INDEX COUNTRY PROFILE TOP 4 REASONS TO INVEST IN ALBANIA INVESTMENT AND BUSINESS CLIMATE MACRO-ECONOMIC INDICATORS

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1 ALBANIA CALLS

2 INDEX COUNTRY PROFILE TOP 4 REASONS TO INVEST IN ALBANIA INVESTMENT AND BUSINESS CLIMATE MACRO-ECONOMIC INDICATORS

3 Albania has started a new chapter of sustainable and long-term economic development. The Government has designed a new economic model based on deep structural reforms with a specific focus on boosting domestic production, exports and foreign direct investments. Over the last 24 years, Albania has experienced a difficult transition process. During this process, Albania has encountered many successes and hardships. The country s economic potential has never been fully used. With the EU ambition in mind, the Government of Albania has committed itself to create a new economic model and a more competitive investment climate. The 2014 was the year of deep reforms for Albania. The Government has undertaken structural reforms aiming to reshape the business climate and environment. The new legal framework on tourism, strategic investments, public-private partnership and free economic zones, will ensure productive inputs of economic growth contributing to increase the foreign investment inflow. The Berlin Process marked the beginning of a historical process for the Western Balkan countries, with main focus the connectivity in the Region. A number of important projects in infrastructure are designed. The TAP project is very important for Albania because it will enable the connection of Albania with the natural gas network. Foreign investment is a key factor for the new government, not only because FDIs provide liquidity, employment and development, but especially because they assist raising the performance level of economic sectors. As a result, the Albanian Government is fully committed to be a determined and reliable partner to investors, ready to assist them to overcome all the obstacles to a free and competitive market. Today we are fully aware that in order for the economy to make a quality jump, a strong partnership between the public and private sector must be established, to address the mistakes of the past and to build a new future together. Today Albania is more open to investors and this readiness will determine the economic success of the country. Namely for this reason, today more than ever, we want to invite you to discover Albania as a country of opportunities. Arben Ahmetaj Minister of Economic Development, Trade and Entrepreneurship

4 MONTENEGRO Bajram Curri KOSOVO Shkoder Puke Kukes Lezhe Rreshen Peshkopi Adriatic Sea Burrel Kruje Durres Tirana Librazhd MACEDONIA Lushnje Fier Elbasan Gramsh Berat Corovode Pogradec Korce Vlore Tepelene Permet Erseke Gjirokaster Ionian Sea Sarande GREECE 0 50 miles 0 50 km

5 COUNTRY PROFILE General Information Surface area: 28,748 km2 Length of coastline: 316 km Capital city: Tirana Currency: Albanian Lek (ALL) Location Time zone: GMT +1 hour Situated in South-eastern Europe Borders the Adriatic and Ionian Seas Directly borders Greece, Macedonia, Montenegro and Kosovo It is entry gate to global markets through its four ports Population Language: Albanian Total population: 2.8 million (Data from INSTAT) Median age: 31.6 years (2014 data from CIA Fact book) Literacy rate: 96.8 % (data from CIA Fact book) Political System The Albanian government is a Parliamentary Republic President since 2012 is HE Mr. Bujar Nishani Prime Minister since 2013 is HE Mr. Edi Rama Climate Albania has a mild climate with 270 to 300 days of sun per annum Natural Resources Albania is a country rich in natural resources Key resources include petroleum, gas, bauxite, chromium, copper, iron ore, nickel, salt and timber Huge potential to produce significant amounts of water, wind and solar energy 7 COUNTRY PROFILE

6 ECONOMIC TRADE INTEGRATION Albania benefits from extensive Free Trade Agreements with: EU Central Europe (through CEFTA) Europe (through EFTA) Turkey USA (under the Generalized System of Preferences (GSP) program)* Free access to a market of over 600 million NORWAY customers. Albania is also a member of World Trade Organization (WTO) and applies WTO rules to all import licensing. SWEDEN * Trade benefits for preferential duty-free entry for about products. FINLAND Turku Helsinki Oslo Stockholm ALAND ISLANDS Tallinn ESTONIA Göteborg Gotland Riga LATVIA Dublin IRELAND UNITED KINGDOM London NETH. Brussels Lille BEL. Paris FRANCE Amsterdam LUX. Strasbourg DENMARK Copenhagen GERMANY Bern SWITZ. Öland LITHUANIA Malmö Vilnius Kaliningrad RUSSIA Bornholm Gdań sk Hrodna Berlin Prague CZECH REPUBLIC Vienna AUSTRIA Ljubljana Warsaw POLAND Kraków SLOVAKIA Bratislava Budapest HUNGARY Brest BELARU L'viv Chernivtsi Mins Zhytom ROMAN M Buchares PORTUGAL 2800 Madrid KM 2300 KM 1700 KM Lisbon SPAIN BALEARIC ISLANDS MONACO ITALY Podgorica Corsica Rome VATICAN 1200 KM 600 KM 280 KM Sardinia CITY CROATIA Belgrade SERBIA BULG Pristina MONT. Sofia KOS. Skopje MACE. Thessa ALBANIA GREECE Athens Sicily

7 TOP 4 REASONS TO INVEST IN ALBANIA Healthy Growth, Young Workforce, Vibrant Industries and Comprehensive Reforms. Export-oriented Growth Albania has a dynamic export sector. Albania s export has a 24% annual growth rate for the past five years and its trade with many EU countries has been surging. Exports has grown from 1 billion USD to 2.5 billion these years. Trade is playing an increasingly important role in Albania, contributing to almost half of the country s GDP in Competitive Human Capital 57% of Albania s population is under the age of 35 The average wage in Albania is one of the most competitive in the region. The minimum wage is the lowest in the region Albania has over 1 million well-educated, highly-motivated professionals English, Italian and Greek are all widely spoken while French and German are included in education curricula at school Each year, more than 100,000 students enroll at university Promising Sectorial Opportunities Albania has a range of public-private investment opportunities It also has a range of opportunities in stable and growing sectors such as: Manufacturing, Energy, Agriculture, Mechanic industry and Tourism Comprehensive Structural Reforms Government is launching major reforms to better share growth with foreign investors: Free Economic Zones New PPP Law Strategic investments law Tourism law 9 TOP 4 REASONS TO INVEST IN ALBANIA

8 INVESTMENT AND BUSINESS CLIMATE A SUPPORTIVE LEGAL FRAMEWORK ON FOREIGN INVESTMENTS No prior government authorization is needed for foreign investments and no sector restrictions. Business Environment and Economic Freedom In the last year Albania jumped 40 positions (from 108 to 68) in the World Bank s Doing Business Report 2015, performing exceptionally well in three indicators: paying taxes, registering property and providing investor s protection (ranked 7 th in the world, and best in the region). According to EBRD, Albania was the top reformer country in the region in The Heritage Foundation s 2015 Index of Economic Freedom ranks Albania very favorably compared to other countries in the region. Albania scores highest in trade, fiscal and investment freedom indicators. Standard & Poor s improved twice the outlook for the country, from B (-) to B (stable) to B (+) Credit Watch / Outlook Action / Sovereign Credit Rating Doing Business 2015 Globally, Albania has a good performance and is ranked 7 th out of 189 economies related to investor s protection. Source: Doing Business

9 According to the World Bank Report 2015, Albania has experienced the highest economic growth in the region. The business climate has improved significantly e 2015f Albania Bosnia & Herzegovina Kosovo FYR Macedonia Montenegro Serbia SEE Source: National Statistical Offices and World Bank Projections. Note: SEE6 is a weighted average. For investors, Albania is a highly attractive, growing market with stable economic, political and legal structure, as well as a liberalized economic framework and good conditions for doing business. The Government of Albania is undertaking a wide range of structural reforms to strengthen the rule of law and to create an internationally competitive business environment. A new economic model is in place, with focus on production and exports through major structural reforms. Further business climate reform is taking place in order to better share the growth opportunities with foreign investors. Foreign direct investments (FDI) inflow figure in Albania, for the year 2014 reached 878 million Euro (preliminary calculations). FDI Inflow in mln Euro INVESTMENT AND BUSINESS CLIMATE * Source: INSTAT, Bank of Albania, Ministry of Finance The focus for the future development of the Albanian economy will remain on attracting FDIs with a focus on sectors where the Albanian economy has unexploited potential both in terms of natural resources as well as in developing sectors that are not yet performing to their full potential, such as renewable energy, tourism, agribusiness, infrastructure and services. Albania has adopted a liberal framework which has been designed to create a favorable investment climate for foreign investors. 11

10 THE NEW LAW ON STRATEGIC INVESTMENTS The Government approved the New Law on Strategic Investments, which aims the promotion and attraction of strategic investments, both domestic and foreign, in those sectors of the economy identified as strategic sectors by this law through special, facilitating or accelerating administrative procedures. The law aims to boost foreign investments and will be in force until December 2018, which means that during this period foreign and Albanian investors will profit by accelerated procedures and supporting incentives. The law foresees that AIDA is the responsible administrative structure for providing services to investors in a unique window. AIDA performs the role of the assisting agent, and will follow all administrative procedures till the realization of the investment project. The law foresees as strategic investments the private, the public or public-private investments, in the following sectors: Energy and minings, Transport, telecommunications, infrastructure and urban waste, Tourism, Agriculture and fishery Economic zones and Priority Development Areas that have impact on the Albanian economy 12

11 Albania has a liberal framework which encourages and protects foreign investments. The law on foreign investments offers guarantees to all foreigners (either physical or legal persons) who are willing to invest in Albania. The provisions include the following: No prior government authorization is needed for foreign investments and no sector restrictions; There is no limitation on the percentage share of foreign participation in companies (100% foreign owned companies can be set up); Foreign investments may not be expropriated or nationalized directly or indirectly, expect in except in exceptional circumstances in the interest of public use, as defined by law; Foreign investors have the right to expatriate all funds and contributions in kind; In all cases, investments will receive equal and unbiased treatment and will have complete protection; In any case foreign investments will have a treatment equal to what common international practice allows; Special state protection through replacement with full rights of foreign investors by the Albanian state in legal and civil conflict with private third parties. Foreign investment in Albania is, therefore, generally permitted and treated according to conditions no less favorable than those which apply to domestic investment in similar circumstances. Private residential Albania has bilateral agreements on the promotion and protection of reciprocal investments with the following countries: Austria Belgium Bulgaria China Croatia Czech Republic Denmark Egypt Finland France Macedonia Germany Greece Hungary Israel Italy Luxembourg Malaysia Netherlands Poland Portugal Romania Slovenia Sweden Switzerland Tunisia Turkey United Kingdom United States property purchase is allowed to foreign investors, however they cannot purchase agricultural land which can only be rented for up to 99 years and commercial property may be purchased only if the proposed investment is worth three times the price of the land. 13 THE NEW LAW ON STRATEGIC INVESTMENT

12 BUSINESS CLIMATE The Government is committed to locate and to identify new resources that will ensure the sustainable development of the economy. Indeed, ongoing reforms have been designed to increase the efficiency of the tax administration and the fight against corruption. Constant dialogue has also been established between the business community and the Government through the creation of the National Economic Council which is chaired by the Prime Minister and the Investment Council which is chaired by the Minister of Economic Development, Tourism, Trade and Entrepreneurship. Close co-operation with international organizations such as the World Bank, the International Monetary Fund and the European Union is helping to ensure steady economic development. The implementation of wide-ranging economic reforms is also contributing to the country s broader social-economic development with the ultimate aspiration the integration into the European Union. 14

13 National Economic Council The National Economic Council (NEC) is a new important structure of the Government. NEC is the highest level public-private dialogue mechanism where the business community can represent and voice its concerns. The National Economic Council (NEC) has as primary objective the provision of concrete recommendations for the Government to improve the legal and institutional framework which has a direct impact on the business climate. The Council is a decision making body composed by representatives of central and local institutions as well as other organizations. Investment Council The Council is the newest structure set up by the Albanian Government, supported by EBRD. The aim is to intensify the dialogue between the government and the private sector, to improve the business climate and to promote good governance. The council will act as an intermediary between the business community and the government aiming to contribute on the improvement of the business environment for investments. It is composed by key decision-makers from the business community, as well as government officials and representatives of international financial institutions. Administrative Simplifications The registration of a new business may be completed within 24 hours with a minimal cost of 100 ALL (< 1) BUSINESS CLIMATE This can be done at the service window of the National Registration Centre s (NRC) office in Tirana or at any of the other 32 NRC offices throughout the country Requests for licenses and permits may be submitted at the service window of the National Licensing Centre s (NLC) office in Tirana or any of the other NLC offices throughout the country. Double taxation treaties are currently in force with the following countries: 1- Austria 2- Belgium 3- Bosnia and Herzegovina 4- Bulgaria 5- China 6- Croatia 7- Czech Republic 8- Egypt 9- France 10- Greece 11- Hungary 12- India 13-Italy 14- Kosovo 15- Latvia 16- Macedonia 17- Malaysia 18- Malta 19- Moldova 20- Montenegro 21- Netherlands 22- Norway 23- Poland 24- Romania 25- Russia 26- Serbia 27- Singapore 28- Slovenia 29- South Korea 30- Spain 31- Sweden 32- Switzerland 33- Turkey 34- United Kingdom 35- Ireland 36- Germany 37- Singapore 38- Qatar 39- Kuwait 40- United Arab Emirates. 15

14 COMPETITIVE TAX RATE Personal Income Tax ALL (approx 214) 0% ALL (approx 924) Profit Tax Annual turnover of 2 million ALL or less ( 0 14,000) ALL (approx 178) Annual turnover between 2 and 8 million All ( 14,000-57,000) 13% 7,5% and above ALL Corporate 23% 15% Withholding Tax 15% VAT 0%, 20% Customs/Import Tax 0%, 2%, 5%, 6%, 10% or 15% Excise Tax Depending on goods The Government has introduced a number of new businessfriendly initiatives such as: The Textile and Footwear Industry Package 2014, giving a strong stimulus to the fashion industry (The Plastic Industry Package and the Agriculture Sector Package are being drafted to support these industries); NO VAT on machinery that cost of over 360,000 that is used to increase productivity; NO EXCISE on the fuel used by oil-producing companies; NO VAT on the import of cement and steel used for the construction of hydropower plants; 16

15 COMPETITIVE HUMAN CAPITAL In terms of human capital, Albania has a young workforce that is well educated and highly motivated. 57% of Albania s population is under the age of 35 and the median age is 31.6 years. Proficiency in foreign languages; Approximately 116,000 students register annually in all the universities. Professional Trainings driven by market needs; Labour relations between employers and employees, are regulated by individual employment contracts in accordance with the Labour Code of the Republic of Albania. The Albanian National Employment Service Institution ( al) has been established, with the main goal to pursue active operations in order to fully support employment in line with EU standards. MACRO-ECONOMIC INDICATORS WAGES Minimum Wage 22,000 ALL (approx. 157) Average Wage (private sector) 37,305 ALL (approx. 266) Source: INSTAT Average Gross Wage in the Region ALBANIA BULGARIA ROMANIA SERBIA MONTENEGRO CROATIA Source: Federation of European Employers, SIEPA, INSTAT 17

16 The macroeconomic situation in Albania is characterized by stable prices, low inflation rates and solid exchange rates. Average annual inflation has remained relatively stable for more than a decade with 1.9% inflation recorded in 2013 and 1.6% recorded in GDP Growth 3,4% ,7% ,6% ,6% ,4% ,1% 2014* Inflation Rate 2,3% ,6% ,5% ,04% ,94% ,63% 2014 MACRO-ECONOMIC INDICATORS Unemplyment Rate 13,6% 12,5% 13,7% 13,3% 13,0% 13,0% 17,4% Exports by Year (In Mln ) Albania s domestic currency The Lek (ALL) is extremely stable, with 1 being the equivalent of ALL throughout Item Exchange Rate (Eur/ALL) STRONG BANKING SECTOR Albania has 16 commercial banks, 14 of which are foreign owned including Raiffeisen, Intesa San Paolo, Societe Generale and Credit Agricole, Alpha, NBG, Pro Credit, Pireaus, Veneto, etc. Foreign capital in the Albanian banking system reached the level of 93%; 75% of all invested capital comes from the European Union; There are no exchange rate restrictions in Albania; There is a floating exchange rate regime. 19

17 RENEWABLE ENERGY Albania is the most dynamic renewable energy country in Europe. Through strong political commitment and an ambitious national strategy, the Government has placed renewable energy at the top of the country s development agenda. The long-term vision of the Government is to position Albania as one of the world s leading renewable energy-driven economies. For investors in the renewable sector, the Government of Albania offers the following benefits: Attractive feed-in tariffs for small hydropower plants (HPP) New laws on electricity market Albania has huge potential for hydroelectric energy: Total installed capacity of 1,878 MW; Potential installed capacity of 4,500 MW; Average power production of 4.2 TWh; Potential annual power production of TWh; Only 35% of hydroelectric energy potential is currently being utilized. Production During the period , there have been noticeable differences in the electricity production Main indicators of electricity (in GWh) Production 4,974 5,467 5,409 5,516 2,933 3,770 5,201 7,743 4,185 4,725 6,959 Import ,828 2,417 1, ,262 2,538 1,424 Supply 5,900 5,945 5,933 6,121 5,750 6,300 6,592 6,773 7,342 7,617 7,961 PETROLEUM AND GAS ENERGY Albania has a significant volume of oil reserves, producing more than 1.4 million tons in The Government has designed a favorable policy to attract foreign investments in the natural resource sector. The Albanian oil, gas and byproducts market is a free, open, and liberalized market and where the Government of Albania plays only a regulatory role. 2

18 HYDROPOWER Water resources are amongst the most important natural resources in Albania. Eight large rivers, fed by hundreds of smaller rivers and streams, run through the country from East to West. The average height of the hydrographic territory of Albania is about 700 m above sea level. SOLAR ENERGY Albania is part of the Mediterranean climate zone. This means that it has a hot, dry summer followed by a relatively short and mild winter. For this reason, the country has very favorable conditions for the development of solar energy including: Average daily solar radiation of 4.1kWh/m2 Average sunshine hours per year of 2,400 At present, solar energy is mainly used for heating purposes. Photovoltaic energy has still to be properly explored. WIND ENERGY Albania has unexploited wind power potential, especially along the Adriatic Coast where many areas with high wind energy potential are situated. Key facts: Average annual wind speed of 6-8 m/s Average energy density of W/m2 Potential for at least 20 oleic electricity centrals The Government s target is to generate 5% of total electricity from wind sources, in the next five years. 3 POTENTIAL INVESTMENT SECTORS

19 MINING INDUSTRY Exploration, exploitation and processing of mineral ores constitute a significant activity in the Albanian economy, and the sector is growing up each year. Albania s mineral deposits include chrome, copper, iron-nickel, limestone, sandstone, asphalt and natural bitumen, decorative limestone, decorative massive sandstone. The exploitation sector represents a growing contributor to the Albanian economy. The sector represented about 1.2%-1.4% of GDP (in 2013, 1.2%). The total number of mining licenses is 640 and 40 of them, are foreign owned companies. The total licensed surfaces in mining sector is S = km². The major foreign operators in mining industry come from Turkey, Canada, China, and Italy. Key areas of mining include: COPPER ORE This sector offers sizeable opportunity to invest, particularly in Mirdita region: Spaçi and Perlati deposits and Korça region: Rehova deposit. These regions cover about 28% of total geological reserves (with 1.79% Cu) or 6,8million tones. in 2014 the production of copper ore was 259,137 tones and the production of copper concentrate was 20,357 tones. IRON-NICKEL & NICKEL SILICATE ORE Iron-Nickel & Nickel Silicate reserves are considered as the largest mineral deposits in Albania. Geological reserves are estimated at around 364 millions tones and the main deposits of them are located in: Librazhd Region with 85 million tones; Prrenjas Pogradeci region with 66 million tones; Bilishti Region with 111 million tones; Has Kukes Lure Region with 103 million tones. 4

20 Chromium Ore Map Copper Ore Map Iron-Nickel & Nickel Silicate ore Map Malesi e Madhe Durres Kavaje Fier Shkoder Lezhe Kurbin Vlore Kruje Lushnje Tirane Peqin Tropoje Puke Mirdite Mallakaster Mat Kucove Elbasan Berat Tepelene Has Dibre Bulqize Kukes Librazhd Gramsh Pogradec Skrapar Permet Gjirokaster Korce Kulonje Devoll Malesi e Madhe Durres Kavaje Fier Shkoder Lezhe Kurbin Vlore Kruje Tirane Peqin Lushnje Mallakaster Tropoje Puke Mirdite Mat Kucove Elbasan Berat Tepelene Has Dibre Bulqize Librazhd Gramsh Pogradec Skrapar Permet Gjirokaster Kukes Korce Kulonje Devoll Malesi e Madhe Durres Kavaje Fier Shkoder Lezhe Kurbin Vlore Kruje Lushnje Tirane Peqin Mallakaster Tropoje Puke Mirdite Mat Kucove Elbasan Berat Tepelene Dibre Bulqize Gramsh Skrapar Permet Gjirokaster Has Kukes Librazhd Pogradec Korce Kulonje Devoll POTENTIAL INVESTMENT SECTORS Delvine Delvine Delvine Sarande Sarande Sarande CHROMIUM ORE Albania is well known for its high potential in chromium ore. From the geographic perspective, there are 36.9 millions tones of geological reserves and three main regions where chromium ore is located: North-eastern Region Tropoja with 6.1 millions tones x 26.48% Cr2O3 and Kukës Ultrabasic Massif with 6.8 million tones x 21.4% Cr2O; Central Region - Bulqiza and Lura Ultrabasic Massif with 12 millions tones with more than 38% Cr2O3; South-eastern Region Shebenik Pogradec Ultrabasic Massif with 7.5 millions tones, from which 1.2 million tons, more than 38% Cr2O3. Currently there are 250 active exploitation permits distributed on 13 districts in chromium industry. In 2014 the production of chromium ore was 652,463 tonnes and the production of ferro chrome was 34,897 tones. There are currently 26 active mining exploitation permits, distributed in five administrative districts. There are several advantages on investing in the mining industry in Albania: Rich in various minerals with a proven record of successful investments in the sector (both domestic and foreign); Huge untapped potential for further investments, both in extracting and processing; A priority sector for the Government, which continues to develop favorable investment policies; Availability of high quality, experienced engineers and other technical personnel; Easy access to international markets; Competitive human capital. 5

21 TOURISM Unique Development Potentials; Attractive coastline, with long sandy beaches and clear water; Long, hot and sunny summer season; Proximity to major European cities by air; Its range of archaeological, historical and religious sites: Natural protected areas: International protected areas: Cultural monuments: Archeological parks: International protected sites: 56 protected areas 4 RAMSAR areas ~1600 monuments 9 parks 3 UNESCO protected sites Foreign visitors in Albania

22 A global-recommended tourist destination; Albania is ranked 3d among 15 best tourist destinations for 2015 according to L Express Magazine. Albania was listed fourth on the New York Times 52 places to go in 2014 ; Albania is ranked the first among 3 most special destinations in Europe, according to Albatross Agency in Scotland. Key tourism segments to develop businesses: Beach resorts Nature tourism (including trekking, climbing and rafting) MICE tourism Health tourism (SPA and Thermal) From Marseille to the Albanian Riviera, Five hot European travel destinations for Touted as the last secret of Europe, tourists from Italy and the Balkans have been visiting this glorious 120-kilometre stretch of coastline in the southwest of the country for some years, but it s only just starting to be discovered by tourists from the rest of Europe. Albania: The new pearl of the Balkans With beaches as nice as in Greece, lakes and mountains as in Switzerland, the villages registered in the list of world heritage by UNESCO, a tale mixes years of history from the Romans, to Byzantine culture. Prices among the lowest in Europe: it`s about time that Albania finds itself between the tremendous sunny destinations. Butrinti National Park in Albania In the south-west of the country, it is a must-see for fans of ancient history; boasts a number of significant archaeological sites and is considered a microcosm of Albanian history. POTENTIAL INVESTMENT SECTORS 7

23 MANUFACTURING Albania has a strong and vibrant manufacturing sector, which is driven by highly successful enterprises in the textile and footwear industry. This success has been achieved through establishing extraordinarily close relationships with leading Italian brands over the past 20 years. Key facts on the manufacturing sector: In 2014, exports increased by 24,6% or 165 million dollars; 5000 new jobs were created within the year; 14% increase in imports of machineries and equipment; Partnerships with major brands and retailers throughout Europe; Major markets in Italy, Germany, France, Holland, Denmark and Greece

24 Key advantages of the textile and footwear industry in Albania Highly skilled and cost-competitive workforce; Experience and tradition, high quality products; Short-time deliveries to EU countries with comparatively low transport costs to Europe; Competitive labor expenses due to lower salaries than the other countries in the region; Excellent language skills; Stable and favorable Investment climate; A consolidated legal framework in compliance with international standards; Government policy to support this sector for this business. Government Incentives The government has rolled out the Textile and Footwear Industry Package 2014, giving a strong stimulus to the fashion industry For the first time, the Government provides a symbolic tariff of 1 leasing contract, when renting government property. Instant reimbursement of VAT, in the case of taxpayers with a zero risk, and within 30 days in the case of exporter taxpayers Exemption from VAT on machinery and equipment Different financing incentives for job training Facilitation of Customs Procedures Simplification of procedures on the Employment and Social Security This sector is represented in the National Economic Council A one-stop shop dedicated solely to textiles and footwear investors has established within the Albanian Investment Development Agency (AIDA) POTENTIAL INVESTMENT SECTORS 9

25 AGRICULTURE Agriculture remains one of the largest and most important sectors in Albania. Agriculture is a main source of employment and income especially in the country s rural areas and represents around 20% of the GDP covering about half of the total employment. The main objectives for 2015 are the irrigation and the drainage systems and food security, in line with the EU priorities and conditions.. The Government aims to transform Made in Albania brand into a certified and reliable food brand in the international market. 10

26 There are many reasons to invest in the agriculture sector in Albania: Favorable climate Average 16 degrees in the coastal areas Diverse micro-climate suitable for different products Suitable soil and abundant water Preferential Trade Agreements with the EU on the increase of exports POTENTIAL INVESTMENT SECTORS The agricultural sector has grown steadily in the past five years This sector has not been affected by the European financial crisis 18% increase in exports within the year. The Government will launch a new package to support the sector 11

27 TRANSPORT & LOGISTICS Albania s location at the center of the natural crossroad of European transport corridors places the country in a unique geographical position. A decade of continuous investments in the country s infrastructure has boosted the development of the transport sector, which continues to play an important role in the broader economic development of the country. ROAD TRANSPORT The Albanian national road network contains: 3,719 km of roads 1,198 km of primary roads and 2,083 km of secondary roads All the country s primary roads are paved according to the international 67% of the country s secondary network paved to international standards 12 Albania is connected to a number of regional logistics corridors The Pan-European Corridor VIII This strategic transport corridor is important for the Albanian trade: Joins the Adriatic Sea to the Black Sea, Passes through Albania, Macedonia and Bulgaria Connects Durres and Tirana with Skopje, Sofia, Bourgas, Varna and Plodviv

28 Albania also has several critical logistic corridors One example is the Durrës - Kukës - Morinë corridor, which is known as Rruga e Kombit It: Concidered as Albanian s best link with Pan-European Corridor VIII 170 km long Connects the capital Tirana with the port of Durres and state of Kosovo Work is currently in progress on the completion of a number of other important corridors including: Between the east and west of Albania, a 64 km road connecting Lushnje, Fier and Vlore 63 km road between Qafë Thanë, Pogradec and Korçë 29 km road known as the Tirana Elbasan highway, an important part of Albania s Central-South axis 22 km bypass around the city of Fier, a significant project, which will connect two of Albania s main highways POTENTIAL INVESTMENT SECTORS 13

29 TRANSPORT & LOGISTICS SEA PORTS Albania currently has ports in four main cities - Durres, Vlora, Saranda and Shengjini - with plans for continuous expansion. Port of Durres is: The largest and most important port in Albania The main gateway to Pan European Corridor VIII Covers 81.8% of all the country s maritime transport Has a processing capacity of 4 million tons per year Port of Vlora is: Albania s second largest port Primarily a passenger port Porto Romano: Located 6.5 km in the north of Durres city. It s infrastructure supports coastal deposits of oil, gas and of their byproducts and L.P.G Petrolifera Port: Terminal port for petroleum, byproducts, and LPG, in the Vlora Bay. Access to Corridor VIII Positioned nearby the Greek and Italian refineries. 14

30 RAILWAY TRANSPORT The Albanian railway network comprises 441 km of single-track rails. The network serves to the Albanian industry and connects several important cities. The Albanian Government intention is to revive the railway sector and to improve the Core and Comprehensive railway network in Albania, (corridor VIII and the railway connection with Montenegro) as an important transport mean to increase trade in the region and to connect it with the European Railway Network. POTENTIAL INVESTMENT SECTORS AIR TRANSPORT Tirana International Airport Mother Teresa is located in an excellent geographical position at the heart of Albania. It is: 17 km (30 minutes) from the capital city 32 km (45 minutes) from Durres, the country s biggest port Located at a major crossroad between northern, southern, central and eastern Albania Located very closely to Albania s core industries which are mostly located in or around Tirana Key facts: Total Aircraft movements of 17,928 in 2014 Total passenger volume of 1,810,301 in 2014 Total cargo volume (in tons) of 2,324 in

31 ICT SERVISES Government recognizes the importance of ICT and has taken actions to facilitate the development of the sector and integrate ICT in governance through a wide variety of ICT actions in cross-cutting sectors. The Government will work on three main directions to set measurable objectives: To improve and promote digital services, e- services for citizens and business. Priority will be the increase of transparency and improvement of public administration services in accordance with the principles of Open Government Partnership initiative. The massive introduction of services in education to overpass the digital divide and to enable youth. Policies will be oriented towards improving and expanding human capacities in order to increase the number of users and the number of local providers of e- services. This way will encourage the creation of jobs in this field for the Albanian, regional and wider markets. The consolidation of digital infrastructure in the territory of the Republic of Albania, strictly respecting European principles of free and fair competition. TELECOMMUNICATIONS Albanian telecommunications services include fixed telephony and mobile telephony. The main operator of fixed telephone is Albtelecom Sh.a., governed by Turkish telecom companies Çalik and Turk Telekom with 77% of shares, and the rest of the shares of 23% owned by the Albanian government and other stakeholders. 16 Operators Abcom, ASC, Nisatel, and AMC Fix are the most alternative operators, holding about 26% of the total fixed telephony subscribers. The novelty that ALBtelecom brings with its fixed telephony services is the 3 play services, where each user can get voice services, Internet and ALBtv through one single cable.

32 MOBILE TELEPHONY the main operating Mobile telephone companies in Albania are: Vodafone Albania (47%) Albanian Mobile Communications (35%) Eagle Mobile which is the brand of Albtelecom (12%) Plus Communication (6%) At the end of the year 2014, the number of mobile phone users (active SIM cards) reached about 4.9 million and 3.4 million of them, were active users of mobile telephony. Penetration rate at the end of 2014 was 11,66%. Indicators of 3G services are all growing. The number of users of 3G mobile services in 2014 was 1.4 million which represents 51% penetration on the basis of population and 18% increase from The total volume of transmitted data to cellular networks with GPRS / UMTS 2014 increased by 148%. INTERNET SERVICE At the end of 2013, there were an estimated internet subscribers (both fixed and mobile). During this year, more than 115 registered operators offered internet and other related services locally. The main operator is Alb-Telecom, representing 32% of the market. Most of the providers are located in Tirana and other cities in western Albania. Internet mainly offered through ADSL and the Hybrid Fiber-Coax. Number of subscribers to broadband access from fixed networks at the end of 2014 amounted to about 207 thousand, compared to 183 thousand in 2013, which represents an annual increase of 13.3%. The rate of penetration (number of subscribers per 100 inhabitants) of fixed network broadband access by the end of 2014 was 7.31% compared to 6:40% in Technology DSL represents 62% of the fixed broadband connections and subsequently with 24% cable ties. Most DSL connections are related to optical fiber lines combination copper and 7% of subscribers of broadband access optical fiber related to home / building (FTTH / B). About 60% of subscribers are connected to 4-10 Mbps download apace. 17 POTENTIAL INVESTMENT SECTORS

33 TECHNICAL ECONOMIC DEVELOPMENT AREAS Albania offers unique economic and location opportunities to develop modern industries. It is an attractive and stable country to live in, and the government is committed to long-term economic development. 18 One of the Albanian Government s objectives is the development of economic zones based on public-private partnerships. The Government has approved three economic zones, which have the status of Technical and Economic Development Areas (TE- DAs) The Government of Albania seeks developers and investors to create world-class technical and economic development areas (TEDAs) on land areas in Koplik (Shkodër district, approx. 61 ha), Spitalla (Durrës district, approx. 213 ha) and Vlora (Vlorë district, approx. 230 ha). The Government has approved a new TEDA legislation, the objective of which is to create maximum conditions of predictability, productivity and profitability for developers and users of the TE- DAs.

34 The draft legislation proposes measures, amongst other things, for: PRODUCTIVITY Reliable infrastructure to the borders of TEDAs Fiscal incentives for R&D and training of labor force PREDICTABILITY Stabilization clause Use of International Accounting Standards Fair settlement of disputes through international arbitration PROFITABILITY Exemptions from VAT & customs duties on goods, raw materials and machinery for developers, operators & users inside the TEDAs Tax incentives and exemption from income and real-estate taxes to minimize start-up costs Fiscal incentives to promote employment INCENTIVES From the moment goods enter Albania, they are exempted from custom duties and VAT Albanian goods that enter TEDA are exempted from VAT taxation Goods can be transported from one TEDA to another without paying custom duties or VAT Capital expenses are 120 percent deductible during a period of 2 years if developers and users invest in TEDA within three years of its operation Developers and users are also exempted from 50 percent of the profit tax rate (currently at a rate of 15 percent) for a period of 5 years A developer s project is exempted from infrastructure taxes Buildings in TEDA are exempted from real estate taxes for a period of 5 years Buildings transferred to the TEDA are not subject to the transfer tax on real estate Wages and social costs are 150 percent deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 percent deductible for the subsequent years Training costs are doubly deductible for a period of 10 years Research and Development costs are doubly deductible for a period of 10 years TECHNICAL ECONOMIC DEVELOPMENT AREAS 19

35 TECHNICAL ECONOMIC DEVELOPMENT AREAS TEDA SPITALLA World Class location: 209 ha situated on the suburbs of Durrës, second most developed city in Albania 36 km from the capital Tirana Direct exchange with Tirana Durrës motorway Highest concentration of businesses in Albania 6.4 km away from Durrës Seaport Main Albanian seaport One of the largest in the Adriatic and Ionian seas 33 km from Tirana International Airport Nënë Tereza Crossroad of Corridor 8 and Adriatic-Ionian highway (Blue Corridor) Potential Industrial Hub Electronics Mechanical Industry Light industry Agro-processing Automotive Industries Trade and storage of goods Services (excluding call- centers) TEDA VLORA World Class location: Largest TEDA in Albania 289 ha Development in phases Strategic location 6 km from Vlorë Economic and touristic hub in Southern Albania 5.7 km from Port of Vlorë 151 km from the capital Tirana Part of Corridor 8 Adjacent to Adriatic- Ionian Highway 147 km from Tirana National Airport Nënë Tereza Potential Industrial Hub Electronics Mechanical Industry Light industry Agro-processing Automotive Industries Trade and storage of goods Services (excluding call- centers) 20

36 TEDA KOPLIK World Class location: 61 ha of flat land by Shkodra Lake Excellent for light industry, electronics, auto parts manufacturing, construction Near the biggest city in the north, with educated workforce and outstanding natural beauty Near the border with Montenegro, enjoying reasonable access to two ports Connection hub for Montenegro, Serbia and Kosovo 15 km from Monte Negro (Hani - Hotit custom point) 34 km from the Port of Bar (Montenegro) 127 km from the Port of Durrës 2 km from Koplik 20 km from Shkodra 115 km from the capital Tirana Potential Industrial Hub Electronics Mechanical Industry Light industry Agro-processing Automotive Industries Trade and storage of goods Services (excluding call- centers) Accelerating economic development through privatization During 2014, the privatization policy of the small and medium non-strategic sector with 100% state capital was revised. During this period there has also been prepared the first and second packages of privatization of state assets. There are 40 assets in total. The sale of assets is carried out through a public auction procedure and the former owners of the land have priority to purchase the assets. Privatizations in sectors of particular importance as: Privatization of stateowned oil company Albpetrol S.A. Privatization of INSIG S.A. It is the only stateowned insurance company in the marketplace. It operates in Albania, Kosovo and in Macedonia, and offers life and non-life insurance products. The sale of 16.8% the state share in the Albtelecom S.A. The sale of 14.9% the state share in the ARMO S.A. 21 TECHNICAL ECONOMIC DEVELOPMENT AREAS

37 PROJECTS RENEWABLE ENERGY: Key hydropower production projects: DRINI I ZI RIVER SKAVICA Instaled capacity Average annual energy production Investment Value 181 MW 694 GWh 350 milion Euro VJOSA RIVER Instaled capacity Average annual energy production Investment Value 365 MW GWh milion Euro Key electricity transmission projects include: Albania - Italy Through the Adriatic Sea 400 kwh Through Porto Romano: 250 km length Investment value 530 Mln Euro Through Vlora: 135 km length, Investment value 380 Mln Euro Albania - Macedonia 400 kwh Electricity distribution Investment. 1. Low voltage and medium voltage network, MV / LV Cabins. 2. Smart Meter-s 22

38 Transport Infrastructure Priority Projects The transport infrastructure is fundamental to the economic and social development objective of the country but also a direct contributor to the economy of Albania. Road Transport Infrastructure Major Projects ADRIATIC IONIAN CORRIDOR The Adriatic Ionian Road Corridor (which based on the South East Europe Transport Observatory SEETO regional development plan) is part of the Albanian North-South Road Corridor which will link the Montenegro Coast with the Greek Coast). Starting in Hani-Hotit and going through to Kakavija, this road is a must for the development of the economy and tourism, giving tourists access to vast seaside areas. The entire road axis now is part of the Core Network, (total length of about 380 km), and according to the methodology must be completed within The total estimated cost for bringing this road corridor in the Core network standards is estimated approx. 875 million Euros. No feasibility study available for the axis, no detailed design available for the axis. EAST WEST ROAD CORRIDOR (PART OF CORRIDOR VIII) East-West National Road Corridor which links Port of Durresi and Macedonia is important part of Corridor VIII. This corridor foresees to link three Balkan Region capitals Tirana Skopje - Sofia together and also links the important ports in Italian coast (Bari and Brindizi) with Durresi and Vlora in Adriatic Sea with port of Varna and Burgas in Black Sea. The entire road corridor now is part of the Core Network, (total length of about 236 km), and according to the methodology must be completed within The total estimated cost for bringing this road corridor in the Core network standards is estimated approx. 468 million Euros. Maritime Transport Infrastructure New Port of Shëngjin Transport Infrastructure Maritime Transport This project consists of the development of the New Port of Shëngjin on the Northern part of Shëngjin. Referring to the Feasibility Study this port is meant to substitute the Port of Durres as the biggest industrial port in Albania, and one of the biggest in the region, by building a capacity to sustain not only the national needs but those of the region as well. Through its 60 Million Tons of capacity per year, the New Port of Shëngjin is expected to fulfil the needs of Kosovo, Serbia, Macedonia and further. The project includes the multimodal port connectivity due to its focal position. The construction cost of this project stands at 1.2 Billion Euro. 23 PROJECTS

39 PROJECTS Air Transport Infrastructure Airport in Southern Albania The development of the Airport in the Southern Albania project idea goes in line with the increase in capacity of the Albanian civil aviation sector and the increased access to the tourism potential of the Albanian southern region. Kukesi Airport This Airport is located about 3 km in south of Kukësi city, in Fusha e Meteorit. It is the second civil airport in Albania. The GoA intent to start the negotiation for a concession agreement, in order to reactivate the operation in this airport. Rail Transport Infrastructure The project of Railway Infrastructure The Albanian railway lines that link the ports of Adriatic and Ionian Seas, (Durrës, Shëngjin and Vlora) make the territory of Albania very important, in terms of SEETO Comprehensive Network, as well as Core Network. The Albanian railway network is an important part of the South East Europe Transport Observatory (SEETO) initiative. GoA intention is to revive the railway sector and to improve the Core and Comprehensive railway network in Albania, (corridor VIII and the railway connection with Montenegro) as an important transport mean to increase trade in the region and connecting the region with the European Railway Network. Currently the extension of the Albanian railway network is positioned in a very convenient way for connecting ports with all neighbour countries. The Albanian Railway network comprises of 420 km of single-track rails. In the north, it is functionally linked with Montenegro and hence with all existing network in the Balkans and beyond; In the east, a 2.8 km missing line would create the link to Macedonia. 24

40 On going high profile projects PROJECTS Adriatic Sea Italy Albania Tirana TAP Greece Black Sea Istanbul Ankara TANAP Georgia Tbilisi SCP Baku Azerbaijan Caspian Sea Athens 1. The Trans Adriatic Pipeline (TAP) 2. The Ionian Adriatic Pipeline (IAP) The Trans Adriatic Pipeline (TAP) provides the only realistic trade alternative, from the strategic point of view, to enable the arrival of gas in the markets of Southeast Europe (SEE). The TAP project is very important for Albania because it will enable the connection of Albania with the natural gas network, the so-called Southern Gas Corridor, enhancing the National and European security for energy and by contributing to the diversification of gas supplies to the Region. TAP is not only a gas pipeline, because through it, Albania will become a hub power supply from Shah Deniz, Greece and Italy in both directions, from the region towards the European Union and vice versa Turkey Tirana Business Park (TBP) is the largest german real estate, direct private investment in Albania. It is located nearby the International Airport Mother Theresa in an area of 22 ha. By 2022, 17 buildings will be erected, with a total built up area of app. 176,500 m2 and 3600 parking spaces. TBP is divided in two main areas PDA (Project Development Area) and RA (Resale Area) each of them m2. PDA will be dedicated for offices, retail space, commercial areas, shops, food, storage, internal and external parking spaces and supporting services while the Resale Area will serve to any demand arising, so it is an area to be tailored to the needs of TBP s customers.this ambitious, 100 million euro project is being implemented by Lindner Group of Germany. TBP is on its way to become one of the hot spots in SEE, by bringing together industries, entrepreneurial models and creative impulses. 25

41 Tirana Logistic Park, TLP has 20 ha of space and a fully constructed 15,000 m 2 warehouse with 11.5 m height and 7 mt/m 2 floor bearing capacity, multiple direct level docking and substantial parking storage available. It is suitable for warehousing, distribution or light manufacturing. Leasable spaces are available from 800 m 2 to 7000 m 2. There is also the ability to build to lease for up to 25,000 m 2 of space. Custom clearance and rail access are on site. For information: info@tlp.al