Manufacturers choosing to invest in Albania benefit from ‘the Albanian advantage’, the opportunity to access the long-term gains that come from investing in a politically stable, fast-growing low cost European economy that is the newly-established gateway into southern Europe.
Garments Manufacture
Textiles and garments is the largest employer in the manufacturing sector. Building upon a strong post-war tradition of garments production, since privatization in 1990 many local firms have created a strong reputation for themselves while foreign firms have substantially increased their share of the sector’s output particularly within the export processing regime. Many foreign firms have been operating in Albania for more than a decade and a large percentage are still increasing the scope of their operations and hiring more staff. Export and import figures, both of which have increased in recent years, are closely related within a re-export regime that sees imports of semi-final products re-exported after several operations inside Albania.
The main advantages of investing in Albania in the garments sector are:
• An available labour force across the country with experience in the sector
• Direct and total labour costs are lower than most comparable countries
• Easy access to Italy, Greece and the Balkan markets
• No VAT or customs duties for 100% facon producers under the re-export scheme
• Widespread language skills, particularly in Italian, English and Greek
• Linkages and experience of working with Italian and Greek investors
• Workforce is adaptable and flexible, able to adopt new technologies and meet international quality standards
• Ability to produce small orders and meet short delivery times, required by customers
• Lower costs of transport due to proximity to Italy and Greece
Shoe Manufacture and Leather Processing
Albania is one of the leading shoe producers and leather processors in the world. Exports of Albanian footwear have doubled in the last three years, and in the period 2000-2004 Albania’s shoe and leather exports grew at more than double the rate of world exports in the sector. Albanian shoe and leather exports are currently growing by 20-30% per annum.
Nearly 100 shoe and leather companies in Albania produce 1.2 million pairs of shoes per month. Albania is the second largest exporter of shoes to Italy – itself by far the leading exporter of shoes in the world – and Albania is an ideal location to export to the Italian, European and Balkan markets. Foreign investors in Albania are also increasingly exporting to non-European markets. With free trade agreements signed with the Balkan countries and the EU, Albania offers unrestricted export opportunities within the region.
Albania is a particularly attractive location for companies producing and exporting:
Safety shoes for export to global markets
All types of shoe production and assembly for Balkan and European markets
Leather processing for Albanian shoe producers and for the European market
Leather accessories for the Balkan and European markets
Albania is the most competitive location in Europe for shoe and leather production. At $150-200 per month, labour costs in the shoe and leather sector in Albania are one-tenth those in Italy and one-fifth those in Greece. Wages in Albania are one-third to one-half the level of other Balkan and East European countries. The Albanian workforce is both stable and loyal. Figures show that 50% of employees in our leading shoe manufacturers have worked in the factory for more than 5 years.
Foreign manufacturers in Albania can turn around European orders quicker than any other country. Some firms are delivering orders to Italy within 24 hours of receiving them in Albania. Quality levels in Albanian shoe and leather factories are high, with many companies having ISO9001 certification. Companies are adopting advanced production techniques: today, some of the most advanced shoe factories in the world are located in Albania.
With the strong growth rate of exports, there are growing opportunities for leather processing companies to invest in Albania and service on a just in time (JIT) basis the raw materials needs of our major shoe manufacturers.
Mining
For a small country, Albania has considerable extractable mineral resources including chromium, copper, nickel and coal. The quality and quantity of chromium is particularly high: prior to 1990 Albania was the world’s third-largest producer and is today the only European country with significant reserves of this vital mineral. In 2000, the government signed a 30-year concession with an Italian consortium led by DARFO to exploit 50% of the country’s chromium ore reserves and 100% of its Ferro-chromium reserves. The minerals extracted are exported directly with only limited processing so there are opportunities for downstream processing.
Albania’s coal and nickel mines have been privatized.
Albania’s three largest copper mines are currently being operated under a 30-year concession signed in 2002 with the Turkish company Ber-Oner.
Albania has significant unexploited deposits of bauxite and phosphates. According to ministry experts, these are low grade deposits. One bauxite mine is currently operating to provide input to the country’s cement industry while no phosphate rock is being mined at the present time.
Albania has significant marble and stone reserves which have the potential to be used in the construction industry. However ministry experts claim that the marble is of poor quality since it is mixed with limestone. Limestone is probably the only remaining mineral with interesting potential for exploitation since the country has unrestricted reserves and it can be mined under government licence.
Oil and Gas
Recoverable reserves from existing oil fields in Albania are around 440 million tons: of these, 100 million tons are in carbonate reservoirs and 340 million tons are in deeper ferruginous reservoirs. Gas reserves are estimated at 1.56 billion Nm3, of which 75 million Nm3 is natural gas and the rest associated gas. Reserves of tar sand are estimated at 600 million tons, of which 55 million tons are bitumen. Further exploration may uncover additional reserves of oil and gas, both of which have been extracted since 1918. Crude oil is exported to Italy and gas is used by local industry.
A number of foreign firms and the Albanian firm Albpetrol are undertaking oil and gas exploration. The government plans to privatize the oil and gas sector. Oil extraction is centred in the Berat and Fier regions and the large refinery at Ballsh. Onshore extraction is expected to increase from 350,000 tons in 1997 to 2.5 million tons by 2022.
Foreign investment could tap into Albania’s current excess capacity in the petroleum industry, especially in equipment and spare parts manufacturing as well as the modernization of industrial processes, communication, transportation, and advanced environmental and equipment technologies. Foreign investment in drilling rigs and oilfield exploration could help revitalize Albania’s ailing equipment, improve recovery rates, enhance economic efficiency, and uncover additional reserves of oil and gas.
Our investor targeting strategy seeks primarily to identify and promote foreign investment in the development and rehabilitation of the Kucova, Amonica, Velca, and Delvina oilfields; the rehabilitation of several hundred kilometers of crude oil pipes owned by Albpetrol; the modernization and construction of crude oil and product storage facilities; and the modernization of the Ballsh refinery. In addition to oil and gas exploration, we also seek to promote processing and refining operations in Albania, as well as the manufacture of oil-related products. Our goal is to move Albania’s oil and gas sector higher up the value chain with more value adding activities performed locally.
Agribusiness
Albania offers opportunities in agriculture built around its favourable climate and low-cost rural labour force. Still using traditional methods, Albania’s fruit, vegetable, meat and dairy products are cultivated using few artificial additives, chemicals, or pesticides. Thus Albania is in a position to become a world-class producer and exporter of quality organic foods destined for regional, European and North American markets.
The potential is considerable; our mild Mediterranean climate (with mild winters and dry summers) and abundant precipitation (an annual average of 1,400 mm in the coastal areas and 1,800-3,000 mm in the hill and mountain regions), are especially suited for growing early and late season fruits, olives, medicinal plants and wine. Large rivers provide effective irrigation especially in the coastal plains where 60% of the arable land is located.
Albania’s significant forest resources present additional opportunities for foreign investment, particularly by furniture and cabinet-making companies with their own distribution networks. Albania’s fine beech wood forests should interest firms engaged in quality furniture making.
The Albanian agribusiness sector is an important part of the Albanian economy contributing some 25% of GDP and employing 60% of national workforce. Substantial investments have been made in recent years and added value in the sector has increased at 10-15% per year. However, the total volume of production is not equal to domestic consumption needs and significant imports of food products are still necessary. Opportunities exist therefore for various import substitution strategies.
Within the sector, the food processing industry is a better than average performer. In some niche market products, such as frog meat or sage, the sector is an important player at the European level. Double digit growth has been seen in the sub-sectors of herbs and spices, vegetable oils and fish products. Again, the food processing sector is diverse, but dominated by small-scale, often artisan producers, most of them producing for the local market. While some medium-sized enterprises, often relatively modern, aim to serve regional markets, production volumes do not meet domestic requirements. Small-sized investment opportunities have been identified in many sub-sectors. The best can be found in segments where exports already exist, namely medicinal plants and herbs, early and late season vegetables, preserved products such as olives, olive oil, canned tomatoes, fresh and processed fish, and cheese.
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