Imagine that you are an entrepreneur somewhere in Northern Europe. Things are going very well for your business. You have a turnover of let’s say 1 billion Euros and have the competition on your heels. You feel like a hidden hero, and want to come up and expand. What you do in this case, is look at new opportunities and new market to invest. Let’s say you look at Albania.
What would you look at? You would look at the market. Albania has a pretty established market, has a strategic geographical position (with ports on both the Adriatic and the Ionian Sea) and is also part of the CEFTA agreement. You look at the recourses; the country has significant natural resources. You look at the workforce: Albania has a young cheap manpower. And finally you look at the political situation.
And here you get drawn back where you see that the problem of corruption and the justice system reform is theme de jour. What would you? They say uncertainty kills investments and what foreign direct investors are experiencing these days is this kind of uncertainty about the implications of a lack of rule of law on their businesses.
“Rule of law is crucial for the business. Every day we read on the newspapers about the justice reform and we are unclear on what is the perceptive of the country if the justice reform is passed or not. We cannot move forward if we have corruption. Business in Albania needs effectiveness”, said Silvio Pedrazzi, CEO, Intesa Sanpaolo Bank Albania and President of Foreign Investors Association of Albania on a conference on Justice reform impact on Foreign Direct Investments in Albania.
According to Foreign Investors Association business survey show that all top five issues of concern for business are related in essence to the rule of law.
71% of businesses consider courts as a problem, 69% consider corruption as a problem, and then comes informality, frequent changes of legislation and understanding of tax legal framework and procedures. General public is even clearer: more than 90% of the people of Albania strongly support the need for judicial reform.
“It is obvious, even to those who do not want to see, that that is there is no trust in current judicial system of Albania, and that this situation must change. There is so no time for hide and sick. It hurts businesses, it hurts the economy”, noted the EU Ambassador, Romana Vlahutin in her speech.
Albania had a total inflow of 869 million euro in 2014 from foreign direct investment, FDI. The extraction industry made up 58 per cent of the sum while transport and telecommunications came second with 13 per cent and energy third with 9 per cent. While in January 2016 it experienced a decline compared to the same period of a year before, from 245.53 million Euros in January 2015 to 168.93 million Euros in 2016.
“Albania loses millions of dollars in potential foreign investment every year due to its failed judicial system. In the past year alone, we have spoken with multiple companies -- one seeking to invest up to $250 million. These companies have opted to invest elsewhere out of fear that they would not be able to get a fair trial in Albanian courts”, said David Muniz, U.S Charge D’Affaires at the Foreign Investors Association of Albania Event.
“U.S. investors avoid the justice system in Albania because they have lost faith in it. That is not a very encouraging sign”, said Muniz.
Justice reform has been an ongoing issue for more than a year and a half now. Measures to fight corruption, to secure property rights/titles, reduce the high rate of non-performing loans – all these are other challenges that need to be addressed over the year.
“Growth cannot fall from the sky, a lot of effort is needed to attract serious investment money”, said Ambassador Vlahutin.
The government has taken a lot of measures to improve chances for growth, from the regulation of the energy market, fight against informality, many reforms are going on, but still the most important reform, the one on justice is still pending, waiting for approval.
If this important reform is not being approved, Albania can lose the opportunity to grow, as investors will be scared away by lack of rule in the country. Albania seems not to have a plan B in this regards. The passing and implementing of the justice reform is the only sure way for the country to make it in the EU and attract foreign investors, which are like oxygen for the economy. /AgroWeb.org/