In its newly published Investment Climate Statements, the US State Department sketches a bleak picture of the Albanian investment climate, which proves to be a hostile environment to foreign investors because of the government favoring “politically connected companies”:
Investors report ongoing concerns that regulators use difficult-to-interpret or inconsistent legislation and regulations as tools to dissuade foreign investors and favor politically connected companies. Regulations and laws governing business activity change frequently and without meaningful consultation with the business community. Major foreign investors report pressure to hire specific, politically connected subcontractors and express concern about compliance with the Foreign Corrupt Practices Act while operating in Albania. Reports of corruption in government procurement are commonplace.
Furthermore, the increasing use of concessions and public–private partnerships are cited as another detrimental developments:
The increasing use of public private partnership (3P) contracts has narrowed the opportunities for competition, including by foreign investors, in infrastructure and other sectors. Poor cost-benefit analyses and a lack of technical expertise in drafting and monitoring 3P contracts are ongoing concerns. The government had signed more than 200 3P contracts by the end of 2017.
The report also states that the justice reform has so far not contributed to a better investment climate:
Foreign investors cite corruption, particularly in the judiciary, a lack of transparency in public procurement, and poor enforcement of contracts as continuing problems in Albania. In 2016, the government of Albania passed sweeping constitutional amendments to reform the country’s judicial system and improve the rule of law. The implementation of judicial reform is underway, including the vetting of judges and prosecutors for unexplained wealth, but foreign investors perceive the investment climate as problematic and say Albania remains a difficult place to do business.
All of these points have been iterated frequently by international organizations such as the IMF and Worldbank. Recently, the IMF warned once again against PPPs and high public debts that result from it, and expressed its worries about the lack of Foreign Direct Investments.
