Despite a generally supportive legal framework for foreign investment, foreign investors face significant challenges in Albania, according to the U.S. State Department’s 2024 Investment Climate Statement.
The report outlines deep-rooted and systemic issues in Albania’s economic structure, including weak competition, insecure property rights, poor contract enforcement, and unstable fiscal policies. It notes that foreign investors continue to perceive Albania as a difficult place to do business.
The findings contrast sharply with the Albanian government's optimistic goal of concluding EU membership negotiations by 2027, implying a lack of convergence with EU economic standards.
Arguably one of the most critical assessments issued by the State Department on Albania’s investment environment, the report highlights serious governance and rule-of-law deficiencies, including widespread corruption, organized crime, and money laundering.
The State Department concludes:
Albania’s economic development remains vulnerable due to widespread corruption, organized crime, distorted competition, labor shortages caused by emigration, low productivity, and a large informal sector. Tackling these issues will require deep structural reforms.
Main Highlights from the Report
Albania is still perceived as a difficult place to do business. Major obstacles cited by investors include:
- Corruption in the public sector, judiciary, and public procurement;
- Unfair and distorted competition;
- A large informal economy;
- Money laundering;
- Frequent changes in fiscal legislation;
- Weak property rights;
- Poor contract enforcement.
Corruption remains a major concern. Foreign investors frequently report corruption in government procurement, which often delays or prevents investment.
Extortion is a serious issue. Investors report being targeted by elements within the public administration, media, and criminal groups.
U.S. businesses have reported threats of property expropriation and extortion.
Illicit funds distort competition. The business community reports that proceeds from drug trafficking, smuggling, tax evasion, and corruption undermine fair competition.
Public-private partnerships (PPPs) have reduced market opportunities for foreign investors, especially in infrastructure and other key sectors.
The Law on Strategic Investments has yielded limited results for foreign investors. Of nearly 60 approved projects, almost all have gone to domestic firms in the tourism sector. Foreign applicants often face long delays.
Labor shortages are growing due to the emigration of young, skilled workers, negatively affecting investment potential.
The legislative process lacks transparency. Businesses often complain that their feedback on draft laws and regulations is ignored, and that comment periods are frequently not respected.
Property rights remain problematic.
- Obtaining clear land title is difficult.
- Allegations of court system manipulation to gain illegal land titles persist.
- Overlapping ownership claims are common.
- The compensation process for property confiscated under communism is inefficient, slow, and often below market value.
Judicial inefficiency continues.
- Court cases can drag on for years without resolution.
- Many claimants take their cases to the European Court of Human Rights (ECHR) in Strasbourg.
- Even after favorable rulings, enforcement in Albania remains slow.
Intellectual property rights (IPR) are weakly protected.
- Infringement and counterfeit goods remain common.
- Counterfeits include software, clothing, machinery, and cigarettes, found even in mainstream markets and shopping centers.
