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Albania Times, Volume 1, Number 1 October 15, 1995From: Albanian Times <AlbaTimes@aol.com>The Albanian Times (by AlbAmerica TRade & Consulting International) DirectoryCONTENTS[1] An Economic OverviewBusiness Headlines
[2] Albanian Urban Population Jumps to 44 Percent[3] Albanian Minister Denies Sanctions Violations.[4] Tirana to Develop Land for Housing[5] Albania, Germany Review Economic Cooperation[6] Albania's Berisha Calls to Speed Economic Reform[7] Albanian Bankers Receive Tougher Sentences[8] Albania, Romania, Slovenia to Share Air Traffic Data with NATO[9] Albania Schedules and Draws IDA Credit[10] EU- Albania's First Trade PartnerBusiness Report
[11] Foreign Oil Moves in[12] Albania Enters the Jet Age[13] One of the Biggest Success Stories[14] Silver Lining to Industrial HopesOther Announcements
[15] New Privatization Publication[16] Travel Guides for Albania
[1] Economic OverviewFour years after major political forces changed Albanian life, the country has emerged as one of the most entrepreneurial in all Eastern Europe. High margins and lack of a solid legal system to facilitate incorporation has, however, left the country with an extremely fragmented economy and trade still the major industry.Signs of a more organized and sophisticated business are showing in construction, but limited access to capital keeps companies from engaging in large projects and destroys daily the architecture of the cities. Cooperation between businesses is minimal or non-existent. The immediate result is engagement in all sorts of activities, reducing the advantages that might be gained by economies of scale, but retaining the flexibility for moving in and out of high margin opportunities and providing immense internal growth. In general, the market lacks liquidity; real estate, in particular, is often priced at above market clearing levels. The government's hesitation to put land for sale has curbed supply and jerked prices to a level where they interfere with normal economic activity of either home buyers or small business owners. There seems to be no financial activity of any sort except for unqualified lending and borrowing between individuals or (less frequently) them and state owned banks. Lack of experience in investing has led to very risky lending practices. Often borrowers operate covertly in all sorts of industries, although absorbers of millions of dollars in direct loans from the public. Transfer of money to and from the country is very tedious and cash has become the standard language of transactions. Increased competition has pushed higher margins into harder-to-enter markets; size is pushing owners further away from micro management. More sophisticated tools are required to put to use a larger capital and manage in a market swarming with bargain hunters and opportunity seekers. The most arduous companies are already splitting the market in shares that need to be known and managed. The Albanian notion of time and space changed. Opportunities have increased with the increased freedom, the rhythm of life has accelerated, most of what was supposed to be around forever withered and died; with it the patience to look at things in a long term perspective. The changes in the government, political parties, political and economic views, the rise and fall of tens of newspapers and the rapid change in the outlook of free Albanians have all introduced a new transitory culture with a new main trait - a sense of urgency. New relations are introduced, but for all we know they could all be short lived. Change, normally an unknown, is becoming an assumed constant. Geared up to cope with it, the new business finds it unpractical to crystallize relations unlikely to last. However, there is no doubt that relations in the Albanian society cannot remain so liquid. The lost values in the period of transition are resurfacing. Hierarchy is being reintroduced and the government re-institutionalized. The companies with the best vision and management are establishing their existence in the market. Growth in capital and in employee base is introducing a number of new responsibilities for the management that require a lot more sophistication. Need for scientific management is born and with it chances for more productive joint ventures or new investments.
[2] Albanian Urban Population Jumps to 44 PercentIn September 1995, Albania's urban population was 44 percent, from 34 percent in 1990, according to the Institute of Statistics. In the past 5 years, there were over 65,000 peasant families requesting the urban dweller status. In the year 2000, Albania's rural population is expected to equal city inhabitants. (Republika)
[3] Albanian Finance Minister Denies Fuel Sanctions ViolationsDylber Vrioni, deputy prime minister and minister of finance denied on Oct. 5 claims that the fuel embargo against Yugoslavia had been violated. He said Albania is increasing cooperation with other countries and institutions which have the necessary means and experience to combat smuggling. (Radio Tirana)
[4] Tirana to Develop Land for HousingA new housing development project for the capital's western outskirts is under consideration, Albania's urban planning officials say. The area to be developed is 70 hectares and will provide housing for 21,000 people. A total of $1,7 m will be used to develop complete infrastructures before offering the land to building companies. The estimated price for each square meter of developed land will be $240, according to planning officials. The land under consideration is currently occupied by chaotic building structures following recent mass movements of rural population to capital Tirana. This is the largest such project ever undertaken in the country and has been masterminded in cooperation with USAID experts. (Koha Jone)
[5] Albania, Germany Review Economic CooperationAlbanian negotiators have stressed to their German counterparts the need to eliminate double taxation between the two countries. A Joint Commission for Economic, Industrial, and Technical Cooperation between Albania and Germany concluded its review of relations on Oct. 5 in Tirana. The German side pledged to support German investors in Albania with Federal guarantees for capital investments through the Bank for Reconstruction and Development and the German Company for Investment and Development. (ATA)
[6] Albania's Berisha calls to Speed Economic ReformAlbania's President Sali Berisha said his government had to step up the pace of economic reform to ensure success for his Democratic Party in next year's general elections, the ruling party's daily said on Oct.10. Berisha praised what he called great economic changes in Albania, especially the resolution of foreign debt, rises in average salaries, privatization and production. But the president called on his government to fulfill its reform program by the next elections, which are scheduled to be held early next year. (Reuters)
[7] Albanian Former Bankers Subject to Tougher Jail SentencesAn Albanian appeals court on Oct. 10 increased the jail sentences of four former leading bankers by up to four years on charges they had collaborated in robbing the state of $1.2 million. But the Tirana appeals court backed a lower court ruling to acquit former prime minister Vilson Ahmeti, who had been accused of abusing his position by appointing French financier Nicola Arsidi to negotiate the country's foreign debt. (Reuters)
[8] Albania, Romania, Slovenia to Share Air Traffic Data with NATONATO drew Romania, Slovenia and Albania closer into its cooperation net on Oct. 9, signing agreements to work on harmonizing civilian and military airspace standards. The agreements require members to upgrade their air traffic control and airspace surveillance to NATO standards and to a common standard over Eastern European member states. U.S. defense contractor Lockheed Martin Corp. this month announced an $82 million contract for five long-range radar systems for Romania, mainly for civilian traffic.Romania, Slovenia and Albania join the Visegrad group of Poland, Hungary, the Czech Republic and Slovakia who had joined the U.S. air space cooperation initiative in 1994. (Reuters)
[9] Albania Reschedules and Draws IDA CreditIDA in late August approved a $4 million credit to help Albania develop a five-year program to boost jobs and small-scale private businesses in urban areas. About half the money will go to give technical assistance to alleviate the 30 per cent urban jobless rate through restoring markets, schools, waterways, hospitals, roads and other infrastructure. Most of the rest will be disbursed as loans to some 2,000 prospective small enterprises. (TRANSITION)
[10] EU - Albania's first trade partner.In a press release on Oct. 12, the European Commission says the EU is by large the first partner of Albania, in external trade. In 1994, Albanian exports to the EU amounted to 128 Million ECU. Imports from the EU to 425 Million ECU. The Commission says Albania's GDP is growing; increase in inflation has been stopped, the national currency keeps almost parity with US$.The Commission puts Albania's GDP per capita at US $549 (1994); GNP growth was 11% in 1993, 8% in 1994, 5,5% forecast for 1995. GDP main components: agriculture 55.5%, industry 12.6%, services 31.9% (1994 figures) Albania has received, in total, almost 400 Million ECU of assistance from the EU since 1991 (one of the Central/Eastern European countries most benefited per capita).
[11] Foreign oil companies move in"Since offshore exploration was opened for the first time in 1991, around $80 million have been invested in seismic studies and for the drilling of three wells." Occidental, Agip and BHP will be drilling another four offshore by the end of 1996. Coperex, Shell and INA Naftaplin of Croatia will also start drilling at that time. The national petroleum company will launch a second onshore licensing round in late autumn.The Oil sector faces dire environmental problems with crude oil leaking directly on the farmland and into streams and rivers. The four refineries in Albania are in poor condition. A joint venture has been formed between Premier Oil and Albpetroleum. Anglo-Albanian Petroleum will enhance production from the countries largest oil field - Patos Marinze, where reserves seem to reach 1 billion barrels and recoverable reserves range between 150m to 200m barrels. (Kevin Done, Financial Times)
[12] Albania enters the jet ageAlbania is recognizing the need for the modernization of air transport. With 10 to 17 flights a day up from less than two just three years ago and with more than 200,000 passengers a year up from 30,000 in 1990, signs for a healthy travel market are hard to miss. However, Albania is facing the need of upgrading the Airport facilities to handle the increased traffic. Serious steps are being taken to bring the 38 year old airport to a more modern shape and negotiations for a financing package of about $34 million is under way. The project is part of the bigger $1.3 billion dollar public investment planned to upgrade Albania's obsolete infrastructure. Berliner Bank, Kreditanstalt fur Wiederaufbau and Hermes are the most likely to provide project finance. Siemens, on the other hand seems to be the main contractor.With only 17 telephones half of which are used for traffic control, the airport is in a very desperate state. Air traffic over Albania has increased from six airplanes a day in 1990 to between 70 and 80. The emergency first phase of the upgrade project, will renew the runway, taxiway and apron. The second phase will built a new terminal capable of handling from 500,000 to one million passengers a year. A new Airline, the only flag carrier so far, called Albanian Airlines is added to the already long list of Lufthansa, Swissair, Alitalia, Olympic, Austrian, Malev, Balkan Air, ADA Air, Adria, Croatian and Hemus Air. The new airline, currently using an Airbus 320 is flying to Italy, Germany, Turkey and Macedonia and expects to purchase another soon with routes to London, Brussels, Paris and Athens. (Kevin Done, Financial Times)
[13] One of the biggest success storiesWith approximately 60% of the population living in the countryside and about 54% of the GDP coming from the farming sector, the issue of land is one of the most vital in the development and stability of Albania. "The rapid and almost total land privatization of Albania's agricultural land ... has been judged one of the greatest success stories". The Organization for Economic Co-operation and Development says the agricultural production has increased by 11% of the total GDP as compared with the 1980's. However, not all agree. A side-effect of this reform was the defragmentation of arable land into the hands of many, reducing thus efficiency in farming.Albanian government is taking measures to reverse this effect and passed a law in August that will allow buying and selling of farm land on the condition that it is first offered for sale to the neighbors. Mr. Myslym Osmani, deputy Minister of Agriculture, estimates that the average farm size will double as a result in the next ten years. But for some even this law does not solve the problem. Passing ownership from one hand to the other will worsen the issue of ownership rights of those who owned the land before communists came to power. The government is trying to compensate this group of people with vouchers that can be used in the privatization process or with coastal land whose owner is indisputably the State. This uncertainty has not scared away just foreign investors. According to Ms. Rachel Wheeler, a research economist at the land registration project of the USAID, such problems have left many lands unfarmed lest the former owner takes over. Blood feuds are growing in number. Meanwhile, the World Bank and its Agricultural Development Fund has made more than 4,000 loans ranging from $200 to $2,000 to small farmers which is mainly used for seed, machinery and livestock. (Kevin Done, Financial Times)
[14] Silver lining to industrial hopesIncreased demand in the world markets and subsequent higher prices could not have come in a better time for the Albanian chrome mining industry. With production falling to 223,000 tones from 1.2 million six years ago, Albchrome, the state owned mining company, has a long way to go before it can reach its previous capacity.Albania, the only country in Europe with significant reserves in Chrome, accounts for approx. 5% of total world reserves. Western mining consultants who have studied the Albchrome operations, however, say it is grossly overmanned. Mining equipment is a serious investment and cash strapped government cannot commit. "We want real equity from a foreign partner. We are looking for a joint venture to last at least 15 years.", says Mr. Ramadan Disha, Albchrome's general director. "After some false starts a couple of years ago, Albania is currently considering joint venture proposals from six international consortia and a recommendation is expected by the end of October. The European Bank for Reconstruction and Development is also keen to participate both as equity investor and lender." (Kevin Done, Financial Times)
[15] New Privatization PublicationCentral & Eastern European Privatization Network (CEEPN) recently published "Privatization in Central and Eastern Europe-1994". Each annual edition includes a chapter dedicated to a particular country. Price $30 US. Also available previous years editions. Contact: Central & Eastern Privatization Network, Dunajska 104, P.O. Box 18, 61109 Ljubljana, Slovenia. Tel: (386-61) 1683-396, Fax: (386-61) 346-660 (Dennis McConnell)
[16] Travel Guides for Albania1. Blue Guide: Albania by James Pettifer, 1994 Published in the U.S. by W.W. Norton and Company, Inc. 500 Fifth Avenue, New York, NY 10110 2. Albania: A Guide and Illustrated Journal, by Peter Dawson, Andrea Dawson and Linda White 2nd Edition, 1995. Published in the U.S. by The Globe Pequot Press, Inc. 6 Business Park Road, P.O. Box 833, Old Saybrook, Connecticut 06475-0833. |
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