FAVORABLE BUSINESS ENVIRONMENT AN INCREASING POTENTIAL FOR TRADE AND INVESTMENTS IN ENERGY SECTOR ATHENS 8-9 OCTOBER 2008

ROLE AND FUNCTIONING OF THE ENERGY SECTOR Vital importance for any economy in the BSEC area; A fundamental precondition for fulfilment of the national goals for a sustainable economic growth; BSEC countries share the same concern regarding the stability of energy market, growth of trade , improve energy savings and reduce environmental pollution.

THE GOVERNMENT FOCUS Dynamic economic reforms, with a view to an increased harmonization of legal and institutional framework; Ensure better regional co-operation in energy development; Seeking for optimized utilization of local resources in a sustainable environment; Improving business climate, establish regulatory and institutional mechanisms, reduction of administrative barriers, enabling toward further development of energy sector.

ALBANIA A TOP 10 REFORMER GLOBALLY AND REGIONALLY Successful reforms for the facilitation of doing business,2007/08, ranked the second among 10 countries (Annual report of IFC-WB on doing business 2009); Starting a business, reduction of registration cost, consolidation of tax, health insurance and labour registration into a single application; Strengthened investor protections, with a new company law; Corporate income tax was reduced from 20 percent to 10 percent effective January first, 2008; Established a public credit registry, allowing financial institutions to share credit information.

MACROECONOMIC STABILITY A SENSITIVE INDICATOR FOR FOREIGN INVESTORS Economic growth raises very fast in the region, with 5-6% in real terms; Inflation remains 2-4%; unemployment reduced to 13,2%; FDI-s in 2007, year raised of 74%, in amount 460mln.Euro,and in the first six months 2008,inflow raised 65%, in amount 227mln.Euro, comparing to the same periods of year 2007; High export growth rate of 27% in 2007 and in the first six months 2008, raised 19,1% comparing the same period of 2007. Equal treatment, security and protection for investments, Albania has signed 38 agreements for reciprocal protection and promotion of investments.

Removal administrative barriers, versus regulatory reform; MACRO ECONOMIC STABILITY IS FOLLOWED BY A CONSTANT AND FRIENDLY BUSINESS ENVIRONMENT Removal administrative barriers, versus regulatory reform; Broaden the agenda from a fragmented to a comprehensive regulatory one; Increased the level of political leadership; Establish instruments to ensure fair rules of the game; Implement and monitor the reform process.

Technical Working Groups (TWG) 7

CONCRETE ACTIONS Albania today with minor number of licenses and permissions. From 166 existing licenses and permissions, 104 were eliminated; A new policy area in the license area, aiming for establishment of National Licensing Centre, the second „one stop shop“ expecting to become operational in 2009; Stability and predictability if the legislative framework. Preparation of the guidelines for system management of RIA. Government transparency, e-government. This year 08, is in place e-procurement; e- tax; E-signature law, and e-commerce law. Reduction of the tax burden; Business Dialogue / function of BAC; Creation of the Administrative Court of Justice for administrative dispute resolution.

TRADE POLICY A VERY LIBERAL APPROACH AND IN SUPPORT OF ECONOMIC INTEGRATION Albanian market very open, with a liberal trade regime; Member of WTO since 2000 year, guaranteeing non discrimination and transparency. Improvement of trade legislation with WTO rules. The average binding tariffs for industrial and agricultural products respectively are; 10,6% and 6,4%, stimulating FDI-s. Implementation of CEFTA and Interim Agreement with EU; For the year 2007, trade volume covers 42%; Exports 9% and Imports 33% of GDP share; Beside the positive of export trends, still we do face a negative trade balance.

TRADE EXCHANGES AMONG THE BSEC COUNTRIES

IMPROVING BUSINESS INFRASTRUCTURE Improving legal and regulatory framework/ concession law and under legal acts; law on development of free economic zones; Establishment of industrial parks, export processing zones, etc; Increasing capital investments with PPP contracts; Speed up the privatization process, mostly in strategic sectors, energy, oil, insurance etc;

THE ONLY COUNTRY IN EUROPE OFFERING IMMENSE OPPORTUNITIES IN ENERGY POWER Construction of new Generation capacities as private investments of Concessions/PPP-s; Hydropower Plants; Thermo Power Plants.

POLICY ACTIONS IN HYDROCARBON SECTOR - Diversification of supply sources for oil, gas and their by- products, creating possibilities of interconnection with international oil and gas pipelines. - Privatization of public enterprises operating in petroleum sector/ privatization of ARMO; - Promoting FDI-s for oil and gas exploration and production in Albanian territory; -Providing a stable and qualitative regulatory framework towards the quality of by-products market and the emergency oil stocks; - Developing of the projects for import-export and stocking of energetic products in the area of Porto Romano and in the area of the city of Vlora.

THANK YOU! Intra-regional trade and strategic investments in energy sector cannot be successful without direct participation of the private sector, as a driving force to economic growth.... THANK YOU! Bashkim Sykja E-mail: bsykja@mete.gov.al