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UNCLAS SECTION 01 OF 11 TIRANA 000054 
 
SIPDIS 
 
STATE FOR EEB/IFD/OMA 
STATE FOR EUR/SCE 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC
 
SUBJECT: INVESTMENT CLIMATE REPORT: PART TWO 
 
TIRANA 00000054  001.4 OF 011 
 
 
¶G. PROTECTION OF PROPERTY RIGHTS 
 
Intellectual Property Rights 
---------------------------- 
 
The principal law that covers intellectual property rights and 
protects copyrights, patents, trademarks, stamps, marks of origin, 
and industrial designs is Law No. 9380 which is dated April 2005. 
In July 2003, GOA passed Anti-piracy law No 9124 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, but it 
did not cover satellite or cable television programming.  In order 
to close the loophole in the legislation and regulate adequately 
digital broadcasting, in May 2007 the Parliament approved the Law 
No. 9742 "On Digital Broadcasting". Albania is a signatory of 
different international agreements on Intellectual Property Rights 
Patents and Trademarks. 
 
A new industrial property law was approved in July 2008. The new law 
brings Albanian legislation for the protection of industrial 
property into harmony with EU legislation, directives of the 
European Commission, the European Convention on patents, the TRIPS 
agreement (commercial aspects of industrial property rights) as well 
as other international agreements ratified by Albania in the field 
of industrial property. 
 
In addition, amendments to the provisions implementing the Customs 
Code relating to intellectual property rights and brand controls 
were adopted in order to allow products to be classified as "fake", 
"pirated" or "liable to infringe the rights of patent or certificate 
owners". 
 
Implementation of Copyright Law 
------------------------------ 
 
There has been limited progress on the proper implementation of 
intellectual property rights. In 2006, the Albanian Copyright Office 
was established. It operates under the Ministry of Culture, Sport 
and Youth and has signed agreements with different stakeholders 
including the Competition Authority, the National Council of Radio 
and Television, the National Cinematography Centre, the Forum for 
the Protection of Producers and Screenwriters and the tax and 
customs administrations, with the aim of fighting piracy and 
enforcing the copyright law. However, the most successful 
institution in combating broadcast piracy remains NCRT which has 
tried to ensure that only licensed programming is allowed to be 
broadcast on television and penalized those stations in 
noncompliance. Nonetheless, law enforcement remains incomplete and 
violations of copyright and other intellectual property rights are 
common.  The most frequently pirated products are western movies and 
sport events broadcasted by TV channels. Also pirated copies of DVDs 
and CDs, imported from other countries, are easily purchased in 
shops all over the country. The number of cases of violation of 
copyright law brought to court remains low. 
 
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. A Board of Appeal was established in the Directorate 
for Patents and Trademarks and the Directorate completed the 
reorganization of its computer system. A bulletin of industrial 
property rights containing records of registrations and changes of 
intellectual property rights titles is published and an on-line 
version is available on the GDPT website. The Administrative Council 
of the EPO approved Albania's request for accession to the European 
Patent Convention and its ratification is underway. 
 
Further capacity strengthening and additional human resources for 
both the Copyright Office and the GDPT are 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 low level of fines 
under the current law. Further efforts are needed to improve 
inter-institutional cooperation and the ability of customs 
authorities to detect counterfeit products. 
 
Immovable Property Rights 
------------------------ 
 
Enforcement of immovable property rights in Albania remains an 
evolving issue.  Overall there has been some progress on 
strengthening property rights, but proper coordination and further 
acceleration of restitution and compensation plans are needed. 
Unresolved property issues have undermined efforts to develop a 
 
TIRANA 00000054  002.4 OF 011 
 
 
functional land market and keep FDI well below its potential. 
Immovable property rights (land rights) are still far from well 
defined, especially in the coastal areas where there is potential 
for tourism development.  Large-scale property confiscation during 
communist rule and the subsequent nationalization of the economy 
completely altered Albania's economic landscape. Property 
restitution, corruption, illegal buildings and enforcement of court 
decisions are among the most serious challenges facing Albania in 
its economic development. 
 
Currently, enforcement of property rights is pursued civil court 
system.  Almost 70 percent of all civil cases in the Albanian courts 
involve property disputes; many of these cases linger for years 
before reaching a final ruling.  To date, 216 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 property registration process has begun in approximately 95% of 
the country but has only been finalized or completed in 25% of urban 
areas and 85% of rural areas. More lucrative land in high value 
coastal areas has not yet been fully registered due to existing 
disputes over property title.  The main institutions dealing with 
property restitution and registration are the Agency for Restitution 
and Compensation and the Office for the Registration of Immovable 
Properties. 
 
The presence of a large number of informal (unlicensed or 
unregistered) buildings spread all over the country has been another 
major impediment to secure property titles. In 2006, Parliament 
approved the law on the legalization of the informal buildings. The 
Agency for the Legalization, Urbanization and Integration of 
Informal Areas (ALUIZNI) is in charge of implementing the 
legalization process. The number of informal buildings is estimated 
to be 350,000 and the surface occupied is estimated to be 320,000 
hectares.  The first stage of submissions of self-declaration 
requests for legalization is completed. To date, the process is 
almost half way through since 50% of the informal constructions have 
been identified and approved for legalization. 
 
¶H. TRANSPARENCY OF REGULATORY SYSTEM 
 
Albania's regulatory system is not fully transparent but the 
situation is improving.  Businesses have difficulty obtaining copies 
of laws and regulations especially in their draft form.  Laws and 
regulations are sometimes inconsistent, leading to unreliability in 
their interpretation.  Proposed laws and regulations are sometimes 
not published in draft form for public comment.  There has been 
modest improvement in this area recently as several state agencies 
operate well-organized websites which are updated regularly.  Some 
agencies 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. 
 
 
¶I.  EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
The financial sector in Albania has in general been spared from the 
global financial turmoil, primarily due to the low amount of loans 
in relation to total deposits. Also the lack of a 
housing/construction bubble has minimized pressure on the banks. 
However, a significant reduction in bank deposits took place in the 
fall of September 2008 as individuals withdraw their money due to 
fear from losing their savings. Since October 2008 deposits dropped 
by about 15% and during 2009 they were below their top level. After 
summer 2009 there has been a stable increase in bank deposits and by 
the end of 2009 they reached their pre-crisis level. Lower deposits 
created some liquidity issues but banks were well equipped to face 
the situation. Banks have increased their equity capital to better 
face the situation and also BOA has an active monitoring program to 
ensure enough liquidity in the banking sector. 
 
The financial sector is totally dominated by commercial banks funded 
with private capital. Currently, 16 banks are operating in the 
country - two domestically owned banks and 14 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. The performance of the financial sector in channeling 
savings towards productive investment has substantially improved, 
but still remains weak in comparison to Western standards. Banks in 
Albania offer standard banking services such as deposit accounts, 
 
TIRANA 00000054  003.4 OF 011 
 
 
foreign transfers, trade finance and, increasingly, mortgages. 
 
Market competition has greatly strengthened and the quality of 
banking services provided to the public have significantly improved. 
 Major Western banks, such as the Italian Intesa SanPaolo Group and 
Societe Generale, entered the market through the purchase of 
domestic banks. Raiffeisen (Austrian) and several Greek Banks are 
also very active in the banking sector. The banking network has 
extended to most parts of Albania and developments in this respect 
are promising. In November 2009, there were 517 branches, up from 
392 at the end of 2007 and 127 in 2005.  Several banks offer ATM and 
Point-of-Sales terminals and their number is growing rapidly. In 
November 2009 there were 725 ATMs up from 335 at the end of 2006 and 
3,936 Point-of-Sale terminals up from 1,183 at the end of 2006. 
Since 2005, most state employees receive their salaries through 
electronic transfers and have been offered debit cards for all their 
transactions. In 2008 the private sector also switched to paying 
salaries through electronic transfer.  By September 2009 banks had 
issued 557,000 electronic payments cards (97 percent debit cards and 
3 percent credit cards) up from 353,465 or 36.6% at the end of 2006. 
However, due to the negative effect of the financial crisis, there 
has been a reduction in the number of cash/credit cards that 
individuals use. The banking system has been a profitable investment 
sector and has companies have had significant profits over the past 
several years. 
 
In the absence of a stock market, banking sector remains the main 
channel for business financing. Credit to the economy has 
experienced an impressive growth since 2005, in part due to the low 
starting point. The credit growth rate was 74 % in 2005, 56 % in 
2006 and 50% in 2007 and even in 2008, loans grew by almost 30%. The 
growth has slowed down considerably during the first nine months of 
2009 to about 16%. In November 2009 loans constituted 50.3% of total 
banking assets compared to 25% at the end of 2005.  Credit to 
businesses made up 67% of banks' credit portfolios. The fast growth 
of credit has increased non-performing loans as well. Their share to 
total credit increased to almost 10% by November 2009 compared to 
4.3% in July 2008 and just 2.3% at the end of 2005. 
 
In order to keep credit growth at sustainable levels, supervision 
was strengthened during the last two years. The Law on Regulation of 
Credit Risk Management was amended, establishing higher capital 
requirements for banks that record credit growth exceeding set 
benchmarks. The credit information bureau opened in January 2008 and 
is contributing to an increase in the information and transparency 
in the banking sector. 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. 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. 
 
The service of e-banking transactions as a banking product appeared 
after 2004 and has slowly expanded but still remains underutilized 
by the public.  Multiple banks offer 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. 
 
The low level of financial intermediation remains an impediment to 
the development of the private sector, particularly to small and 
medium enterprises (SMEs).  Business report that the following 
issues affect access to credit in Albania; high interest rates, 
distrust of the banking system, high operating costs of banks and 
poor business/project proposals. 
Credit lines can be obtained on the local market, but interest rates 
can be high; under some circumstances, between 10 and 15 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) and the entity requesting credit needs to be at least 51 
percent privatized. 
 
The insurance industry has also experienced Qh rates of growth 
over recent years but, relative to neighboring countries, the market 
for insurance in Albania remains largely untapped, especially for 
life insurance. The insurance market experienced an increase of 9.43 
% for the period January - November 2009 compared with the same 
period of the previous year. Gross insurance premiums amounted to 
$75.2 million for the same period. Non-life insurance represents 91% 
of the total premiums while the rest is life insurance. 
 
The sector is expanding and has attracted foreign investors as two 
Austrian companies and one Greek have entered the market through the 
 
TIRANA 00000054  004.4 OF 011 
 
 
acquisition of controlling shares of domestic companies. American 
Reserve Life Insurance became the most recent company to enter the 
domestic market through its privatization of INSIG. There are ten 
companies present in the insurance market, eight in the general 
non-life insurance and two offering only life insurance. GOA has 
launched the privatization process of the state owned company INSIG 
but the process has been unsuccessful mainly due to the lack of 
interest by international companies. 
 
¶J. POLITICAL VIOLENCE 
 
Albania held parliamentary elections on June 28, 2009.  The new 
government was formed with a coalition between the ruling Democratic 
Party (DP) and the Movement for Socialist Integration (LSI).  The 
Socialist Party (SP) has boycotted parliament since it convened in 
September 2009 and has called for investigations into alleged 
electoral fraud in the June 28 elections.  Despite a highly 
polarized political atmosphere, the elections and the ensuing 
boycott have been peaceful and political violence has been avoided. 
Small crime, specifically incidents of extortion, theft and robbery, 
continue to be of some concern to the business community. 
Nonetheless, the domestic climate has been steadily improving and 
the violent crime rate has substantially decreased.  Albania is a 
steady source of stability in the region and relations with 
neighboring countries are friendly.  The U.S. enjoys a particularly 
amicable bilateral relationship with Albania, which is a staunch 
American ally in the fight against international terrorism and has 
contributed troops to the war efforts in Iraq and Afghanistan. 
Albania joined NATO in April 2009 and has begun the process for 
European Union accession. 
 
¶K. CORRUPTION 
 
Corruption, including bribery, raises the costs and risks of doing 
business and remains an area of concern in Albania.  Corruption has 
a corrosive impact on both market opportunities overseas for U.S. 
companies and the broader business climate.  It also deters 
international investment, stifles economic growth and development, 
distorts prices, and undermines the rule of law.  The government has 
made progress in reducing corruption through strengthening judiciary 
and police capabilities and introducing new technologies that 
automate government processes and increase transparency.  Corruption 
is still believed to be endemic in Albania and a major challenge to 
economic development. 
 
Legal Background 
---------------- 
 
Albania has ratified several international treaties and conventions 
relating to corruption and is member of some of the major 
international organizations and programs dealing with corruption 
and/or organized crime. Albanian legislation has been amended and 
changed frequently in recent years to strengthen the framework 
dealing with anti-corruption and organized crime in order to bring 
the Albanian legislation in line with civil and criminal conventions 
of the European Union. 
 
Albania has ratified The Civil Law Convention on Corruption (Council 
of Europe); The Criminal Law Convention on Corruption (Council of 
Europe); The Additional Protocol to Criminal Law Convention on 
Corruption (Council of Europe); the United Nations Convention 
Against Corruption (UNCAC).  Albania has also ratified a number of 
key conventions in the broader field of economic crime, including 
the Convention on Laundering, Search, Seizure and Confiscation of 
the Proceeds from Crime (2001) and Convention on Cybercrime (2002). 
Albania has been a member of the Group of States Against Corruption 
(GRECO) since the ratification of the Criminal Law Convention on 
Corruption in 2001 and has been following the recommendation of 
GRECO related to incrimination and transparency of political party 
funding. Albania is also a member of the Stability Pact 
Anti-Corruption Network (SPAI). 
 
Bribery is illegal in Albania. Under the Albanian penal code both 
active and passive bribing, abuse of office and undue influence are 
considered criminal offences.  In addition to basic corruption 
offenses, there are specific criminal provisions addressing 
corruption by persons exercising public functions, high State 
officials and locally elected persons, judges, prosecutors and 
employees of the judicial bodies, private sector, foreign public 
officials, etc. According to the EU progress report 2009, out of 
thirteen recommendations from the Council of Europe Group of States 
against corruption (GRECO) report on Albania, two recommendations 
regarding the rules on political parties financing remain to be 
addressed. 
 
The implementation of the Intersectoral Strategy on the Prevention 
and Combating of Corruption 2008-2013 adopted in October 2008 has 
 
TIRANA 00000054  005.4 OF 011 
 
 
started. However, realistic implementation mechanisms and timeframes 
are missing, together with monitoring indicators and adequate 
resources. The government has also embarked on reforms that aim at 
tackling corruption by minimizing direct contact between the private 
sector and the administration. E-government reforms like 
e-procurement, e-taxation, one-stop-shop for registration and 
licensing of businesses have had a positive impact in reducing 
corruption as a result of direct contacts. 
 
Main institutions involved in combating corruption include the 
Inter-Ministerial Anti-Corruption Task Force headed by the Prime 
Minister. This structure replaced the former Anti-Corruption 
Monitoring Group and according to the law serves as a coordinating 
body for anti-corruption initiatives. The Anti-Corruption Task Force 
is supported by the Departmentof Internal Admiistrative Control 
and Anti-Corruption (DIAC) whih has relatively wide-ranging powers 
to investigte allegations of irregularities by public officias. 
DIAC serves as an Inspectorate oop all centralexecutive public 
institutions and is mandated toinvestigate allegations of 
proceduaa  rreeuuaaiiies and irregularities in h(  a d i(g"o*+Q 
ppblicf"inances. It reports to the Prime Mins"e .*Te HQghh 
Inspectorate for the eellrrttoo  nn  uuii  of Assets (HIDAA) 
establishd i(  0 3"coll&ccssaaddaadi(ts the annual declaratio  f"Qa s"t s and properties of mid-high level public officials in central 
and local executive agence s as well as politicians, and supervises 
the prevention of conflicts of interest situations. PolicQ 
authorities and the Prosecutor General's Officeaare 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. 
The Joint Investigative Unit against corruption and economic crime 
was established in 2007 in the Tirana District Prosecution Office. 
The unit is a multi-agency taskforce composed of prosecutors and 
judicial police officers working together on specific 
investigations.  Based on the success of the unit, six more units 
have been established in regions throughout Albania to prosecute 
corruption and economic crimes outside Tirana.  The High State 
Control is the highest institution of economic and financial 
control. It supervises the economic activity of state institutions 
and other state juridical persons as well as the use and 
preservation of state funds by the organs of central and local 
government. It is subject only to the Constitution and laws, and the 
Head of the High State Control is appointed and dismissed by the 
Assembly upon proposal of the President. In the Judiciary, the High 
Council of Justice is in charge of appointment and removal of judges 
and prosecutors in the first and second instances. Specialized 
inspectors investigate allegations of misconduct of judges and the 
High Council of Justice then takes the relevant disciplinary 
measures, including removal.   However, corruption remains a major 
problem. Conviction rates in corruption cases remain low. 
 
 
 
U.S. Companies 
-------------- 
 
It is important for U.S. companies, irrespective of their size, to 
assess the business climate in the relevant market in which they 
will be operating or investing, and to have an effective compliance 
program or measures to prevent and detect corruption, including 
foreign bribery.  U.S. individuals and firms operating or investing 
in foreign markets should take the time to become familiar with the 
relevant anticorruption laws of both the foreign country and the 
United States in order to properly comply with them, and where 
appropriate, they should seek the advice of legal counsel. 
 
The U.S. Government seeks to level the global playing field for U.S. 
businesses by encouraging other countries to take steps to 
criminalize their own companies' acts of corruption, including 
bribery of foreign public officials, by requiring them to uphold 
their obligations under relevant international conventions.  A U. S. 
firm that believes a competitor is seeking to use bribery of a 
foreign public official to secure a contract should bring this to 
the attention of appropriate U.S. agencies, as noted below. 
 
U.S. Foreign Corrupt Practices Act: In 1977, the United States 
enacted the Foreign Corrupt Practices Act (FCPA), which makes it 
unlawful for a U.S. person, and certain foreign issuers of 
securities, to make a corrupt payment to foreign public officials 
for the purpose of obtaining or retaining business for or with, or 
directing business to, any person. The FCPA also applies to foreign 
firms and persons who take any act in furtherance of such a corrupt 
payment while in the United States. For more detailed information on 
the FCPA, see the FCPA Lay-Person's Guide at: http:// 
www.justice.gov/ criminal/fraud/docs/dojdocb.html. 
 
Other Instruments: It is U.S. Government policy to promote good 
 
TIRANA 00000054  006.4 OF 011 
 
 
governance, including host country implementation and enforcement of 
anti-corruption laws and policies pursuant to their obligations 
under international agreements. Since enactment of the FCPA, the 
United States has been instrumental to the expansion of the 
international framework to fight corruption.  Several significant 
components of this framework are the OECD Convention on Combating 
Bribery of Foreign Public Officials in International Business 
Transactions (OECD Antibribery Convention), the United Nations 
Convention against Corruption (UN Convention), the Inter-American 
Convention against Corruption (OAS Convention), the Council of 
Europe Criminal and Civil Law Conventions, and a growing list of 
U.S. free trade agreements. 
 
OECD Antibribery Convention: The OECD Antibribery Convention entered 
into force in February 1999.  As of December 2009, there are 38 
parties to the Convention including the United States (see http:// 
www.oecd.org/).  Major exporters China, India, and Russia are not 
parties, although the U.S. Government strongly endorses their 
eventual accession to the Convention.  The Convention obligates the 
Parties to criminalize bribery of foreign public officials in the 
conduct of international business. The United States meets its 
international obligations under the OECD Antibribery Convention 
through the U.S. FCPA.  Albania is not a signatory country of the 
OECD Convention on Corruption. 
 
UN Convention: The UN Anticorruption Convention entered into force 
on December 14, 2005, and there are 143 parties to it as of December 
2009 (Please go to see http://www.unodc.org/unodc/en 
/treaties/CAC/signatories.html).  The UN Convention is the first 
global comprehensive international anticorruption agreement.  The UN 
Convention requires countries to establish criminal and other 
offences to cover a wide range of acts of corruption.  The UN 
Convention goes beyond previous anticorruption instruments, covering 
a broad range of issues ranging from basic forms of corruption such 
as bribery and solicitation, embezzlement, trading in influence to 
the concealment and laundering of the proceeds of corruption.  The 
Convention contains transnational business bribery provisions that 
are functionally similar to those in the OECD Antibribery Convention 
and contains provisions on private sector auditing and books and 
records requirements.  Other provisions address matters such as 
prevention, international cooperation, and asset recovery.  Albania 
signed the UN Anti-Corruption Convention on December 2003 and 
ratified it in 2006. 
 
OAS Convention: In 1996, the Member States of the Organization of 
American States (OAS) adopted the first international anticorruption 
legal instrument, the Inter-American Convention against Corruption 
(OAS Convention), which entered into force in March 1997.  The OAS 
Convention, among other things, establishes a set of preventive 
measures against corruption, provides for the criminalization of 
certain acts of corruption, including transnational bribery and 
illicit enrichment, and contains a series of provisions to 
strengthen the cooperation between its States Parties in areas such 
as mutual legal assistance and technical cooperation.  As of 
December 2009, the OAS Convention has 33 parties (see http:// 
www.oas.org/ juridico/english/Sigs/b-58.html) 
 
Council of Europe Criminal Law and Civil Law Conventions: Many 
European countries are parties to either the Council of Europe (CoE) 
Criminal Law Convention on Corruption, the Civil Law Convention, or 
both.  The Criminal Law Convention requires criminalization of a 
wide range of national and transnational conduct, including bribery, 
money-laundering, and account offenses.  It also incorporates 
provisions on liability of legal persons and witness protection. 
The Civil Law Convention includes provisions on compensation for 
damage relating to corrupt acts, whistleblower protection, and 
validity of contracts, inter alia.  The Group of States against 
Corruption (GRECO) was established in 1999 by the CoE to monitor 
compliance with these and related anti-corruption standards. 
Currently, GRECO comprises 46 member States (45 European countries 
and the United States). As of December 2009, the Criminal Law 
Convention has 42 parties and the Civil Law Convention has 34 (see 
www.coe.int/greco.) 
 
Free Trade Agreements: While it is U.S. Government policy to include 
anticorruption provisions in free trade agreements (FTAs) that it 
negotiates with its trading partners, the anticorruption provisions 
have evolved over time.  The most recent FTAs negotiated now require 
trading partners to criminalize "active bribery" of public officials 
(offering bribes to any public official must be made a criminal 
offense, both domestically and trans-nationally) as well as domestic 
"passive bribery" (solicitation of a bribe by a domestic official). 
All U.S. FTAs may be found at the U.S. Trade Representative Website: 
http:// www.ustr.gov/trade-agreements/free-trade-agre ements. 
 
Local Laws: U.S. firms should familiarize themselves with local 
anticorruption laws, and, where appropriate, seek legal counsel. 
 
TIRANA 00000054  007.4 OF 011 
 
 
While the U.S. Department of Commerce cannot provide legal advice on 
local laws, the Department's U.S. and Foreign Commercial Service can 
provide assistance with navigating the host country's legal system 
and obtaining a list of local legal counsel. 
 
Assistance for U.S. Businesses: The U.S. Department of Commerce 
offers several services to aid U.S. businesses seeking to address 
business-related corruption issues.  For example, the U.S. and 
Foreign Commercial Service can provide services that may assist U.S. 
companies in conducting their due diligence as part of the company's 
overarching compliance program when choosing business partners or 
agents overseas.  The U.S. Foreign and Commercial Service can be 
reached directly through its offices in every major U.S. and foreign 
city, or through its Website at www.trade.gov/cs. 
 
The Departments of Commerce and State provide worldwide support for 
qualified U.S. companies bidding on foreign government contracts 
through the Commerce Department's Advocacy Center and State's Office 
of Commercial and Business Affairs.  Problems, including alleged 
corruption by foreign governments or competitors, encountered by 
U.S. companies in seeking such foreign business opportunities can be 
brought to the attention of appropriate U.S. government officials, 
including local embassy personnel and through the Department of 
Commerce Trade Compliance Center "Report A Trade Barrier" Website at 
tcc.export.gov. 
 
Guidance on the U.S. FCPA: The Department of Justice's (DOJ) FCPA 
Opinion Procedure enables U.S. firms and individuals to request a 
statement of the Justice Department's present enforcement intentions 
under the antibribery provisions of the FCPA regarding any proposed 
business conduct.  The details of the opinion procedure are 
available on DOJ's Fraud Section Website at http://www.justice.gov/ 
criminal/fraud/fcpa. Although the Department of Commerce has no 
enforcement role with respect to the FCPA, it supplies general 
guidance to U.S. exporters who have questions about the FCPA and 
about international developments concerning the FCPA. For further 
information, see the Office of the Chief Counsel for International 
Counsel, U.S. Department of Commerce, Website, at http:// 
www.ogc.doc.gov/trans_anti_bribery.html.  More general information 
on the FCPA is available at the Websites listed below. 
 
Exporters and investors should be aware that generally all countries 
prohibit the bribery of their public officials, and prohibit their 
officials from soliciting bribes under domestic laws.   Most 
countries are required to criminalize such bribery and other acts of 
corruption by virtue of being parties to various international 
conventions discussed above. 
 
 
 
Anti-Corruption Resources 
------------------------- 
 
Some useful resources for individuals and companies regarding 
combating corruption in global markets include the following: 
 
Information about the U.S. Foreign Corrupt Practices Act (FCPA), 
including a "Lay-Person's Guide to the FCPA" is available at the 
U.S. Department of Justice's Website at: http:// www.justice.gov/ 
criminal/fraud/fcpa. 
 
Information about the OECD Antibribery Convention including links to 
national implementing legislation and country monitoring reports is 
available at: http:// www.oecd.org.  See also new Antibribery 
Recommendation and Good Practice Guidance Annex for companies: 
http:// www.oecd.org/dataoecd/11/40/44176910.pdf 
 
General information about anticorruption initiatives, such as the 
OECD Convention and the FCPA, including translations of the statute 
into several languages, is available at the Department of Commerce 
Office of the Chief Counsel for International Commerce Website: 
http:// www.ogc.doc.gov/ 
 
Transparency International (TI) publishes an annual Corruption 
Perceptions Index (CPI).     The CPI measures the perceived level of 
public-sector corruption in 180 countries and territories around the 
world.  The CPI is available at: http://www.transparency.org/.    TI 
also publishes an annual Global Corruption Report which provides a 
systematic evaluation of the state of corruption around the world. 
It includes an in-depth analysis of a focal theme, a series of 
country reports that document major corruption related events and 
developments from all continents and an overview of the latest 
research findings on anti-corruption diagnostics and tools.  See 
http:// www.transparency. org/publications/gcr. 
 
The World Bank Institute publishes Worldwide Governance Indicators 
(WGI).   These indicators assess six dimensions of governance in 212 
 
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countries, including Voice and Accountability, Political Stability 
and Absence of Violence, Government Effectiveness, Regulatory 
Quality, Rule of Law and Control of Corruption.  See 
http://info.worldbank.org/ governance/wgi/sc_country.asp.   The 
World Bank Business Environment and Enterprise Performance Surveys 
may also be of interest and are available at:  http:// 
go.worldbank.org/RQQXYJ6210. 
 
The World Economic Forum publishes the Global Enabling Trade Report, 
which presents the rankings of the Enabling Trade Index, and 
includes an assessment of the transparency of border administration 
(focused on bribe payments and corruption) and a separate segment on 
corruption and the regulatory environment.  See 
http://www.weforum.org 
 
Additional country information related to corruption can be found in 
the U.S. State Department's annual Human Rights Report available at 
http://www.state.gov/g/drl/rls/hrrpt/. 
 
Global Integrity, a nonprofit organization, publishes its annual 
Global Integrity Report, which provides indicators for 92 countries 
with respect to governance and anti-corruption. The report 
highlights the strengths and weaknesses of national level 
anti-corruption systems. The report is available at: 
http://report.globalintegrity.org/. 
 
 
 
¶L.  BILATERAL INVESTMENT AGREEMENTS 
 
 
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. 
As of June 1, 2009, Albania has concluded bilateral investment 
protection agreements with the following countries: 
 
Agreements in force: 
Greece, Germany, Italy, France, Austria, Netherlands, United 
Kingdom, Denmark, Sweden, Portugal, Belgium and Luxembourg, Spain, 
Finland, Hungary, Slovenia, Switzerland, USA, Turkey, Romania, 
Bulgaria, Macedonia, Russia, Israel, , China, Malaysia, Republic of 
Korea, Serbia, Montenegro, Moldavia, Kosovo and OPEC Fund for 
International Development. 
 
Signed Agreements: 
Ukraine, Tunisia, Syrian Arab Republic, Poland, Lithuania, Bosnia 
&Herzegovina, Islamic Republic of Iran, Kuwait, Libyan Arab 
Jamahiriya, Egypt, Czech Republic and Croatia. 
 
Albania has also signed agreements 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 laws. 
 
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, Croatia, Moldova, Kosovo , Turkey, Russian 
Federation, Malaysia, China, Egypt, Serbia, Montenegro, South Korea, 
Austria and Latvia.  Agreements are signed with Luxembourg, Spain, 
Singapore and Ireland and are awaiting ratification by parliaments. 
 
 
¶M. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
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 MIGA Convention, which established the 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 OPIC can work together on projects.  MIGA offers long-term 
(up to 20 years) political risk insurance coverage to eligible 
investors for qualified investments. 
 
In 1998, OPIC-supported the $200 million Southeast Europe Equity 
Investment Fund, which invested heavily in Southeastern Europe. OPIC 
supported its successor, SEEF II managed by Bedminster Capital. SEEF 
II has invested in the Albanian health sector by purchasing a 
 
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private hospital now known as the American Hospital as well one of 
the largest Internet Providers in Albania, ABCOM.  For more 
information on OPIC please visit http://www.opic.gov 
 
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 
 
¶N.  LABOR 
 
Labor relations between employee and employer are regulated by 
individual employment contracts pursuant to Law 8549, dated January 
11, 1999 ("On The Status Of The Civil Employee And The Labor Code") 
updated in 2003.  The GOA has established the National Council of 
Labor, composed of government officials, trade unions and employers 
associations.  Its major goal is to improve social dialogue between 
the government, management and employees. The institutions that deal 
with the labor market are: Ministry of Labor and Social Affairs, 
National Employment Service, State Labor Inspectorate and other 
private actors like Private Employment Agencies, and Private 
Vocational Training Centers. 
 
Employers and employees have the right to form trade unions (Labor 
Code, article 176). Trade unions are organized at the national level 
(according to industrial sector) and at the company level. The right 
to strike is sanctioned by Law no. 7458 (January 12, 1991) and by 
the Labor Code. Trade unions have the right to negotiate wages, 
working conditions, etc., and the employment contracts are 
applicable both to union and to non-union workers. Two main 
national-level trade unions, both affiliated with the ITUC 
(International Trade Union Confederation) are the Confederation of 
Trade Unions (KSSH) and The Union of the Independent Trade Unions of 
Albania (BSPSH).  Employment contracts can be for a limited or an 
unlimited period, but as a general rule employment contracts are 
signed for an unlimited period if the duration is not specified 
properly in the contract. 
 
The labor force in Albania is about two million people, of which 
almost 1.2 million workers live abroad, mostly in Greece and Italy. 
During the third quarter of 2009, the official unemployment rate 
reached 12.76%.  A high proportion of Albanians under-40 speaks two 
languages.  Albanian youth generally speak Italian and Greek and 
English are common among the younger generation.  While some members 
of the labor force are highly skilled, many work in low-skill 
industries or have out-of-date technological skills.  However, 
Albanians are rapidly learning modern market practices and often 
display impressive entrepreneurship. 
 
Albania has a tradition of strong secondary education that prepare 
students to enter the labor market.  Elementary education is 
compulsory and a large percentage of those who finish elementary 
school continue to high school. 62 percent of high school graduates 
go on to college. The GOA has opened new public universities in 
Albania which along with the new private universities represent 
impressive growth in this sector.  In addition, the number of 
students who receive graduate degrees abroad has increased 
significantly, establishing a generation of skilled professionals 
which the government is trying to lure back to Albania through the 
Brain Gain Project (a UNDP program offering financial incentives to 
Albanians educated abroad to return to Albania to work). In 2007, 
the GOA established the Excellency Fund which aims to promote and 
financially reward youngsters and students during their studies. 
 
The average salary in public administration during the third quarter 
of 2009 amounted to 42,000 leke (about $450) monthly. In May 2009, 
the GOA increased the minimum monthly wage applicable for both the 
public administration and the private sector to 18,000 leke (about 
$200), which is still among the lowest in the region.  However, 
since 2008, to counter informality in the labor sector due to under 
reporting of revenue by businesses, the government is using minimum 
reference salaries (MRS) for the private sector.  The MRS 
establishes a standard wage depending on job code for all employees 
and is used to calculate both the personal income tax and the rate 
of contributions for social and health insurance. It is not 
necessarily the actual salary an employee receives. 
 
¶O.  CORPORATE SOCIAL RESPONSIBILITY 
 
In general, there is little awareness of corporate social 
responsibility among producers and consumers with the exceptions of 
large companies, mostly foreign companies, which try to employee 
social corporate responsibility principles.  The laws and 
legislation related to CSR exist in Albania and if implemented fully 
could constitute a strong base for further development of CSR 
practices in Albania.  Even academic instruction on CSR in Albania 
is in a very early stage of development. Corporate Governance 
 
TIRANA 00000054  010.4 OF 011 
 
 
course, Environmental Engineering and Business Ethics curricula have 
only been introduced in the past several years at some 
universities. 
 
 
¶P.  COMPETITION FROM STATE-OWNED ENTERPRISES 
 
In general, there is little discrimination between public and 
private companies operating in the same sector but there have been 
allegations by businesses that believe state-owned companies were 
granted preferential treatment in government contracts. 
 
Privatization process of SOEs in Albania is nearing completion and 
SOEs are active only in few sectors like extraction and sale of oil 
and gas (Albpetrol), energy generation (KESH), insurance (INSIG) and 
ports. 
 
 
¶Q. FOREIGN-TRADE ZONES/FREE PORTS 
 
The GOA approved Law 9789, dated July 19. 2007 "On the Establishment 
and Functioning of 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 latter 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." 
 
During 2007-2009, the GOA approved the construction of several 
industrial parks: Shengjin, Koplik, Vlore, Elbasan, Lezhe, and 
Shkoder and one industrial and energy park in Spitalle, Durres (the 
largest, with 850 hectares). Four of these parks are located near 
the main ports of Albania - Durres, Vlore, Shengjin. The developers 
for the Shengjin, Vlora and Koplik/Shkoder have been selected while 
selection of other developers is still in process as of January 
¶2009. 
Industrial zones may be used for production, manufacturing, 
agro-processing, trade, export-import and supporting activities. 
Albinvest will serve as a "one- stop-shop" for the licensing of 
tenants.  The development of economic zones will promote economic 
growth and increase employment and the competitiveness of the 
Albanian economy. 
 
In 2009, Albanian government approved the first free zone adjacent 
to the approved container port in Vlore. The Ministry of Economy and 
Energy, initiated a process of open international tender for the 
execution and completion of a Concession Agreement (with a duration 
of 35 years), for a 478 hectares area. The tender deadline was 
December 18 and the Ministry is expected to announce the winner. 
 
¶R.  FOREIGN DIRECT INVESTMENT STATISTICS 
 
The FDI has increased although it still remains among the lowest in 
the region. The cumulative FDI is also the lowest in the region. The 
Bank of Albania reported the following figures for foreign direct 
investment in Albania. Regardless of numerous contracts, only a few 
projects materialized in 2009. 
 
FDI in million Euro per Year (2004)279, (2005)212, (2006)259, 
(2007)481, (2008)653, (2009)580* 
Source: Bank of Albania 
*BoA estimate for the first three quarters of 2009 
 
FDI during the first nine months of 2009 is estimated to have 
reached 580 million euro despite optimistic GOA projections for 2009 
fueled mainly by strong investor interest witnessed during 
2007-2008. A large part of FDI is due to privatizations. The 
Albanian government collected 103 million Euro from the 
privatization of 76 percent of the shares of the distribution arm of 
Albanian Power Corporation; 48 million Euro from the privatization 
of 12.6 percent of AMC state controlled shares; 5 million euro from 
the privatization of 40% of GOA controlled shares of the United Bank 
of Albania. INSIG (insurance company) privatization failed during 
the negotiation process with the winer and it might take place 
during 2010. 
 
Leading investor nations in Albania include: Italy, Greece, Turkey, 
 
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Austria, Germany, Canada, Spain and the U.S.  Foreign investment 
focuses on financial sector, oil and gas production, 
telecommunications, mining, metallurgy, energy, manufacturing and 
cement production.