Ever since Albania seceded from the Soviet Union, and tilted toward the European Union, the country’s economy has grown from strength to strength. Between 2010 and 2021, the economy grew by a remarkable 37%. And according to forecasts, it could grow by a further 20% by 2025.
Albania’s economic growth has had a positive impact on the country’s poverty levels. It has also represented huge opportunities for investors looking to make money amid Albania’s success. In light of this, the following are seven reasons to invest in Albania:
7 Reasons to Invest in Albania
- Tight Ties With Europe As a Central European Free Trade Agreement (CEFTA) member, Albania has complete free trade among its seven other member countries. This means Albania has unfettered access to a combined market of 26 million customers. Given that all CEFTA members try to comply with EU objectives and regulations, trade between Albania and the EU tends to be relatively frictionless. With ports on the Adriatic and Ionian Seas, the Albanian market also occupies an ideal position for these exports. These facts allow exports to the EU from Albania to grow year on year, accounting for more than €2 billion in 2021 alone.
- A Liberal Business Environment Ever since 2009, when Albania applied for EU membership, the country has undergone a series of economic reforms to ensure its application’s success. Importantly for investors’ bottom line, Albania now has a very favorable tax regime. Property tax is just 1%; corporate income tax is 15% (the U.K. has a rate of 19%); and residents in Albania only pay 15% tax on their income, no matter how much they earn. The Law On Foreign Investment covers most of the regulatory framework foreign investors need to be aware of in Albania. The Albanian Investment Development Agency (AIDA) says this all-important law allows for “100% ownership for foreign companies and outlines specific protections for foreign investors”. What is more, a government paper has openly said it gives “high priority… to potential foreign investors”. In a nutshell, compared to other EU countries, investing in Albania appears to be a more seamless process.
- A Serious Anti-Corruption Drive Along with necessary economic reforms, Albania transformed its political landscape to accelerate its EU application. This includes various anti-corruption drives, ranging from a €3 million EU-funded project (the biggest of its kind in the West Balkans) to setting up an online portal, allowing citizens to anonymously record corrupt activities. It is perhaps not unsurprising then, that Albania improved its ranking on Transparency International’s Corruption Perception Index by 27 places, since 2016. Less corruption means foreigners need to pay less in bribes to get their businesses up and running. Plus, falling corruption numbers are a good bellwether for a stabilizing political environment and a fairer, more equal society. Due to the economic and political reforms, Albania is in open accession talks with the EU.
- Less Poverty than Ever Before As a result of economic and political reform, Albania has achieved staggering growth. This has been mirrored by the country’s labor sector. Jobs in textiles, tourism, trade and administrative services have been on the rise since 2013. Tourism in particular is booming; it is the 25th most visited country in Europe, with The New York Times ranking it as the fourth best tourism destination in the world. According to the World Bank, the economic and employment growth resulted in “Poverty in Albania is estimated to have fallen significantly to 22% of the population in 2021.”
- Affordable Unused Land To encourage people to invest in Albania, the government consistently advertises its “competitive land prices”, “a lot of unused lands” and the fact that its value will only “increase even more” over the next 10 years. This is great news for investors. Constructing the necessary infrastructure for any business in Albania is likely to cost far less, and rise in value far more, than most other Western European countries.
- Competitive Labor Costs Not only are 57% of Albanians under 35 making for a big labor pool, but they are also relatively economical to hire. For reference, the minimum wage in Albania is $335 per month, compared to $1160 per month in the U.S. But Albanian talent is also very well-educated. Every year, more than 100,000 Albanians enroll in universities, with a large number studying in EU countries like Germany and France.
- A Conscious Investment While the poverty problem in Albania has indeed reduced significantly, 5.8% of its population still lives in extreme poverty. Apart from being a potentially smart financial decision to invest in Albania, doing so could also go a long way to help fund the country’s continued drive to tackle poverty and get more Albanians into well-paying jobs. The Albanian energy sector makes an excellent example. In 2022, foreign investors came in to invest in Albania by putting €103 million into the energy sector, and this represented an increase of more than 145% compared to 2021. Not only did this boost the number of Albanians employed by the sector to more than 2% of its population but much of this investment also went into renewables such as wind and solar. A new solar project in the Korça region, for example, was approved in 2022 and was supported by foreign investment. This will supply new, high-skilled jobs, help energy-deprived residents gain access to cheaper energy and hopefully give foreigners a healthy return on their investment.
Looking Ahead
Albania’s remarkable economic growth and favorable investment environment offer lucrative opportunities for investors. With tight ties to Europe, a liberal business environment and a serious anti-corruption drive, Albania presents a seamless and secure investment destination. Moreover, the country’s success in reducing poverty and its conscious efforts to tackle societal challenges make investing in Albania not only financially rewarding but also impactful in promoting further development and creating well-paying jobs for its population.
– Sam Rucker
Photo: Unsplash