In The World Bank’s forecasts of long-term convergence, Albania will reach EU average living standards in 22 years Source: The World Bank Income convergence

In The World Bank’s forecasts of long-term convergence, Albania will reach EU average living standards in 22 years

Source: The World Bank

Income convergence in EuropeThe convergence

• With economic growth of 6 percent per year, it would take ten years for Albania to catch up with EU11 countries and over 22 years to reach EU average living standards

• Expanding the growth potential through structural reforms in a stable macroeconomic environment drives strong income convergence

Moreover, Albania’s exports to the EU are estimated at 40% below potential, the highest in the SSE region


Albania’s import potentialAlbania’s export potential

• Imports from the EU are estimated to be below potential by 33 percent

• According to The World Bank, Albania’s exports to the EU are estimated at 40% below potential, the highest in the region

2013 Potential

+67%

4,107

2,464

2013 Potential

+49%

7,690

5,152

Albania’s potential in global trade, mln USD

To unlock its growth potential, Albania will benefit from its extensive FTAs with EU and other neighboring countries, which cover a market of over 600 million customers

CEFTA

EU

World

CEFTA

EU

World

1

2

3

• Can reach any major city in Europe within 3 days by truck

• Albania will be part of the EU’s market, the largest in the world, of 620 million customers

• CEFTA is a market of 26 million customers

• 7 million is the size of the Albanian speaking market within CEFTA

• Albania is a Member of WTO and applies WTO rules on import licensing

• Bringing down trade barriers• Trade agreements with the US

Free trade advantage

Source: Ministry of Economic Development, Tourism, Trade and Entrepreneurship

Four major reasons to invest in Albania: healthy growth, young workforce, vibrant industries and comprehensive structural reforms

Export-oriented GrowthAlbania’s export has a 24% annual growth rate for the past five years and its trade with many EU countries has been surging

ACompetitive Human Capital57% of Albania’s population is under age of 35 and the average wage is one of the most competitive in the region

BPromising Sectoral OpportunitiesPromising industries include manufacturing, energy, agriculture, mechanic industry and tourism

CComprehensive Structural ReformsGovernment is launching major reforms to better share growth with foreign investorsD


Albania’s export has a 24% annual growth rate for the past five years, growing from 1 billion USD to 2.5 billion

A Export-oriented Growth

Total import, 2009-2014

• Import has been declining since 2011

+21%

Total export, 2009-2014

• Already as one of the largest sectors, the growth rate of trade is still above average

Source: Income statement, investments and macroeconomic variables for all market producers of goods and services 2006 - 2014, Institute of Statistics of Albania

+5.4%

Albania’s dynamic export sector, mln USD

2009 2010 2011 2012 2013 2014

1041.24

1609.95

1973.772134.28

2463.4 2556.34

2009 2010 2011 2012 2013 2014

4300.24790.19

5449.05 5298.15 5145.235519.82

Trade is playing an increasingly important role in Albania, contributing almost half of the country’s GDP in 2012


Share of total income by sector, 2014Albania’s Trade as % of GDP, 1990-2014

• Albania has a dynamic manufacturing sector and an increasingly efficient logistic system, which has boosted the trade sector


The importance of trade in Albania’s economy

• Total income from producers of goods and services is 15.3 billion USD

• The contribution of industry is growing steadily

1990 1995 2000 2005 2010 2014

38%47%

57%

69%

86%93%

Agricul-ture; 21.7

Construc-tion; 12

Trans-port; 2.8

Other services;

30.2

Industry; 15.3

Thanks to closer economic integration, Albania’s export to Spain, Germany, Italy and other major economies in the UE has surged despite debt crisis


Spain Germany

• Albania’s export to Spain is more than doubling every year in average

• Albania’s export to Germany is growing fast at 28% per year

• Albania’s exports to France have increased 80% from 2009

1356 70

197241

+108%

2010 201220112009 2013

35 44 57 6695

+28%

20112009 2012 20132010

Albania’s export to Western Europe

Source: Export by Countries (1993-2013), Institute of Statistics of Albania

80%

2009 2010 2011 2012 2013

9.4 15.7 10.815.3

52.5

France

In terms of human capital, Albania has a young workforce that are well-educated and highly-motivated

B Competitive Human Capital

57% of Albania’s population is under age of 35

The median age of Albania’s population is 31.2 years

They are well-educated, highly-motivated

Many can speak English, Italian and Greek

There are over 1,000,000 of them


Albania has one of the lowest median age in the region, and a well-educated workforce comparatively


Average years of schooling, 2012Median age, 2010

26.3

31.2

35.4

37.2

38.1

40.3

41.1

41.6

42.1

42.2

44.3

Macedonia

Greece

Serbia

Montenegro

Italy

Bosnia

Albania

Romania

Kosovo

Bulgaria

Slovenia

Source: The World Bank, CIA World Factbook; UNESCO

8.3

10.1

10.1

10.2

10.4

10.4

10.5

10.6

11.7

Italy

Slovenia

Montenegro

Serbia

Albania

Greece

Romania

Bosnia

Bulgaria

Many from the workforce have great language skills and have received professional training


Language skills Professional training Workforce availability

• Albania’s workforce has proficiency in foreign languages– English, Italian and Greek

are widely spoken– French and German

included in the education system

• Professional Trainings driven by market needs – Vocational trainings and

hands on trainings at leader factories in each sector

– Flexible structure, to support workforce needs in different regions

• Approximately 116,000 students register annually in all the universities

• The budget of the National Employment Service will be tripled next year

• Support funding available for businesses expanding


Compared with neighboring countries, Albania’s wage level is the most competitive


Average monthly wage in EUR, 2013

• The average monthly wage of Albanian workers is as low as 310 euros

Monthly minimum wages in EUR, 2013

• According to the latest minimum wage law of Albania, it is the second lowest in the region

148

157

164

174

179

186

191

211

Bulgaria

Macedonia

Bosnia and Herz.

Romania

Montenegro

Turkey

Serbia

Albania

266

333

340

395

422

436

486

539

Serbia

Montenegro

Turkey

Bosnia and Herz.

Romania

Macedonia

Bulgaria

Albania

Source: The World Bank; Ministry of Economic Development, Tourism, Trade and Entrepreneurship

New industries are developing rapidly contributing significantly to exports growth thanks to the new economic model

Source: Albanian Investment Development Agency

Manufacturing

1

TEDA-s

2 Agriculture

3

Tourism

5

C Promising Sectoral Opportunities

Auto-motive and mechanic

4

The government has rolled out the Textile and Footwear Industry Package 2014, giving a strong stimulus to the fashion industry


Significant growth in exports

• In 2014, exports in manufacturing increased by 24,6% or 165 million dollars.

• 5,000 new jobs were created within the year• 14% increase in imports of machineries and

equipment.

New stimulus given to the sector

• Under the slogan “a new chapter for employment”;• A symbolic rent of EUR 1 when leasing from gov’t;• A one-stop shop dedicated solely to the sector;• Instant reimbursement of VAT;• Simplification of procedures.

2012 2013 2014

620.92693.54

859.2734

+18


Albania’s export in manufacturing, mln USD, 2012-2014


• The exports of the sector have increased by 18% in 2014.

• The share of the sector in total exports increased to 1.3% in 2014 from 1.17% that it was in 2013

• Instant reimbursement of VAT;• Financial support for participation in trade fairs and

international.

2012 2013 2014

20

2934

+31


Albania’s export in chemicals and plastics, mln USD, 2012-2014

The government has rolled out the Plastic Industry Package in early 2015

New stimulus given to the sector Significant growth in exports

The agricultural sector of Albania has distinct natural advantages and superior market conditions


Steady growth in the past five years

• The agricultural sector has grown steadily in the past five years

• This sector has not been affected by the European debt crisis

• In 2014 the Government launched a new package to support the sector

• 18% increase in exports within the year.

Natural and market advantages

• Favorable climate – Average 16 degrees in the costal areas– Diverse micro-climate that is suitable for different

products• Suitable soil and abundant water• Advantages from preferential trade agreements

with EU on the increase in exportsSource: Albanian Investment Development Agency

3,330

2008

2,750

2009

3,1252,646

2010

+7%

2012

3,520

2011

Albania’s agricultural output, mln USD, 2008-2012

Albania has a dynamic sector of renewable energy and tremendous untapped potential of green power


Hydro power Wind and solar energy Petroleum and gas energy

• Eight large rivers run through the country from the mountainous East to the Adriatic and Ionian seas

• To date only 35% of Hydro-Energetic potential of the country is utilized, and total resources are about 4,500 MW

• Albania has favorable conditions for development of solar energy – solar radiation is calculated to be more than 1,500 kWh/m2/yr

• Albania has an untapped wind power potential, in particular along the Adriatic coast

• Albania has significant oil reserves and produced about 1.2 million tons in 2013

• Its oil exports to foreign markets at the end of 2012 amounted to 567 million USD, dominating the total domestic exports

Source: Ministry of Economic Development, Trade and Entrepreneurship

A new economic model is in place, with focus on production and exports through major structural reforms

Macro-economic reformA

Pension reform

B

Territorial-administrative reform

C

Business climate reformE

D Comprehensive Structural Reforms

Energy reform

D

F Deregulation reform

Further business climate reform is taking place in order to better share the growth opportunities with foreign investors


Business climate

Tax & customs

One Stop Shop

Gov’t is increasing the efficiency of tax administration and fight against corruption through the National Economic Council, which operates under the auspices of the Prime Minister. An anti-evasion reform has started on 1st of September 2015

Corporate tax rate - 15 %VAT – 20%Personal tax rate from 0 - 23 %Favorable tax system for Small Businesses - 7.5%Treaties for the Avoidance of Double Taxation with over 30 countries


Introduction of e-registration and electronic notification of balance sheets and financial reports. The registration completed with less than one euro; registration and licensing to be offered through one unique window by 2016

Furthermore, Albania has no restriction on capital movement and has one of the most competitive tax rates in the region



No restriction on capital transfer1No restrictions on repatriation of profits2Simplified tax procedures3Competitive tax rate4

Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors

E Legal Framework

Full protection and equal treatment

• Full protection of foreign investment– Foreign investment may not be

expropriated or nationalized directly or indirectly, except in special cases, in the interest of the public us as defined by law

– Foreign investors have the right to expatriate all funds and contributions in kind of their investment

• Equal and unbiased treatment – In all cases and at all times investments will

have an equal and unbiased treatment, and will have complete protection

– In any case foreign investment will have a treatment equal to what common international practice allows

No limitation and full openness

• The implementation of the economic reforms constitutes the main engagement of the Government for the country’s social-economic development, with the final goal of integration with the European Union

– No prior government authorization is needed and no sector restrictions to foreign investments

– There is no limitation on the percentage share of foreign participation in companies-100% foreign ownership is possible


Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors

E Legal Framework

• Stimulate and support strategic investments in fast growing sectors

• Facilitate administrative procedures, increase transparency, and reduce legislative complexity for strategic investments

• Increased predictability and security of state - investor contracts through ratification of contracts by statutes

• Expedited due diligence procedure (AIDA completes the due diligence within 30 days of the submission of an application)

• Support with the necessary infrastructure• Provision of immovable assets to develop

and implement strategic investment projects

• Tourism is considered a strategic sector, in line with the other legislation on strategic investors

• Provides a comprehensive approach for an integrated and sustainable development of tourism

• Create areas to be developed by investors, and provide for public – private partnerships

• Provide expedited procedures for land acquisition and leases up to 99 years

• Introduce international standards and certifications for a sustainable tourist sector


The new Law on Tourism The new Strategic Investments Law

The new law on Technical and Economic Development Areas

E Legal Framework


Developer’s project shall be exempted from infrastructure tax;

2

1

3

Developers and users shall be exempted from 50% of the profit tax rate for a period of 5 years

For developers that invest in the area, within 3 years of commencement of work or the investor that shall invest in the area within 3 years of commencement of the economic activity in the area, the annual capital expenses shall be 20 % deductible, regardless of the sum of depreciation, pursuant to the law on profit tax, during a period of 2 (two) years;

Supply of Albanian goods, intended to enter the area, shall be considered as a supply for export at zero scale

4

5 Buildings constructed in the area shall be exempted from real estate tax for a period of 5 years and from tax for transfer of ownership

6 Wages and social costs shall be 150 % deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 % deductible for the subse-quent years

The new law on Technical and Economic Development Areas

E Legal Framework


7

8

Training costs for employees and expenses for R&D in the area, shall be doubly deductible for a period of 10 years, from the beginning of operations;

Wages and social costs shall be 150 % deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 % deductible for the subsequent years;

1

2

Procedural and administrative incentives

Shortens the application period to up to 15 days from the submission of the application

Provides guaranties for the investor against financial consequences caused by changes in the legislation for a period of 10 years

TEDA - SPITALLE

Manufacturing – industrial and agro-processing• New innovative industries with high – tech

• Energy-efficient industries

• High-productivity industries

• IT activities

• Automotive spare parts, construction materials etc.

Commercial and goods storage• Services (Administration, Banking, Customs,

Health-care, legal, insurance companies, notaries etc.)

• Transport activities

• Support logistics

Duration for the operation of the TEDA

• 99 yearsArea: 501.9 ha

TEDA - SPITALLE

• Located close to the city of Durrës, the second most developed city in Albania

• 6.4 km from the port of Durrës, the biggest and most important port in Albania

• 30 km from Tirana International Airport “Mother Teresa”

• 37 km from the capital city of Albania, Tirana

Area: 501.9 ha

Contract Notice was published on the Procure-ment Agency on 24/08/2015 and FT on 26-27-28/08.2015

Deadline for submission of offers: 28/10/2015 Standard bit documents on: www.ekonomia.gov.al www.aida.gov.al

Visit us at teda.gov.al

Touristic development & investment project at Gjiri i Lalezit by Omnix Albania 2017 - 2022

• Total value of investment: US$1.2 billion • Five Star Luxurious Hotel & Spa, 250 keys, conference hall 500-seats.• Retail Boulevard, Leisure & Entertainment zone includes food & beverages outlets,

cafes, dining and boutique shops. • Atlantis 3,200/day capacity Aqua park and treasure island (allocated 450 car parks)• Themed park, dry sports area, adventure golf, children’s birds park.• 500 Residential luxurious apartments.• 1750 car lots

• 1430 jobs generated• 1050 monthly payroll• 380 indirect services related to the development project

• Start of project 2017 – End of project 2022

Overall Master Plan

Investors already present in Albania


Documents

In The World Bank’s forecasts of long-term convergence, Albania will reach EU average living standards in 22 years Source: The World Bank Income convergence