MINISTRy of economy trade and energy general directory of policies STRATEGY GUIDELINES OF BUSINESS & INVESTMENT DEVELOPMENT (2013-2020) Tirana, May 29, 2012

STRUCTURE OF STRATEGIC DOCUMENT Current situation Vision, policies and policy’s aim Policy objectives and products Costs and financial resources Monitoring indicators

ECONOMIC DEVELOPMENT INDICATORS Albania is an economy dominated by services. The share contribution of agriculture sector is 21% of GDP in 2010. The rest of GDP, is covered by industry approximately 20% and 59% services. During the last three years 2009-2011, the Albanian economy was increased with an average estimated at 3.4% of GDP, inflation 2 - 4%. Unemployment rate has shown decline, reaching 13.3% from 13.5% in 2010. Exports of goods increased by 23%. FDI flows in 2010 amounted 793 million Euro. In 2011 Albania attracted 742 million euros, an amount slightly lower than the previous year. Competitiveness, in the overall ranking for 2011-2012, Albania was ranked 78/142 with an improvement of 10 places from last year.

AIM & STRATEGY FEATURES Develop and implement policies that affect the dynamic and sustainable growth of SMEs, industry and mining sector, in accordance with the National Strategy for Development and Integration Focus: enhancing the competitiveness of entrepreneurship & non food industry sector. It is based on the principles of the European Strategy "Europe 2020" (smart, sustainable and inclusive growth). Support sustainable economic development based on the development of domestic manufacturing capacity, expansion and diversification of the export market and increase employment. It has a horizontal character, which also applies in other sectors of the economy; part of the priorities identified in this strategy requires active support from other sectorial policies. Ensure equal conditions in terms of competition development.

STRATEGY VISION AND CHALLENGES "Development of a dynamic entrepreneurship and a productive industry, able to respond to the challenges of development and integration, regional and global competition”; its vision will focused on : Continuous improvement of business and investment climate, reducing administrative barriers and business costs; Development of a productive industrial and mining sector, capable of processing raw materials in the country and increasing the added value through investments and application of new technologies, clean production, increased professionalism and employment, which stimulates creation of a competitive industry. Creating a partnership between government and business regarding the needs for improved technology, innovation and ability to prepare "skilled workforce". Creation of an competitive and dynamic industry, foreign investment, growth and diversification of exports, and stimulating the creation of new businesses. The challenge of this strategy is to enable and to guide investments, which will gradually transform the economic structure to an economy with sectors and products with more added value.

THE MAIN STRATEGY OBJECTIVES Improving the Business Climate and Institutional Strengthening Establishment of a full system of Regulatory Impact Assessment-RIA. Reforming the inspection system in Albania through the consolidation of the number of inspectorates and enforcement of the Central Inspectorate. Update the registry of Electronic Business Legislation Amending and further improvements of laws and regulations that affect the cost reduction of doing business in Albania. Work will focus on reducing the days needed for: procedures for starting a business; obtaining a construction permit; getting electricity; registering property; getting credit; tax payment, customs procedures for export-import; enforcing contracts, bankruptcy procedures, etc.. Maintaining a continuous dialogue with business community.

SMEs AND ENTERPRENEURSHIP OBJECTIVES Entrepreneurship development; drafting and implementation of entrepreneurship and lifelong learning strategy; creative economy; the CSR program; support for start-ups, women in business and youth, expansion of micro credit in rural and urban areas; Increasing competitiveness of SMEs and strengthening technological capacities: establishment of the National Competitiveness Council , the implementation of the innovation program; drafting legal framework for the creation of financial schemes for innovation like voucher, business angels, etc., strengthening the BRIC, the establishment of parks and technological incubators, clusters development, financial support for innovation etc. Improve business services Improve SME lending - the extension of credit guarantee schemes, the creation of schemes to subsidize bank loan interest, the creation of venture capital schemes, etc.. Strengthening institutional capacities – AIDA, etc.

INDUSTRY SECTOR OBJECTIVES The strategic objective for the industry sector: Encouraging investment in technology, processing the raw materials, modernization, diversification and specialization of industrial products in regional & global markets. Specific objectives Manufacturing sector towards value-added products using raw materials of the country( import substitution). Use of existing industrial facilities and cheap labor cost in disadvantaged areas for product development. Promote and support the industry sector in terms of innovation, offering new products and services to market. Enhancing professional capacity and support them in establishing joint ventures for competitive products.

EXPORT DEVELOPMENT OBJECTIVES The strategic objective of exports: Integration in regional and European markets. Promotion of trade mark "Made in Albania“. Support for export product’s certification. Promoting cooperation between manufacturers will allow the potential use of "economies of scale“. Developing and implementing new credit support schemes for the development of exports. Support to business associations and exporting companies operating in sector and product base. Implementation of an export promotion program with the support of the Diaspora. The disbursement of government funds for competitiveness, ECGF, etc.

FDI OBJECTIVES Increase FDI flows through the completion of privatization process and through concessions in sectors with competitive advantages. The increase of FDI flows in specific sectors such as the shoes &garment industry, sector services and construction materials. Increasing the flow of investments in the sectors of mining, oil and gas, agribusiness, tourism and physical infrastructure. Strengthening the institutional capacities of promotional and implementing structures of investment promotion/AIDA. Development of Economic Zones (industrial parks and free zones). Improving the image of Albania in international markets. Further Improvement of business climate. Undertake a study on the possibility of opening two or three representative offices abroad. Identification of appropriate investors in Albania of converting 15% -20% of foreign companies targeted as potential investors in Albania;

THE STRATEGY COSTS For the period 2013-2020, is estimated to require a budget of around 37.207 million ALL.( 266 Mil. EURO) 20.327 Million ALL or about 55% of the total cost are intend to implement through project fiches with donors. The cost planned to be covered by state budget is 6.330 Million ALL or 17% of the total cost. By private foreign direct investment it is about 10.550 Million ALL or 28% of total cost. Also the state budget will cover costs related to human resources, research and development, trainings etc.

STRATEGY COST BY SECTORS 2013 2014 2015 2016 2017 2018 2019 2020 Cost Mil.ALL Innovative SMEs and entrepreneurship development 990 1024 1443 1958 2554 3117 3980 4240 19306 Export promotion 98 100 105 110 115 120 125 130 903 FDI promotion 151 306 615 935 1600 2515 3225 4930 14277 Mining 298 304 313 325 341 358 380 403 2721   Total 1,537 1,734 2,476 3,328 4,610 6,110 7,710 9,703 37,207

MONITORING INDICATORS… Continuous Improvement of business climate by: -Reducing the time of opening a business that is 5 days to 1 day in 2013, -Reducing steps for opening a business from 5 steps to 1 step, -Reduction of days to obtain construction licenses, -Improvement of service for online payment of taxes etc.. For SMEs and entrepreneurship: Creating three (3) technological business incubators, creating 6 new clusters; support of 500 businesses with information and grants for innovation, creation of program to support 300 women-led businesses through low interest loans; creating program support of around 1000 new businesses (start up), through grant funds and low interest loans; creation of grants fund for the support of 450 creative businesses, especially those in the field of handicrafts .

MONITORING INDICATORS… Internationalization of SMEs: Support of 350 companies with grants to increase their competitiveness; support 100 exporting companies with ECG funds. -Increase the annual value of exports to 10-15%. -Maintain export growth rate and reaching to 20-25% of GDP in 2020. - The increase of exports towards domestic production from export processing reaching in 2020 in 60% with 40%. - Establishment and operation of 9 industrial parks and economic zones. -Improved service for 210 foreign investors. -Increased production by 40% at the end of 2020 compared to 2013 -Increased investment by 40% at the end of 2020 compared to 2013 -Increase employment by 47% at the end of 2020 compared to 2013

THANK YOU! BASHKIM SYKJA Competitiveness Policy Department METE bashkim.sykja@mete.gov.al