Albania - Foreign investment

Prior to 1990, no foreign capital was invested in postwar Albania, but various communist states aided the Albanian industrialization program, supplying credit, machinery and equipment, and technicians. Prior to 1961, assistance by Sovietbloc technicians in geologic surveys, construction, and operation of factories was vital to Albanian economic growth. Following the Soviet suspension of credits, withdrawal of technicians, and elimination of trade, China increased its activity in all these areas. In 1978, China terminated all its economic and military cooperation with Albania and the following year Albania was for the first time without any foreign assistance. In the 1980s, some economic assistance was provided by the FRG.

After the fall of communism, foreign investment was encouraged and 149 joint ventures were agreed upon. A $10 million Coca-Cola bottling plant set up in 1994 outside of Tiranë (directly employing about 100 people), the European Bank for Reconstruction and Development, and a local Albanian company were early ventures. In 1995, Albania concluded a bilateral investment treaty with the United States. At the end of 1995, foreign investment was projected to rise to about $600 million, with about one-half of that coming from Italy. However, the prospects for foreign investment dropped sharply in 1997 in the wake of the violence and property destruction that followed the collapse of the pyramid schemes in which many Albanians had sunk their savings. The violent removal of the Prime Minister in 1998 and the influx of Kosovar refugees in 1999 were added deterrents to foreign investment. From 1997 to 1999, foreign direct investment in Albania averaged only $44.57 million, but in 2000 the rate of inflow tripled to $143 million and then in 2001 to $181 million.

In 2003, the UN Development Program assisted the Albanian government in setting up the Investment Promotion Agency (ANIH) that replaces the Economic Development Agency. Previously, the government had put few restrictions on foreign investment, but had offered no tax or financial incentives beyond national treatment. An improved investment regime is a priority for the current government.

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