Investment Council – For a Simplified Legal Framework ‘On Investments’
Tirana, 18 June 2018 / On Monday, Albania Investment Council (IC) held a regular meeting chaired by the Minister of Finance and Economy, Mr Arben Ahmetaj, with the special participation of EBRD Vice President, Mr Alain Pilloux, and new EBRD Director for Western Balkans, Ms Zsuzsanna Hargitai. In the agenda of this meeting was ‘Legal Framework on Investments in Albania, Current Debates and Challenges,’ with the objective to discuss how motivating and easy applicable is the current legal framework on investments, and to facilitate the process of drafting a simplified legal framework which can retain and attract new investments. This subject comes also in the context of the integration processes of the country to the EU and at a regional level, with the Regional Economic Agenda (REA). A REA component is also the Regional Investment Reform Agenda (RIRA), which inter alia aims also an alignment of the legal and regulatory framework in the country with the best international practices.
In his speech, IC Chair, Minister Arben Ahmetaj underlined the importance of the legal framework on investments as relates to the guarantees, transparency and predictability for investors. ‘We need to identify together all the elements of the current legal framework that could be improved and make respective amendments, if necessary, to precede government’s ambitious goals for economic growth,’ said Minister Ahmetaj.
EBRD Vice President, Mr Alain Pilloux, confirmed the support of EBRD for Albania, as an important country for the Bank. He congratulated the IC for the work done so far, while reconfirmed the EBRD support to this initiative. Mr. Pilloux encouraged the government to continue to improve the business climate, as very important for investments and asked to be focused on making things done, especially by tackling real issues such as property rights, informality, land ownership, the capacity of public administration and so on.
In addition, Mr Pilloux informed that EBRD will continue to support the growth of the private sector in the Albanian economy, mainly via banks through a risk-sharing instrument, to encourage banks to take more risks in their lending operations, aiming to boost as much as possible lending in LEK. Also, EBRD is designing with the EU a pioneering innovative programme which will blend EBRD funding and EU funding, around 100 million EUR in total, to develop the competitiveness of the tourism sector.
Head of the IC Secretariat, Ms Diana Leka, delivered a presentation on the main components of the investments climate, such as legal aspect, institutions & administration and policy. The presentation made reference also to the previous work of the IC dating back in April 2016, assessing in a comparative analysis the incentives for new investments in Albania and region. ‘The primary objective of the new legal frame should be to set up the premises for attracting high value-added investments that will produce longer-term positive effects in the economy. Recent growth recovery was also driven by investment, and the alignment of the legal framework with international good practices could bring a new impetus to investments in the country,’ said Ms Leka.
The presentation included many elements discussed also in a consultation table held with the business community, with more than 60 stakeholders, on 23 May 2018, organised by the Secretariat of the Investment Council, with the support of Ministry of Finance and Economy (MFE) and International Finance Corporation (IFC). Main discussions were focused on whether the new law on investments will be a framework law or a detailed one, principles of the legal certainty, scope of the current legal framework, grievance mechanism, alignment with the Bilateral Investment Treaties, importance of the alignment with sectorial investment laws, importance of equal treatment between domestic and foreign investors, guarantee of documents issued by the state institutions, land ownership problems etc. All these comments are part of the Secretariat’s Summary Paper, including as well a presentation from IFC on the ‘Alignment of Albanian Investment Legislation with Good International Practices’, and a comparative analysis prepared by the Secretariat on the Grievance Mechanism Model in 6 countries.
IC members from the business community underlined some topics which could further improve the investment climate such as fair and equal treatment of investors among domestic and foreign ones; fair use of infrastructure tax in the benefit of both the investors and municipalities; full responsibility from the institutions on the issued documents; application model of indirect taxation for specific industries in line with EU standards; institutional alignment and coordination etc.
Finally, the IC Chair confirmed that the guarantee of the administrative documents issued by the state is an element which is worth to be considered in the new law, while the debate is ongoing on whether this will be a framework law or a detailed and exhaustive one. While, as relates to the infrastructure tax destination, Minister Ahmetaj agrees that it is an issue that can be further considered by the government.
During the closing of the meeting, the IC Chair asked business representatives to send any comments on the current legal framework to the Secretariat while affirmed that the draft law in due time will be shared and consulted with the business community through IC.