ALBANIA

Flag Description: Red with a black two-headed eagle in the center; the design is claimed to be that of 15th-century hero George Kastrioti SKANDERBEG, who led a successful uprising against the Turks that resulted in a short-lived independence for some Albanian regions (1443-78); an unsubstantiated explanation for the eagle symbol is the tradition that Albanians see themselves as descendants of the eagle; they refer to themselves as "Shqipetare," which translates as "sons of the eagle"

 

Country profile

Location

Southeastern Europe, bordering the Adriatic Sea and Ionian Sea, between Greece in the south and Montenegro and Kosovo to the north

Area:

total: 28,748 sq km
country comparison to the world: 145
land: 27,398 sq km
water: 1,350 sq km

Land boundaries:

total: 691 km
border countries: Greece 212 km, Kosovo 112 km, Macedonia 181 km, Montenegro 186 km

Coastline: 362 km

Climate: mild temperate; cool, cloudy, wet winters; hot, clear, dry summers; interior is cooler and wetter

Terrain: mostly mountains and hills; small plains along coast

Ethnic groups: Albanian 82.6%, Greek 0.9%, other 1% (including Vlach, Roma (Gypsy), Macedonian, Montenegrin, and Egyptian), unspecified 15.5% (2011 est.)

Languages: Albanian 98.8% (official - derived from Tosk dialect), Greek 0.5%, other 0.6% (including Macedonian, Roma, Vlach, Turkish, Italian, and Serbo-Croatian), unspecified 0.1% (2011 est.)

Religions: Muslim 56.7%, Roman Catholic 10%, Orthodox 6.8%, atheist 2.5%, Bektashi (a Sufi order) 2.1%, other 5.7%, unspecified 16.2%
note: all mosques and churches were closed in 1967 and religious observances prohibited; in November 1990, Albania began allowing private religious practice (2011 est.)

Population:

3,020,209 (July 2014 est.)
country comparison to the world: 138

Age structure:

0-14 years: 19.3% (male 307,275/female 274,634)
15-24 years: 19.2% (male 297,851/female 282,498)
25-54 years: 40% (male 574,820/female 633,729)
55-64 years: 10.5% (male 157,014/female 158,602)
65 years and over: 11.1% (male 157,143/female 176,643) (2014 est.)

 

Albania declared its independence from the Ottoman Empire in 1912, but was conquered by Italy in 1939, and occupied by Germany in 1943. Communist partisans took over the country in 1944. Albania allied itself first with the USSR (until 1960), and then with China (to 1978). In the early 1990s, Albania ended 46 years of xenophobic communist rule and established a multiparty democracy. The transition has proven challenging as successive governments have tried to deal with high unemployment, widespread corruption, dilapidated infrastructure, powerful organized crime networks, and combative political opponents. Albania has made progress in its democratic development since first holding multiparty elections in 1991, but deficiencies remain. International observers judged elections to be largely free and fair since the restoration of political stability following the collapse of pyramid schemes in 1997; however, each of Albania's post-communist elections have been marred by claims of electoral fraud. The 2009 general elections resulted in a coalition government, the first such in the country's history. In 2013, general elections achieved a peaceful transition of power and a second successive coalition government. Albania joined NATO in April 2009 and is a potential candidate for EU accession. Although Albania's economy continues to grow, it has slowed, and the country is still one of the poorest in Europe. A large informal economy and an inadequate energy and transportation infrastructure remain obstacles.
Albania - financial assistance from the European Union

The Instrument of Pre-Accession Funds, called IPA, is a funding mechanism of the EU, which includes candidate and potential candidate countries like Albania.
• Funding allocation for 2013: €95 million
• Albania has access to:
   - IPA Component I (Transition Assistance and Institution Building)
   - IPA Component II (Cross-Border Cooperation).

This assistance is managed either by the EU Delegation in Albania or by the national Government under indirect management.
• EU assistance focuses on:
   - Justice / home affairs – developing Albanian police capacity to fight organised crime and trafficking and control the country's borders. Setting up an independent, efficient and accountable judiciary.
   - Public administration reform – more professional, de-politicised and incorrupt public administration, with transparent, merit-based appointments/promotions.
   - Transport – especially in rural areas: better rural roads, better connected with main national and regional transport routes.
   - Environment – improving conditions in Albanian coastal regions.
   - Social development – pre-university vocational education & training, and protection of vulnerable groups, especially minorities (Roma, Egyptians).
   - Agriculture – competitiveness of producers and more capable national policy implementation structures.

Albania’s business climate (from http://www.heritage.org/ and http://www.doingbusiness.org/ )

Albania, a formerly closed, centrally-planned state, is making the difficult transition to a more modern open-market economy and remains one of Europe’s poorest countries despite economic and political reforms. The country still lacks a clear property rights system, particularly for land tenure. Security of land rights remains a problem in coastal areas where there is potential for tourism development. Significant reform of the legal system is ongoing, but the courts are subject to political pressure and corruption. Protection of intellectual property rights is weak. Albania is a major transit country for human trafficking and illegal arms and narcotics.
The entrepreneurial regulatory framework has become fairly streamlined, and starting a business takes less than the world averages of seven procedures and 30 days. Minimum capital requirements are modest. Despite some reform, labor market rules remain relatively rigid. With international commodity prices stable, inflationary pressures have eased and allowed the central bank to lower interest rates to stimulate domestic demand.
Albania managed to weather the first waves of the global financial crisis but, more recently, its negative effects have put some pressure on the Albanian economy. While the government is focused on establishing a favorable business climate through the simplification of licensing requirements and tax codes, it entered into a new arrangement with the IMF for additional financial and technical support. Remittances, a significant catalyst for economic growth declined from 12-15% of GDP before the 2008 financial crisis to 7% of GDP in 2012, mostly from Albanians residing in Greece and Italy. The agricultural sector, which accounts for almost half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming, because of a lack of modern equipment, unclear property right as mentioned, and the prevalence of small, inefficient plots of land. Complex tax codes and licensing requirements, a weak judicial system, poor enforcement of contracts and property issues, and antiquated infrastructure contribute to Albania's poor business environment and makes attracting foreign investment more difficult. Inward FDI is among the lowest in the region, but the government has embarked on an ambitious program to improve the business climate through fiscal and legislative reforms. Albania’s energy supply has improved in recent years mostly due to upgraded transmission capacities that Albania has developed with its neighboring countries. However, technical and non-technical losses - including energy theft and non-payment - continue to be a threat to the financial viability of the entire system. Also, with help from international donors, the government is taking steps to improve the poor national road and rail network, a long-standing barrier to sustained economic growth. The country will continue to face challenges from increasing public debt, having exceeded its former statutory limit of 60% of GDP in 2013. Strong trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of debt crises and weak growth in the euro zone.

GDP (purchasing power parity):

$28.34 billion (2013 est.)
country comparison to the world: 116
$28.14 billion (2012 est.)
$27.78 billion (2011 est.)
note: data are in 2013 US dollars
Albania has an informal, and unreported, sector that may be as large as 50% of official GDP

GDP (official exchange rate):

$12.8 billion (2013 est.)

GDP - real growth rate:

0.7% (2013 est.)
country comparison to the world: 181
1.3% (2012 est.)
3.1% (2011 est.)

GDP - per capita (PPP):

$10,700 (2013 est.)
country comparison to the world: 115
$10,400 (2012 est.)
$9,900 (2011 est.)
note: data are in 2013 US dollars

Gross national saving:

14.1% of GDP (2013 est.)
country comparison to the world: 113
13.6% of GDP (2012 est.)
13.6% of GDP (2011 est.)

GDP - composition, by end use:

household consumption: 87.6%
government consumption: 8.4%
investment in fixed capital: 25%
investment in inventories: -2.6%
exports of goods and services: 36%
imports of goods and services: -54.4%
(2013 est.)

GDP - composition, by sector of origin:

agriculture: 19.5%
industry: 12%
services: 68.5%
(2011 est.)

Agriculture - products:

wheat, corn, potatoes, vegetables, fruits, sugar beets, grapes; meat, dairy products; sheep

Industries:

food and tobacco products; textiles and clothing; lumber, oil, cement, chemicals, mining, basic metals, hydropower

Industrial production growth rate:

3.1% (2013 est.)
country comparison to the world: 93

Labor force:

1.098 million (2013 est.)
country comparison to the world: 140

Labor force - by occupation:

agriculture: 54.6%
industry: 12.8%
services: 32.6%
(December 2012 est)

Unemployment rate:

16.9% (2013 est.)
country comparison to the world: 148
14.4% (2012 est.)
note: these are official rates that may not include those working at near-subsistence farming

Population below poverty line:

14.3% (2012 est.)

Household income or consumption by percentage share:

lowest 10%: 3.5%
highest 10%: 29% (2008)

Distribution of family income - Gini index:

34.5 (2008)
country comparison to the world: 92
26.7 (2005)

Budget:

revenues: $3.074 billion
expenditures: $3.858 billion (2013 est.)

Taxes and other revenues:

24% of GDP (2013 est.)
country comparison to the world: 137

Budget surplus (+) or deficit (-):

-6.1% of GDP (2013 est.)
country comparison to the world: 179

Public debt:

70.5% of GDP (2013 est.)
country comparison to the world: 38
62.5% of GDP (2012 est.)

Fiscal year:

calendar year

Types of business entity in Albania
• Sh.A. (Shoqeri Aksionere): ≈ plc (UK)
• Sh.p.k. (Shoqeri me pergjegjesi te kufizuar): ≈ Ltd. (UK)
• Shoqeri komandite: ≈ limited partnership
• Shoqeri kolektive: ≈ general partnership

 

Business Reforms in Albania

2014:
Paying Taxes:
Albania made paying taxes easier by allowing corporate income tax to be paid quarterly.

2013:
Starting a Business:
Albania made starting a business easier by making the notarization of incorporation documents optional.

Paying Taxes:
Albania made paying taxes easier for companies by abolishing the vehicle tax and encouraging electronic filing for taxes.

2012:
Dealing with Construction Permits:
In Albania dealing with construction permits became more difficult because the main authority in charge of issuing building permits has not met since April 2009.

Registering Property:
Albania made property registration easier by setting time limits for the land registry to register a title.

2011:
Paying Taxes:
Albania made it easier and less costly for companies to pay taxes by amending several laws, reducing social security contributions and introducing electronic filing and payment.

2010:
Starting a Business:
Albania eased the process of business start-up by making the registration electronic and enhancing the capacity at the registry, reducing the minimum capital requirement from ALL 100 000 to ALL 100, and eliminating the requirement to register at the Chamber of Commerce.

Trading Across Borders:
With the implementation of ASYCUDA World and the purchase of scanners, the total import customs clearance time has been reduced in Albania.

Resolving Insolvency:
Albania’s new insolvency law introduced statutory time limits during the insolvency procedure, specified professional qualifications for insolvency administrators, and established an Agency of Insolvency Supervision to regulate the profession of insolvency administrators. A simplified procedure of insolvency for small businesses was introduced, as well.

2009:
Starting a Business:
Consolidation of tax, health insurance and labor registration into a single application, making publication online and reducing registration cost.

Getting Credit:
Albania made getting access to credit information easier by establishing its first credit bureau and facilitating access to credit for firms and individuals.

Protecting Investors:
Albania strengthened investor protections by regulating the approval and disclosure requirements of related-party transactions and by reinforcing director duties and available remedies.

Paying Taxes:
Corporate income tax rate reduced from 20% to 10% effective 1/1/2008

2008:
Paying Taxes:
Albania reduced the tax burden for companies by reducing the corporate income tax rate

 

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