Founder and Managing Partner on Kreston Albania
Rezar Llukaçej, Founder and Managing Partner of Kreston Albania, boasts over 20 years of extensive experience in the financial services industry. Throughout his career, he has diligently cultivated a vision aimed at establishing a distinctive company within the market, fueled by a commitment to excellence and the inheritance of core values.
Investing in Albania
January 12, 2024
Investing in Albania is driving the transformation of the nation into a hub for foreign investments in the heart of the Balkans. Central to this shift is the strategic repositioning of Albanian resorts, like Ksamil, as cost-effective alternatives to well-known European destinations.
Rezar Llukaçej, managing partner at the Kreston Albania office in Tirana, provides a comprehensive local perspective on the evolving economic landscape, shedding light on the factors that are establishing the groundwork for Albania’s EU accession.
Regulatory advancements fueling growth
Albania’s investment appeal has been significantly bolstered by proactive regulatory developments in the past year, offering preferential changes to some sectors they are keen to see grow. Rezar Llukaçej stresses that these sectors have seen the adoption of special legislation aimed at encouraging strategic investments, crucial for the nation’s economic development, “Albania maintains a liberal foreign investment regime to attract Foreign Direct Investment (FDI). The FDI flow in 2022 exceeded EUR 1.37 billion, thanks to the government prioritising sectors like tourism, manufacturing, energy, agriculture, oil and mining, and ICT.”
Albania’s FDI safeguards
Llukaçej identifies the key to the success of these improvements has been special legislation aiming to encourage and incentivise strategic investments.
“It calls for important capital investments that are implemented in key economic sectors, strategic for the development of the country.”
“The Law on Foreign Investment provides comprehensive safeguards for foreign investors,” Llukaçej says. He explains that it permits 100% foreign ownership in most industries, with only minor restrictions in areas like air transport and television broadcasting. He further highlights the pivotal role of the Albanian Investment Development Agency (AIDA), which guides foreign investors through the application process and confers the status of strategic investment/investor.
Llukaçej highlights it is not all smooth sailing, but the Albanian government has not taken its eye off the ultimate goal,
“There is always a demand for improvement in the regulatory framework and the government is actively working in that direction of maximising the opportunities to attract investors in the country due to the twining transition impact in the economy and industrial transformation.”
Sector-specific trends: Energy, tourism, real estate, and construction opportunities
Llukaçej notes significant growth in energy and tourism, “Albania has worked on various energy projects to diversify and improve its energy infrastructure, developing the potential to improve its energy efficiency. There has been an increase in interest from investors regarding solar and wind projects, plus the development of hydropower projects, as Albania has significant hydroelectric potential. The country has also worked on interconnection projects with neighbouring countries to increase energy security.”
Tourism, has also seen remarkable development. “The Bank of Albania has even announced recently that in the first 6 months of 2023, the expenses of foreigners who travelled to Albania reached a total of EUR 1.55 billion. This is the highest figure recorded after the 1990s. Due to this interest from investors continues to be high, as the need for new accommodation structures will enable investors to explore new investments in this sector.”
Llukaçej paints a picture of a country on the cusp of a tourism boom. “The plan for large infrastructure projects is not just about enhancing tourist experience but also about consolidating growth in this sector,” he explains.
In parallel, the real estate and construction sectors are buzzing with potential. Llukaçej’s insights reveal a nuanced investment climate, particularly appealing due to Albania’s favorable legislation for property investment. “There’s an intriguing interplay between the opportunities for foreign investors in real estate, whether it’s through leasing agricultural land or the strategic purchase of commercial properties,” he notes. This sector’s growth is intricately linked to the burgeoning tourism industry, creating a symbiotic relationship between the two.
Business development support: Skills, SMEs, and digital transformation
Llukaçej also touches on the growing importance of business skills training and education. The demand for programs focusing on business management, corporate governance, and navigating the challenges of green and digital transformations points to a burgeoning market in educational services. “This is about preparing the workforce for the future, aligning skills with the evolving demands of our economy,” he asserts.
Support for small and medium-sized enterprises (SMEs) is another key focus. Llukaçej envisions a landscape where digital and social media platforms play a crucial role in promoting and inspiring SMEs. “There’s immense potential in empowering SMEs, driving innovation and growth through digital engagement,” he observes. This trend speaks to the broader digital transformation underway in Albania, emphasising the country’s commitment to embracing technology and innovation.
Looking forward, Llukaçej anticipates continued government engagement in enhancing the attractiveness for foreign investments. “There’s a marked focus on streamlining processes for investors, particularly in strategic sectors,” he notes. Digital transformation across various industries is a key trend, with companies increasingly adopting digital marketing, e-commerce, data analysis, and robotic process automation.
“Digital skills development is targeting not only the supply side, the ICT sector, but also the demand side, the different economic sectors, to tap into the opportunities of digitalisation.”
Unsurprisingly, the impact of ESG movement in Europe is profound, according to Llukaçej. “International organisations and businesses are integrating ESG standards into their development strategies,” he states. He emphasises the government’s commitment to green transition, digital transformation, and energy security as part of its broader economic strategy.
Llukaçej discusses the evolution in social corporate governance. With a global movement towards sustainable and ethical business practices, Albania is no exception. “We’re witnessing a shift towards a more competitive and resilient business environment,” he states. This trend indicates a growing demand for advisory services in corporate governance and ESG compliance, aligning Albania with international standards of business conduct.
With a smaller, more agile economy able to put digital, environmental and economic policies into practice more quickly, the IMF recently upgraded the 2023 economic growth forecast to 3.6%. A similar growth forecast for 2024, and an EU accession status that seems on track to happen at the beginning of the next decade, both suggest that the Albanian economy could deliver well on any investments.