22 Sep 2010
How soon should you invest in a fast-developing country like Albania? It’s always a challenging question for investors. Invest too soon and you could make expensive mistakes if you do not know the commercial terrain well. Invest too late and you could get hit by rising land prices, labour and raw materials.
However the new Europort Shengjin, Eagle Of The Adriatic, is fast changing the perception that Albania remains stuck resolutely in the past says Mr. Lirim Muharemi of Kapital Invest, Albania.
“The main purpose of the new port project is to establish the relevant general conditions for development and activation of the Europort of Shengjin, which will mainly connect the south Adriatic and east Mediterranean Eupatorium with the Central, Eastern and also Northern European countries,” says Muharemi.
“The importance of the Europort of Shengjin in Europe,î he adds, ìis also supported by access to the Adriatic and Black Seas, successfully avoiding the fully congested Bosporus and Dardanelle Strait.”
Strategic positioning and stability
Certainly from a mobility geo-strategic position in the Mediterranean area, Albania is now playing a key role. Well-developed and modern transport (port) infrastructure will be a huge boost for the sustainable economic growth of Albania.
The construction of the zone in Shengjin comprises huge possibilities for the development of the northern zone of Albania, not only improving transport and Euro-Balkan transport links, but also increasing the possibility for permanent and temporary employment of a large number of workers.
For example, specialists of various fields, supporting the possibility for the vital development of tourism and foreign trade investment ñthe two most important areas of Albania’s new economic model. But let’s look at this new port in more detail:
Port Shengjin highlights:
– It shortens sea transport distances from 920km to 600km – a boon to the local and wider economy and it has an important role in protecting the international environment as well;
– It’s the main port for the South-East European region and hub port for the Adriatic-Ionian Basin;
– It also means it’s the shortest route from Suez Channel (cargo flows from Far East) to South East Europe.
The most important new corridor is the new conduit of Mirdit, which connects Shengjin – Morine – Prizren-Prishtin-Nish – Krajova- and Romania. The corridor of Mirdit or Fani i Vogel passes through the territory of Prishtin and ends in Nish of Serbia, where it is connected with the European Corridor.
The corridor from Shengjin – Shkodir – Podgorice, provides transit influxes from Montenegro to South-Western Europe. Meanwhile the corridor of Shkumbin provides and supports the transit of goods and people to and from the new port of Shengjin.
“Investments in the roads of the country have increased considerably in the recent years,” says Mr Lirim Muharemi, “which indicates that this commitment was taken seriously by the Albanian government who were highly conscious of the need for good road links. Looking ahead, that commitment will be maintained further with more new A and B roads and extensive resurfacing work wherever necessary.”
He goes on: “Recently about 200 milliard Lek has been invested and about 5,900km of new roads have already been surfaced and existing roads have been reconstructed and improved. Among the main road accesses is that of the Durres-Kukes road, which has been called the new national road by the Albanian population.”
Roads also now connect Kosova to Albania and Kosovo to the Adriatic Sea by means of the ports of Albania. The new Shengjin port, which will be of huge strategic importance to Kosovo, as Prime Minister Berisha pointed out during his recent visit in Kosovo.
It’s certainly badly needed. Albaniaís existing port would have performed only very basic functionality says Mr. Lirim Muharemi. “It is the smallest port in comparison to the other ports of Albania, such as Durres, Sarande and Vlore. Its operative bank is only 160m where only ships of five thousand tones can be anchored .The maximum amount of goods which can be treated at the Port of Shengjin now amounts up to 350 thousand tones.”
So far, the Port of Shengjin has served to facilitate much-improved goods exchanges between Kosovo and Albania – bricks, iron, cement, fuels and gravel. “We are very pleased at the improvement. A huge step forward.”
Strategic positioning and stability
The position of Albanian has long been envied for its East-West strategic importance. And this is now reflected in the amount of business and FDI being conducted in the country.
Albania is seeing real change and interest. Foreign investment in Albania in 2008 amounted to more than 600m euro – or 63 percent of GDP. And 200m euro was invested in its fast-spreading road, portal and air infrastructure. So Albania is on a roll. Back in the 1980s Albania’s GDP was just $4bn; it’s now approaching $25bn, and that’s in part because of the massive foreign investment. Albania is truly punching its weight.
“In 1997, Globe & Mail journalist Neil Reynolds recently wrote, the country [Albania] was in violent upheaval and GDP fell nine percent in a single year. As recently as 1999, it attracted a mere $44m in foreign investment. (With a $10m bottling plant in 1994, Coke was the first of the big multinational companies to invest.) Now investors are rushing to embrace the comeback country that once had everything going against it.”
Remarkably, Albania has thrived through the past three or four years, global recession notwithstanding says Reynolds. Last year, Albania was the only European country (aside from San Marino and Liechtenstein) to post real growth: 3.7 percent. “In 2008, it posted real growth of 7.8 percent. In 2010, it will post real growth of 3.5 percent.”
He adds: “It is the most economically dynamic country in its own Balkans neighbourhood and it is doing better, in relative terms, than many vastly bigger European economies. (In 2009, Germany’s economy shrank 4.8 percent; France is expected to grow 1 percent this year, Italy by 0.4 percent.)”
Surviving the recession
Albania has not been affected by the global financial crisis in the way many other European countries have. Thatís because the Albanian economy is fast developing so the consequences of the global crisis are minimised. The Albanian economy is also modest in size and underdeveloped so the effects of the global crisis are relatively low. But they can be felt indirectly, particularly with emigrant remittances and Albanian exports.
“In our country the highest scale of the risk is the psychological risk,” says Mr. Lirim Muharemi, “but the government authorities are now much more transparent to the public. The Bank of Albania is also increasing its vigilance.”
The crisis in the countries where Albanian emigrants work may also influence them not just psychologically but also financially, reducing incomes, which would lead to the decrease of incomes remittances. “This would have a profound effect if the economic recession lasts. Recession has been observed in the eurozone for the first time since its establishment.”
The recent establishment of Europa-Albania 007 to promote FDI has supported investors. And Muharemi says such investments are rewarding investors. Europa-Albania 007 is lead by a team of qualified experts who have pooled their local and international experience to provide a consultancy services in finance, real estate and general business development and investment, helping establish many successful projects.
The FDI opportunities for foreign investors are immense. From heavy industry to tourism. Although many Albanians standard of living is modest by European standards, this is changing fast. Meanwhile there is that Mediterranean climate and miles upon miles of unspoilt beaches and crystal blue waters of the Adriatic – an increasing lure for many.
In brief: Reasons to invest in Albania:
1. Albania is a country that is building its future growth on expansion, exports and low inflation;
2. Almost 100 percent of Albania’s current exports are earmarked for Europe;
3. Gateway to the Balkans Free Trade Area;
4. Labour costs are generally the lowest in Europe – and likely to remain modest for the short and medium term; social security costs are also low;
5. Property and raw material costs are low, as are energy costs. Generous leasing arrangements on government owned property and factory units are widely available;
6. Albania’s workforce is young and energetic. Its average age is 30 years old compared to over 40 in most other European countries. Many workers are bi-lingual. English is widely taught;
7. Judicial and administrative environment is improving thanks to a pro-business government;
8. Privatisation continues apace and is transforming large tranches of Albanian society. This is also supported by huge World Bank support;
9. Massive infrastructure improvement is taking place be it roads, ports or energy supplies. Recent energy generation investment is now addressing past energy reliability issues ñ part of an ambitious program to upgrade Albaniaís energy services.
Privatisation progress moves ahead
Privatisation of the Albanian economy has been one of the priorities of the government of all political stripes during the last decade in Albania, since the country committed to wholesale democratic change. At different times several important strategic sectors have been privatised such as the sectors of telecommunication, banks, oil and energy.
“In this process of privatisation about 11 million Lek of bonds have been used,” says Mr. Lirim Muharemi, “but 74 million lek could not be used. According to the calculations, there are about 750,000 citizens, who profited from the securities and from the privatisation of such bonds.”
Recent data indicates that the value of unused privatisation bonds amounts up to 64 million Lek of privatisation bonds and 12.5 million in securities.
Two decades after communism’s fall, the vast majority of Albanians eagerly anticipate the chance to join the European family. The slogan of the anticommunist popular movement in 1990 was: We want Albania to become like all Europe. Nothing has changed there two decades on.
Membership of Albania into NATO is now a confirmation of the Albanian reality and without any doubt one of the greatest achievements of the Albanian state in the field of international relations. Admission of Albania with full rights in NATO, at the April Summit in Strasburg, also sent a powerful message to foreign investors and the on-going future enlargement of foreign investment in the country.
Now Albania is completing the process for membership in the EU. “I know for sure that that they are working hard for such a prize,” says Mr. Lirim Muharemi. “Albania is changing from year to year and the Albanians merit all the capacities and opportunities that all the other citizens of Europe have.”
He adds: “We have a young ambitious population and the desire of this new generation is to work and be educated in the European schools. These ambitions indicate that Albania is leaving behind its sad and difficult past for something far, far better. And international investors see evidence of this every day.”