DASH: Corruption Hampers Albania’s Investment Potential – Exit

The US State Department released the 2022 Investment Climate statement for Albania, which states that, despite a sound legal framework, foreign investors perceive Albania as a difficult place to do business.

Amongst other issues, the report says that issues of corruption in procurement and the continued use of PPPs are problematic.

“They cite endemic corruption, including in the judiciary and public procurement, unfair competition, the informal economy, frequent changes in fiscal legislation and weak implementation of contracts as ongoing challenges for investment and business in Albania,” DASH’s summary statement says.

PPPs have long been criticized by foreign institutions, including the World Bank, due to the lack of competition they bring to the market, as well as ongoing claims of corruption.

“Weak cost-benefit analyzes and the lack of technical expertise in drafting and monitoring PPP contracts are constant concerns. American investors are challenged by corruption and the perpetuation of informal business practices. Some US investors have faced contentious commercial disputes with both public and private entities, and some have gone to international arbitration. In 2019 and 2020, the attempted investment of a US company was allegedly hindered by several court decisions and questionable actions of interested parties involved in an investment dispute. The case is now in international arbitration,” says the DASH report.

The report considers property rights challenging in Albania because a clear title is difficult to obtain. ‘There have been cases of individuals allegedly manipulating the judicial system to obtain illegal land titles. Overlapping property titles is a serious and common issue. The compensation process for the lands confiscated by the former communist regime continues to be inefficient and insufficient,” the report states.

DASH further points out that, to limit the opportunities for corruption, the Albanian Government started a comprehensive reform to digitize all public services.

As of March 2021, 1,200 services or 95 per cent of all public services for citizens and businesses, were available online through the E-Albania Portal.

To tackle endemic corruption, the Government of Albania adopted comprehensive constitutional amendments to reform the country’s judicial system and improve the rule of law in 2016. DASH estimates that the implementation of justice reform is underway, supported by the United States and EU, including verifying judges and prosecutors for unexplained assets.

“More than half of the judges and prosecutors who have undergone verification have been dismissed for unexplained wealth or links to organized crime. The EU expects Albania to show progress in prosecuting judges and prosecutors whose vetting revealed possible criminal behavior,” the report further states.

However, DASH assesses that, as a developing country, Albania offers excellent untapped potential for foreign investment in many sectors, including energy, tourism, healthcare, agriculture, oil and mining, and information and communication technology.

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