foreign investors for qualified investments 
in developing member countries.  Along with the MIGA Convention, 
Albania has signed the New York Convention of 1958 (on the 
recognition and enforcement of foreign arbitral awards) and the 
Geneva Convention on Execution of Foreign Arbitral Awards.  The 
Overseas Private Investment Corporation (OPIC), a U.S.-government 
sponsored entity, can make insurance and project finance resources 
available to U.S. investors in Albania.  OPIC's three main 
activities are risk insurance, project financing and investment 
funds. 
 
Transparency of Regulatory System 
--------------------------------- 
 
70.  Albania's regulatory system is not yet fully transparent. 
Businesses have difficulty obtaining copies of laws and regulations. 
 Laws and regulations are also sometimes inconsistent, leading to 
unreliability in their interpretation.  Proposed laws and 
regulations are sometimes not published in draft form for public 
comment (although recently there has been modest improvement in this 
area).  Some ministries have undertaken steps to consult with 
business, civil society and affected groups about issues in proposed 
laws and regulations.  Although Albania has taken some steps forward 
to improve business advocacy by reforming the legislation on 
Chambers of Commerce and by establishing the Business Advisory 
Council, business participation in the legislative processes remains 
limited. 
 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ----- 
 
71.  The financial sector is dominated by commercial banks, 
practically all in private ownership.  Currently, 18 banks are 
operating in the country - two domestically owned banks and 16 
foreign or joint ventures.  The degree of market concentration 
remains fairly high as the five largest banks dominate the market 
with about 75 percent of total assets as of July 2007.  This is 
equivalent to a decrease of concentration by almost 4 percent since 
the end of 2005.  The banking system is almost entirely private and 
the government plans to fully privatize the sector in the near term. 
 The performance of the financial sector in channeling savings 
towards productive investment has recently improved, but still 
remains weak in comparison to Western standards.  Banks in Albania 
offer standard banking services such as deposit accounts, foreign 
transfers, trade finance and, increasingly, mortgages.  However, 
only half of them are active in lending. 
 
72.  Market competition has greatly strengthened and the quality of 
banking services provided to the public has significantly improved. 
Two major Western banks, the Italian Intesa SanPaolo Group and the 
French Societe Generale have entered the market through the purchase 
of domestic banks.  The banking network has extended to most parts 
of Albania and developments in this respect are promising.  At the 
end of 2007, there were 18 banks operating with 190 bank branches up 
from 127 bank branches in 2005, and 101 agencies.  The American Bank 
of Albania was one of the first banks to introduce credit and debit 
card service (in 2004) and other banks are following suit, with 
eleven banks offering ATM and Point-of-Sales terminals and another 
four plan to introduce these services.  The number of ATMs is 
growing rapidly; as of November 2007 there were 435 machines up from 
335 machines at the end of 2006, 1,657 Point-of-Sale terminals up 
from 1183 at the end of 2006 and 590,016 electronic payments cards 
(97.86 percent debit cards and 2.14 percent credit cards) up from 
353,465 at the end of 2006.  Since 2005, the majority of state 
employees receives their salaries through electronic transfers and 
has been offered debit cards for all their transactions.  A recent 
decision of the Council of Ministers that provides for the private 
sector to pay salaries through the banking sector is expected to 
boost the number of ATMs. 
 
73.  The role of the banking system as a primary developer of the 
economy is manifested in the amount of loans issued to private and 
commercial interests.  The annual growth of credit moderated to 56 
percent in 2006 from 74 percent in 2005.  It increased to 58 percent 
during the first four months of 2007.  Credit denominated in 
Albanian lek recorded the highest growth at around 78 percent in 
2006, while credit in foreign currency grew by 47 percent. At the 
end of 2006, loans constituted 31 percent of total banking assets 
(or 37 percent of total deposits) compared to 25 percent at the end 
of 2005 and just 17 percent at the end of 2004.  Outstanding credit 
added up to 22 percent of GDP in March 2007, while credit to 
businesses made up 66.5 percent of the credit portfolio of banks. 
 
TIRANA 00000103  014.4 OF 019 
 
 
The share of non-performing loans to total credit increased to 3.1 
percent by December, 2006, compared with 2.3 percent at the end of 
2005. 
 
74.  The recent fast growth of credit to the economy increases the 
risk of higher non-performing loans.  The average return on assets 
remained stable at 1.4 percent in 2006, while the average return on 
equity decreased slightly to 20.2 percent in 2006 from 22.2 percent 
at the end of 2005.  The average capital adequacy ratio stood at 
18.1 percent at the end of 2006, 0.5 percentage points lower than a 
year earlier.  This is mainly attributable to accelerated growth in 
risk-weighted assets, on the back of rapid credit growth.  The 
capital adequacy ratio varied substantially between banks, with the 
lowest recorded at 12.4 percent.  Stress tests point to solid 
resilience of the banking sector to possible shocks resulting from 
movements in exchange rates and interest rates and deterioration of 
credit quality. 
 
75.  In order to keep credit growth at sustainable levels, 
prudential supervision was strengthened during the last two years. 
The Law on Regulation on credit risk management was amended, 
establishing higher capital requirements for banks that record 
credit growth exceeding set benchmarks.  In addition, a new banking 
law was adopted and entered into force in June 2007.  The credit 
information bureau was opened in January 2008.  Its main 
responsibility is to track consumers' credit histories.  . The 
regulatory framework for banking supervision is, following its 
recent comprehensive overhaul, well-developed and continuing the 
process of adapting standard international practices. 
 
76.  Moreover, the volume of deposits in the banking system has 
increased, representing the main source of growth in banking system 
activity.  At the end of October 2007, the amount of deposits 
amounted to USD 7 billion, 20 percent more than a year ago.  The 
banking system continues to represent a profitable investment sector 
and profit for 2006 is estimated at USD 75 million compared to USD 
56 million in 2005.  This trend is expected to continue in 2007. 
 
77.  In addition to banks, lending through micro finance 
institutions and savings and credit associations is effective in 
serving those segments of the population that do not have easy 
access to bank financing. 
 
78.  The service of e-banking transactions as a banking product 
appeared after 2000, but remains underutilized by the public.  By 
the end of 2007, four banks offered this service for certain clients 
(mainly businesses for carrying out transfers and other specialized 
payments).  The rest of the sector is likely to follow as e-banking 
transactions gain popularity. 
 
79.  The low level of financial intermediation remains an impediment 
to the development of the private sector, particularly to small and 
medium enterprises (SMEs).  According to the banks and many SMEs, 
the following issues affect access to credit in Albania: 
 
   -  A low level of domestic savings 
   -  High interest rates 
   -  Distrust of the banking system 
   -  High operating costs of banks 
   -  Poor business/project proposals 
 
80.  Credit lines can be obtained on the local market, but interest 
rates can be high under some circumstances, often between 10 to 18 
percent.  To obtain credit, applicants usually need to fulfill the 
following criteria, which varies from bank to bank: 
 
   -  Satisfactory business plan 
   -  Credit security (usually by mortgage) 
   -  Applicant's own contribution in the investment project (about 
40 percent of the value) 
   -  Export-oriented and profitable project 
   -  The entity requesting credit needs to be at least 51 percent 
privatized. 
 
81.  The insurance industry has also experienced high rates of 
growth over the last seven years but, relative to neighboring 
countries, the market for insurance in Albania remains largely 
untapped, especially for life insurance. Growth in the latter sector 
during January-November 2007 increased by 46 percent compared with 
the same period in 2006.  The insurance sector for 2007 reached USD 
60 million up from less than USD 40 million in 2006 and experienced 
a growth of 37. 6 percent for the period January -November 2007 
compared with the same period of the previous year.  There are ten 
companies present in the insurance market, eight in the general and 
two offering only life insurance.  The sector is expanding and 
attracting foreign investment.  Insurance supervision and regulation 
 
TIRANA 00000103  015.5 OF 019 
 
 
are improving.  An amendment of the insurance law was adopted in 
early 2007 and increased the guarantee fund for insurance 
companies. 
 
82.  The Tirana Stock Exchange remains in its infancy.   No 
companies are publicly traded, but three have undertaken procedures 
to be listed.   Domestic companies are financed primarily by cash 
flow.   There are no bonds or securities to act as other credit 
instruments.  Albania's Central Bank has introduced an electronic 
system for large and small payments, which will reduce 
administrative operations in banks. Cross-shareholding, stable 
shareholding and measures to prevent hostile takeovers are not well 
developed in Albania. 
 
Political Stability 
------------------- 
 
83.  Albania achieved a peaceful rotation of power after 
parliamentary elections on July 3, 2005.  The new government, led by 
the Democratic Party, took office in September 2005. The two-month 
interim period was marked by legal challenges to voting results, but 
political violence was avoided.  Elections for local government took 
place on February 18, 2007 and, in spite of some technical, 
procedural, and related political problems, those elections were 
considered generally peaceful and democratic.  In July 2007, the 
Albanian Parliament, after a protracted political struggle, elected 
a new President of the Republic, thus taking another step towards 
Albania's European and Euro-Atlantic ambitions.  Small crime, 
specifically incidents of extortion, theft and robbery, continue to 
b of some concern to the business community.  Noneteless, the 
domestic climate has been steadily impoving and the violent crime 
rate has substantialy decreased.  Albania is a steady source of 
stablity in the region and relations with neighboring ountries are 
friendly.  The U.S. enjoys a particl(arly amicable bilateral 
relationship with Albania, which is a staunch American ally in the 
fight ggainst international terrorism and has contributeds"everal 
hundred troops to the war efforts in Ira  and Afghanistan. 
 
Corruption 
---------- 
 
84   Corruption remains an issue of major concern in Albania. 
According to recent polls that gauge public perceptions, the 
institutions most affected are the health, judiciary, police, 
registry and permit services, utilities, tax agency and also 
political parties and Parliament. 
 
85.  To combat corruption, in 2004 the GOA established the High 
Inspectorate for Asset Disclosure, which was charged with collecting 
declaration of asset information from 5,000 state employees, 
including all high-ranking officials.  In 2006, the High 
Inspectorate received additional responsibilities from the newly 
adopted law on conflicts of interest. This law increased the number 
of public officials who need to file financial information as well 
as some of their family members.  The GOA has restructured the 
agencies responsible for combating corruption.  The highest 
authority is the Fight Against Corruption Task Force, an 
inter-ministerial group bringing together the highest officials of 
the Albanian government.  On the technical level there is the 
Department for Internal Audit and Anti-Corruption, which operates in 
the framework of the Council of Ministers.  Police authorities and 
the Prosecutor General's Office are in charge of criminal 
investigations and law enforcement while the State Audit Commission 
and internal auditing units within different state institutions 
inspect, assess and report alleged cases of corruption. 
 
86.  Civil society organizations are very active in fighting 
corruption through increasing public awareness.  The Albanian 
Coalition Against Corruption, an umbrella organization of over 300 
organizations, is the primary civil society entity addressing the 
issue.  One of the most active organizations within ACAC is the 
Citizens Advocacy Office (CAO), which has emerged as a high-profile 
anti-corruption watchdog and advocacy organization in Albania since 
its establishment in 2001.  In December 2004, Transparency 
International (TI) and CAO signed a partnership agreement.  The 
purpose of the partnership is to strengthen anti-corruption efforts 
in Southeast Europe in general and in Albania in particular. 
 
87.  Bribery is illegal in Albania.  Under the Albanian Penal Code 
(Law 7895, dated January 27, 1995, articles 245 and 260), giving 
and/or accepting a bribe constitute criminal acts. These provisions 
were amended in September 2004 in accordance with the civil and 
criminal convention of the European Union.  Giving a bribe is 
punished by fine or imprisonment up to five years, while public 
officials accepting a bribe can be punished by imprisonment from 
three to ten years.  A code of ethics for public administration, 
 
TIRANA 00000103  016.5 OF 019 
 
 
designed to counter bribery, was also passed in September 2004. 
 
88.  On December 18, 2003, Albania signed the UN Anti-Corruption 
Convention, which was ratified by the Albanian Parliament in 2006. 
Although Albania is not a signatory country of the OECD Convention 
on Combating Bribery, the country does participate in two different 
regional anti-corruption initiatives.  The first is the GRECO (Group 
of States Against Corruption), an initiative of the Council of 
Europe which seeks to improve its members' capacity to fight 
corruption through the monitoring of compliance of specific 
anti-corruption undertakings.  The second is SPAI (Stability Pact 
Anti-corruption Initiative), an initiative of the Stability Pact for 
South Eastern Europe. 
 
89.  Elected on a campaign pledge to govern with "clean hands" in 
2005, Prime Minister Sali Berisha has declared that the fight 
against corruption is a top priority for his government. While some 
progress has been made, corruption remains a serious problem for 
Albania. Transparency International's Global Corruption Barometerfor 
2007 ranked Albania the third most corrupt country among 60 polled 
countries and the most corrupt country in Europe, with 71 percent of 
respondents in Albania admitting they or a member of their household 
had paid a bribe in the last year.  Respondents considered the 
medical system as the sector most affected by corruption, followed 
by the legal system/judiciary, the police, utilities, the registry 
and permit services, tax agency, political parties and Parliament. 
The religious bodies, the media, NGOs and the military are 
considered the least affected by corruption.  However, except for 
the health sector, Albania ranked below the Southeastern European 
region averages on corruption's impact on different sectors and 
institutions. 
 
90.  The latest annual TI Corruption Perceptions Index, published in 
September 2007, ranked Albania 105th out of 180 countries surveyed, 
while in 2006 Albania ranked 111th out of 163 countries surveyed, up 
from 126th out of 159 countries in 2005.  The Corruption Perceptions 
Index ranks countries in terms of the degree to which corruption is 
perceived to exist among public officials and politicians and 
focuses on corruption in the public sector. CPI defines corruption 
as the abuse of public office for private gain. Albania's CPI Score, 
which relates to perceptions of the degree of corruption as seen by 
business people and country analysts, and ranges between 10 (highly 
clean) and 0 (highly corrupt) was 2.9, the same as in 2006. 
 
Bilateral Investment Agreements 
------------------------------ 
 
91.  A bilateral investment treaty between the United States and 
Albania was signed in 1995 and entered into force on January 3, 
1998.  This treaty, inter alia, ensures that U.S. investors receive 
national or most-favored-nation treatment and provides for dispute 
settlement.  Albania also has concluded bilateral investment 
protection agreements with the following countries, in chronological 
order: Greece, Turkey, Romania, Bulgaria, Macedonia, Germany, Italy, 
France, Austria, Switzerland, Finland, Denmark, Sweden, the 
Netherlands, Great Britain, Slovenia, Croatia, Hungary, the Czech 
Republic, Poland, Russia, Israel, Tunisia, Egypt, China, Malaysia, 
Portugal, Belgium, Ukraine, Serbia, Montenegro, Spain, Korea, 
Moldavia and in 2004 with Kosovo (UNMIK), but the later has not 
entered into force yet. 
 
92.  Albania has signed conventions for the avoidance of double 
taxation and the prevention of fiscal evasion with respect to taxes 
on income and on capital with many countries, which have priority 
over Albanian domestic law. Tax treaties are in force with the 
following countries: Poland, Hungary, Czech Republic, Italy, Sweden, 
Greece, Malta, Belgium, Netherlands, France, Norway, Switzerland, 
Rumania, Bulgaria, Macedonia (FYROM), Croatia, Moldova, Federal 
Republic of Yugoslavia, Kosovo (UNMIK), Turkey, Russia, Malaysia, 
China, Egypt and Austria. 
 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
93.  The Overseas Private Investment Corporation (OPIC), a USG 
sponsored entity, can make insurance and project finance resources 
available to U.S. investors in Albania.  OPIC's three main 
activities are risk insurance, project finance and investment funds. 
 Albania has also signed the Convention of Multilateral Investment 
Guarantees Agency (MIGA).  MIGA provides investment guarantees 
against certain non-commercial risks (i.e., political risk 
insurance) to eligible foreign investors for qualified investments 
in developing member countries.  MIGA's coverage is against the 
following risks: currency transfer restriction, expropriation, 
breach of contract, and war and civil disturbance.  It provides 
insurance against risks similar to that offered by OPIC; MIGA and 
 
TIRANA 00000103  017.3 OF 019 
 
 
OPIC can work together on projects.  MIGA offers long-term (up to 20 
years) political risk insurance coverage to eligible investors for 
qualified investments. 
 
94.  OPIC has closed its regional office based in Zagreb, Croatia. 
However, OPIC will continue to provide services for this region from 
its Washington Office. 
 
For information please contact John Moran at the following address: 
 
Overseas Private Investment Corporation 
1100 New York Ave., NW Washington, DC  20527 
Tel: 202-336-8400 
Email for general business inquiries to: info@opic.gov 
http://www.opic.gov/ 
 
For information on ExIm Bank please contact Craig O'Connor at the 
following address: 
 
Export-Import Bank of the United States 
811 Vermont Avenue, N.W. 
Washington, DC  20571 
Tel: 202-565-3946 
Email for general business inquiries to: info@exim.gov 
http://www.exim.gov/ 
 
95.  General inquires about USTDA's services should be made through 
USTDA's Information Resource Center by calling (703) 875-4357 or 
through USTDA's website: http://www.tda.gov/.  You may also contact 
us by sending an e-mail to info@ustda.govor by sending a fax to 
(703) 875-4009. 
 
Labor 
----- 
 
96.  Labor relations between employee and employer are regulated by 
individual employment contracts pursuant to Law 8549, dated January 
11, 1999, and the labor code, which was updated in July 2003.  The 
GoA has established the National Council of Labor, composed of 
government officials, trade unions and employers associations.  The 
government has also completed drafting a proposed Social 
Understanding Pact.  The major goal of the Pact is to improve social 
dialogue between the government, management and employees. 
 
97.  Albania's population of just over three million people includes 
a working population of slightly more than two million. The median 
age is young by European standards, just 29 years old compared to 40 
years of age in Italy. The current unemployment rate is officially 
13.5 percent, while private estimates go as high as 25 percent due 
to the lack of reliable statistics.  A high proportion of the 
under-40s speak two languages.  Foreign language training begins 
early in elementary education and continues through high school and 
university.  Albanian youth are generally skilled in Italian and 
Greek thanks to the influence and vicinity of both countries. 
English is common among the younger generation and has become the 
dominant foreign language taught in the Albanian education system, 
followed by French and German. 
 
98.  Albania has a tradition of strong secondary education offering 
advanced skills that prepare students to enter into the labor 
market.  Elementary education is compulsory and 80 percent of those 
who finish elementary school enroll to high school. The percentage 
of those who graduate from high school and enroll in university is 
62 percent.  In addition, the number of students who receive 
graduate degrees abroad has increased significantly, establishing a 
generation of skilled professionals.  While some members of the 
labor force are highly skilled, many work in inefficient industries 
with outdated technology.  However, Albanians are rapidly learning 
modern market practices and often display impressive 
entrepreneurship. 
 
99.  The minimum wage in Albania is lek 14,000 per month, among the 
lowest in the region.  In May 2007, the government approved the 
minimum reference salary for the private sector, which serves to 
calculate the rate of contributions for social and health insurance; 
it is not necessarily the actual salary an employee receives.  This 
proposal is aimed at countering the under reporting of revenue by 
businesses. 
 
100.  Albania adheres to all basic international labor organization 
conventions protecting worker rights.  However, given the 
desperation of many Albanians for work and the weakness of 
government institutions, compliance cannot be assured.  For example, 
child labor laws are poorly enforced and children sell cigarettes, 
candy, and other goods on the street. 
 
 
TIRANA 00000103  018.3 OF 019 
 
 
101.  Employment contracts can be for limited or a limited period, 
but as a general rule employment contracts are signed for an 
unlimited period if the duration is not specified properly in the 
contract. 
 
Foreign Trade Zones/Free Ports 
------------------------------ 
 
102.  The GOA approved a Law 9789, dated July 19. 2007 "On the 
Establishment and Functioning and Economic Zones", abolishing Law 
8636, dated July 6, 2000, "On Free Zones."  The current legislation 
regulates the establishment of economic zones and related matters 
and makes the establishment and the functioning of such zones more 
efficient.  It anticipates the establishment of free trade zones and 
industrial parks near ports, airports or at the crossroads of 
international transport.  Economic zones are proposed by the 
Ministry of Economy and approved by the Council of Ministers on a 
case-by-case basis.  The later has the power to define the status of 
the zone (either a free zone or an industrial park), areas and 
boundaries, the economic activities to be performed within the 
zones, the period of the zone functioning, the method of granting 
the permission (lease, concession, etc.) and the procedures for the 
selection of the "developer."  The selection of the "developer" of 
the economic zones is based on the criteria defined in the law 9663, 
dated December 18, 2006 "On Concessions."  Law 9121, dated 7 July, 
2003 "On the Protection of the Competition" is applicable on the 
economic zones. 
 
103.  The GOA approved two industrial parks, one in Shengjin, near 
the Shengjin port and another one in Koplik, north Albania; both 
zones have an operating life period of 35 years. The land for both 
will be given on concession and the activities to be performed in 
both zones are production, manufacturing and agro-processing, trade, 
export-import and other supporting activities.  Albinvest will serve 
as a "one- stop-shop" for the licensing of "users."  The functioning 
of those zones starts following the construction of the surrounding 
boundaries, entrance and exit gates and the customs office (in the 
case of a free zone.) 
 
104.  Another three zones have been identified: Kurum - Durres Port, 
Spitalle -Durres and Shkoder.  Other locations under consideration 
are Vlore, Durres-Shkozet, Elbasan and Korce.  The largest one is 
expected to be approved during 2008 and will be located in Durres, 
near Albania's largest port. 
 
105.  The development of economic zones is considered by the 
government as a necessary step to ensure economic growth, and 
increase employment and competitiveness of the Albanian economy in 
the regional and international markets. 
 
Foreign Direct Investment Statistics 
------------------------------------ 
 
106.  The Bank of Albania reported the following figures for foreign 
direct investment in Albania, in millions of U.S. dollars: 2000 
(143); 2001 (207); 2002 (135), 2003 (178), 2004 (341), 2005 (270) -- 
2006 (325) and at the end of the third quarter of 2007, FDI reached 
Euro 370 million (USD 530 million).  METE's projection for 2007 is 
Euro 400 million (USD 570 million.)  During 2007 the GOA received 
Euro 120 million from the privatization of the state-owned telecom 
operator, Albtelekom. 
 
107.  METE's projection for 2008 may be optimistic, with FDI 
projected to reach Euro 500 million, fueled mainly by three 
privatizations scheduled to complete in 2008 and the strong foreign 
investor interest in strategic sectors like energy generation, oil, 
cement production, mining, tourism, etc. The latter is fueled by the 
reforms undertaken by the GOA in the legal and fiscal areas. 
Specifically, the new law on concessions paved the way for 
interested parties to submit unsolicited proposals and this resulted 
in a record number of investment proposals received by the GOA 
during 2007. 
 
108.  Cumulative FDI for the period 1995-2006 is USD 1.75 billion or 
an average of USD 58 per capita, among the lowest in the region. 
Sixty percent has come via the privatization process.  Investment 
from U.S. firms has been limited to large scale infrastructure 
contracts with the Government, Bechtel and Lockheed Martin being the 
principal companies.  Net flows of foreign direct investment (FDI) 
increased from 3.3 percent of GDP in 2005 to 3.6 percent in 2006, 
equivalent in absolute terms to an increase of around 16 percent. 
The telecommunications sector took the largest share of cumulative 
FDI inflows in 2006 (35 percent), followed by industry (32.5 
percent) and services (11.8 percent) and for 2007 the projection is 
for telecommunications to be followed by the energy and industry 
sectors. 
 
TIRANA 00000103  019.3 OF 019 
 
 
 
109.  There are no reliable estimates of Albanian direct investment 
abroad, but it is believed to be significantly less than foreign 
investment here.  According to METE, Direct Foreign Investment in 
2006 totaled USD 400 million, a 100 percent increase over total FDI 
in 2005.  Telecommunications, industry and services were the leading 
economic sectors for foreign investment. 
 
WITHERS