Albania Market Entry

Albania Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

When entering the market, a Czech company will encounter the lack of transparency of the business environment and corruption. The connection between politics and business is strong, especially when it comes to government procurement and the issuing of various permits. According to the World Bank’s Ease of Doing Business 2020 report, Albania ranks 82nd, the second-worst ranking of the Western Balkan countries (Bosnia and Herzegovina 90th, Kosovo 57th, Montenegro 50th, Serbia 44th, North Macedonia 17th). A strong local partner is a prerequisite for successful establishment on the market. There is no need to worry about the Albanian market, however caution is advised.

Sales representatives often request exclusive representation for an unlimited period of time. We therefore recommend initially concluding the agreement for a trial period of one year and possibly setting criteria for its further extension (e.g. reaching a minimum turnover). Consultation with a local lawyer before concluding an agency or distributor agreement is in order.

According to cheeroutdoor.com, the majority of sales are ensured by small and medium-sized companies. Foreign multinational chains are represented in the country very sporadically (Italian supermarkets CONAD) or through franchises (Austrian Spar operated by the Albanian Balfin Group). Big Market, KMY and Eco Market can be classified as more widespread chains of convenience stores.

Import conditions, documents and customs rates are detailed on the website of the General Directorate of Customs (Administrata Doganore Shqiptare), where you can also download the customs tariff of the preferential customs regime valid for the EU (and therefore also imports from the Czech Republic), EFTA, CEFTA and Turkey. According to this tariff, the customs rate on all industrial products is zero, the duty is applied only to some items of agricultural products. When importing certain items, the customs service applies the so-called reference price framework, according to which it values ​​the imported goods. This measure was introduced due to increasing fraud by importers with undervaluation of customs invoices of imported goods.

Imported food must comply with the conditions for food safety (Food Safety Standards) according to the applicable legislation, which is based on EU legislation. This is also the basis for the newly adopted law on the assessment of organic food. Albania does not yet have its own standards for assessing food quality. The food importer must be registered with the National Business Center as part of the “Wholesale of foodstuffs intended for humans” activity. The following documents are required to import food: certificate of origin, veterinary or phytosanitary certificate issued by the competent authority in the country of origin and invoice. The importer must send the documents together with the notification of the arrival of the shipment to the Veterinary Service or the Food Safety Service of the Border Control Center 24 hours before the arrival of the goods at the border entry point. These institutions may take samples of imported goods and verify the quality of the above goods for a fee. They can also block a shipment if they deem it dangerous to the population. Customs authorities only verify if the shipment is in accordance with the transport documents.

The importer/distributor of medicines must be registered with the National Agency for Medicines and Medical Devices. He can then apply for a permit to import the relevant drug, or must register this drug with the agency. The application is submitted in the form of a Common Technical Document (CTD) according to international standards for drug registration. For medicinal products in the “Well-established drugs” category, the abbreviated form is sufficient.

In addition to business registration, an importer/distributor of medical devices and technology must also have a special permit for wholesale of medical devices from the Ministry of Health. Before the actual import, the product must be registered with the National Agency for Medicines and Medical Devices. The application for importation/registration is submitted electronically through the agency’s website and contains information about the device, manufacturer, device certification and applicant. The printed application together with the declaration of conformity/CE certificate and proof of payment of the relevant registration fee shall be submitted to the agency.

As a NATO member and EU candidate country, Albania applies the same procedures as other NATO and EU member states to trade in arms and dual-use goods and technologies. Control and licensing of export, import and other transactions with these goods is carried out by the State Office for Export Control established at the Ministry of Defense of the Republic of Albania. Trading procedures, necessary documents for obtaining licenses, as well as legislation are detailed on the website of this office.

Forms and conditions of operation on the market

Newly emerging companies register at the National Business Center (hereafter NBC). This so-called “one stop shop” ensures the company’s registration in the commercial register and assigns the appropriate identification code (with the Albanian abbreviation NIPT) and further registers with all the necessary institutions, i.e. including tax, social and health insurance, the labor office, INSTAT and issues a license for the operation of activities for which a license is prescribed by law.

The establishment of a company in Albania is governed by the Law on Business Companies (No. 7638 of 19/11/1992, updated under No. 9901 of 14/04/2008). The most widespread form of business of legal entities are limited liability companies (Sh.pk) and joint-stock companies (Sh.a.). The minimum share capital of an s.r.o. is 100 ALL (approx. EUR 0.7). The minimum share capital for joint-stock companies must be ALL 3,500,000 (or the equivalent in foreign currency) for a non-public company, and ALL 10,000,000 (or the equivalent in foreign currency) for a public company. A license is required for the following activities: tourism, construction, operation of gas stations, fishing, telecommunications, radio and TV, production and distribution of pharmaceutical products.

The financial costs for a legal representative who processes the documentation on the establishment of a company are in the range of EUR 1,000-2,000. Membership in the Chamber of Commerce according to Act No. 9640 of 2006 is mandatory for state-owned companies and private companies registered in the commercial register. More detailed information on setting up a company and setting up an office can be obtained on the website of the AIDA agency (similar to the Czech CzechInvest) or on the website of KPMG Albania or the law firm Boga & Associates.

Investment incentives (in the form of state assistance in the preparation of an investment) can be drawn by local and foreign investors on the basis of the Act “On Strategic Investments” (2015). The condition is investment in strategic sectors of the economy (energy and mineral extraction, transport infrastructure and communication, tourism, agriculture, special and priority development zones) and in a certain minimum amount (usually EUR 30 million). Applications for investment incentives are managed and information is provided to investors by the state agency for foreign investments, AIDA(Albanian Investment Development Agency), the commission at the Office of the Prime Minister decides on obtaining the status of “strategic investment” and thus incentives. During the 7 years of the Strategic Investments Act, 17 local companies and only 2 foreign companies received investment incentives, which may indicate either the lack of interest of foreign investors or the preference of local investors.

In Albania, there are also several areas/zones in which the state provides investment incentives outside the framework of the Law on Strategic Investments. These are the so-called TEDA (Technical and Economic Development Areas), where the main incentives are duty- and VAT-free imports, accelerated depreciation, a 50% lower profit tax for 5 years and indirect tax relief.

Marketing and communication

The advertising industry is developing rapidly in Albania. All forms of media are used, including television, newspapers, magazines, radio and outdoor billboards. Television remains the predominant medium. To a lesser extent, trade shows, sales promotion literature and event sponsorships are also used to advertise goods and services. Consumers in Albania are price sensitive and are therefore diligently looking for bargains. The size of the advertising market is estimated at EUR 38-40 million per year (situation before the covid-19 pandemic), so the advertising industry generates only EUR 13 per capita, which is the lowest in the Western Balkans region.

Albania has four national television stations: state RTSH, private TV Klan, Top Channel and Vizion Plus TV. The TV Klan station is the largest, its turnover in 2019 was EUR 1million. Top Channel is the second largest station with a turnover of EUR 1million. There are also dozens of local TV stations. A number of international and domestic advertising agencies and PR firms operate in the country. Also several billboard advertising companies.

Mail is the most common form of direct marketing in Albania. Consumers receive direct marketing mail from local supermarkets, electronics and home appliance stores, restaurants, and personal service providers. Catalog purchases remain at an early stage. Direct calls or text messages are rarely used and ineffective. Trade events and fairs are effective promotional channels for industrial products. Local and foreign companies rely on trade fairs to build business contacts, gain visibility in the market and obtain information about new technologies.

Advertising rules are generally liberal with a few exceptions. The government does not allow advertising of tobacco or alcoholic beverages to minors. The government has also introduced restrictions on the marketing and advertising of energy drinks and sugary drinks to minors. Advertising of over-the-counter drugs is approved and monitored by the National Agency for Medicines and Medical Devices. Advertising of registered medicines is prohibited and the promotion of these medicines is ensured by publishing literature and organizing professional scientific events.

Prices are determined by the market, with a few exceptions, such as the price of electricity, which is determined by the Energy Regulatory Office. The government also defines the margin of various entities in the drug distribution chain. Commodities such as tobacco, fuel, coffee, spirits, beer, wine, alcohol, tires, fireworks and batteries are subject to excise duty, which varies according to production.

Issues of intellectual property protection

Intellectual property protection is governed by two laws: Industrial Property Act No. 9947 (7/7/2008) and Copyright Act No. 9380 (4/24/2005). In the field of industrial property and intellectual property rights, Albania is bound by all basic international conventions. The obligation to respect and fight copyright infringement is also enshrined in the Stabilization and Association Agreement between Albania and the EU from 2006.

The responsible body in the area of ​​industrial property is the General Directorate of Industrial Property, which registers industrial patents and trademarks. The responsible authority in the field of copyright is the Directorate for Copyright and Other Related Rights under the Ministry of Culture of Albania. (Drejtoria për të Drejatat e Autorit dhe të Drejtave të tërë të svetli me to, Address: Rr. “Aleksandër Moisiu” Nr. 76, Ish-Kinostudio Shqipëria e Re, Tiranë, Webpage: www.dda.gov.al, Email: [email protected], Tel: +355 4 232008, +0355 4 2271324, +0355 4 2222508.

Public procurement market

The awarding of public contracts is carried out in accordance with the relevant legislation, which are the following laws: Act No. 9643 of 20/11/2006, as amended by Act No. 9800 of 10/09/2007, Act No. 9855 of 26/12/2007, Act No.. of the Government No. 914 of December 29, 2014 “On the approval of public procurement rules”, as amended by Decision No. 402 of May 13, 2015 and Decision No. 823 of November 23, 2016. The legislation is very complex and confusing, therefore, in case of ambiguities or objections in the stage of awarding and evaluating the selection process, consultation with a local lawyer is recommended.

The organization that will conclude the future contract with the bidding companies is responsible for the preparation, publication and evaluation of the tender according to the relevant laws. The law refers to this organization as a “contracting authority”. According to the above-mentioned decision of the Prime Minister No. 914, it is nevertheless possible to separate the “contracting authority” from the “procurement authority” in certain cases, i.e. the organization that enters and evaluates the tender (it can be a superior ministry or an organization that has the most experience with the contract in question and can thus procure requested goods or services for other organizations as well). The full text of the Act and Prime Minister’s Decision No. 914 in English can be downloaded from the website of the Agency for Public Procurement.

In order to apply various conditions within the tender procedure, monetary limits based on the estimated price of the contract are established by law: 1/ high limit (ALL 1,200 million for public works, 200 million for goods and services), 2/ low limit (12 million ALL for public works, 8 million ALL for goods and services).

Tenders can take 8 forms: 1/ open procedure (for contracts over 12 million ALL for public works and 8 million ALL for goods and services), 2/ limited procedure (only for selected companies), 3/ negotiation procedure with the previous by announcing a tender, 4/ negotiation procedure without preliminary announcement of tender, 5/ procedure for consulting services, 6/ design competition, 7/ request for proposal (for orders from 800 thousand to 8 million ALL) and 8/ small value procedure (contracts under 800 thousand ALL). In the healthcare sector, tenders for purchases up to EUR 3 million are considered “national” and a foreign company can only participate through its local distributor.

For orders above a high monetary limit, the tender documentation is drawn up in Albanian and English. Otherwise only in Albanian. Tenders financed by international institutions have different tender conditions (according to international standards) and the funding institutions supervise their compliance.

According to the Public Procurement Act, all tenders must be published on the website of the Public Procurement Agency. This agency reports directly to the Prime Minister and in a number of cases, especially in the case of orders that concern several departments or institutions, it prepares documents for tendering, publishes and evaluates the tender.

In 2020, new legislation for army acquisitions was adopted (Law 36/2020) and subsequent decisions of the Prime Minister No. 1085/2020 and 1170/2020 of 24/12/2020. The acquisition of military equipment and services is prepared by the acquisition department of the Ministry of Defense, which prepares the procurement documentation for the tender process. This procedure does not take place in the form of a public tender, but a demand procedure of directly approached companies. If a foreign company is interested in being approached in the future as part of the demand process, it can allegedly send its informative offer to the Ministry of Defense. It will then, at its own discretion, include it in the demand procedure or not. Ministry of Defense tenders that are not of a military material and services nature are published on the Public Procurement Agency website.Tenders can be searched in the Contract Notice/Advance Search section and in the Contract Authority search field, type “Ministria e Przetjis” (Ministry of Defence) in Albanian.

Tenders are disproportionately long, especially their evaluation. The tender is often canceled and re-issued after some time, sometimes even after a year or more. When political representation is changed, already won tenders or even signed contracts are sometimes cancelled. Through this process, the Albanian government lost hundreds of millions of euros in the form of lost arbitrations with the winner of the tender.

If a company suspects the irregularity of the tender procedure, it can appeal to the so-called Public Procurement Commission. It is a public legal institution subordinate to the Prime Minister. The decision of this institution can be subsequently reviewed by a court.

Payment terms, payment ethics and resolution of commercial disputes

Albanian merchants have banking options for using all standard payment instruments in international transactions, such as letters of credit. However, the use of smooth payments is more common. If the partner refuses to open a letter of credit, we recommend requesting payments in advance in the maximum possible amount, at least until the creditworthiness of the business partner and his attitude to honoring his obligations have been checked. As in any country, it is also possible to encounter customer insolvency and unreliability in Albania. The average maturity of invoices is around 1 month. The length of maturity (delay) varies according to the speed of turnover in individual industries.

Law enforcement is still low in Albania. Courts are slow and overwhelmed with complaints. Therefore, it is recommended to have a court or arbitration clause in the contract specifying the relevant court or arbitration. Albania has been a signatory to the “New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards” since 2000, however, unlike Albanian arbitration, the direct enforcement of foreign arbitral awards has not yet been implemented into local law. Thus, when implementing foreign arbitration decisions, local courts have to rely on legislative provisions regarding the enforcement of decisions of foreign courts, which is not legally completely clean and can lead to a number of complications. Regarding the recognition of foreign court decisions,

Contacts for legal offices for use in a possible dispute are listed in ch. 6.2.

Visas, fees, specific conditions for traveling to the territory

To travel to the Republic of Albania, a citizen of the Czech Republic needs a valid travel, diplomatic or official passport or identity card. There is visa-free travel between Albania and EU countries. The maximum period of visa-free stay in Albania for citizens of the Czech Republic (or holders of travel, diplomatic and service passports of the Czech Republic or identity cards of the Czech Republic) is 90 days during a 180-day period. This period starts counting from the first day of the first entry into Albania. Individual stays are then added up.

No mandatory vaccination is prescribed for entry into Albania, no vaccination certificate is required. Vaccination against hepatitis A can be recommended before a long-term stay, possibly. B. There is no obligation to register the residence of foreigners in Albania. Citizens of the Czech Republic are not required to pay any entry fee when entering Albania.

The direct air connection between Prague and Tirana is irregular, in summer 2019 seasonal flights were operated by ČSA, in summer and autumn 2020 by Wizzair. In the summer of 2021, direct flights should be provided by Smartwings. You can travel with a transfer via, for example, Vienna (Austrian Airlines), Milan or Rome (Alitalia), Ljubljana (Adria), Munich or Frankfurt (Lufthansa, Wizzair), Belgrade (Air Serbia) or Istanbul (Turkish Airlines, Pegasus).

When traveling by motor vehicle, the Albanian border control requires an internationally valid certificate of insurance (the so-called green card), a small technical license and an international driver’s license. When traveling in a business (or company) or rented vehicle, a power of attorney proving the right to dispose of the vehicle must be presented at the border control. The power of attorney should be notarized, in English, in addition to the owner’s information, it should contain the driver’s name and surname, his travel document number and the car’s license plate number.

Without this document, drivers run the risk of not being allowed into the territory of Albania. The network of petrol pumps is satisfactory along the main roads. It is necessary to expect occasional power outages. We recommend buying drinking water; water from taps or wells is often of poor quality and can be harmful to health.

Before a tourist or business visit to Albania, we recommend getting to know the territory through one of the guides. In bookstores in the Czech Republic, you can usually buy quality tourist guides, with one of the best rated being Albania/Rough Guides (Gillian Gloyer), JOTA Publishing House, Albania Tourist Guide, Bradt Publishing House, Czech Republic or Lonely Planet. Basic information about traveling to Albania is available on the website of the Ministry of Foreign Affairs, in the Traveling section.

Accommodation services in Tirana and the main resorts on the coast are at a good to very good level. Accommodation options are significantly worse inland. Mobile networks cover cities and most rural areas. In mountainous areas, there are places without mobile signal coverage. From Tirana International Airport, the journey to the center takes 30 minutes and a taxi costs about 20 EUR.

The people of Albania are generally friendly and willing to help. We recommend changing foreign currencies into Albanian Lek exclusively in banks or exchange offices, which are plentiful in the cities. The use of payment cards in hotels, guest houses and larger shops is common, some smaller shops such as butchers, bakeries and greengrocers only take cash. Cities and main routes connecting the country with North Macedonia, Kosovo, Montenegro and Greece are safe, even at night. However, staying overnight in parking lots is not recommended. In the case of trips to remote areas, we recommend informing the consular section of the Embassy of the Czech Republic in Tirana about the planned route and its timetable (contact see via e-mail or the Internet application DROZD – Voluntary registration of citizens of the Czech Republic abroad).

Health care in Albania is at a low level compared to health care in the Czech Republic. The departure of qualified personnel abroad in the 1990s had a negative impact on the Albanian healthcare system. Only in larger cities do health centers operate, but they are not sufficiently equipped with medical equipment and medical supplies. In larger cities (Tirana, Durrës, Vlora, Shkodra) private polyclinics have been established that provide health care, but it must be taken into account that medical procedures or operations must be paid for in cash. In Albania (especially in the bigger cities), there are enough pharmacies equipped with a sufficient amount of medicines that need to be paid for in cash.

In rural and mountainous areas, there is often no medical care at all. We recommend that travelers carry all long-term medications with them. Anyone traveling to Albania should take out travel and stay abroad insurance, which covers possible expenses for medical care provided, before the trip.

Employment of citizens from the Czech Republic

Citizens of the European Union are exempt from the obligation to obtain a work permit, however, they must obtain a so-called “Exemption from a work permit” from the labor office, for which it is necessary to submit similar formalities as for a work permit. When working longer than 3 months, they must also have a residence permit. The application is submitted to the labor office regionally responsible for the company headquarters, or to the national labor office. The requested information is attached to the application, e.g. a photocopy of the passport together with a photocopy of the page indicating the date of entry to Albania, certificate of the highest completed education, previous experience, extract from the criminal record, preliminary employment agreement between the employee and the employer, extract from the commercial register employer, his identification code (NIPT),ADISA, on the website of the AIDA agency (similar to the Czech CzechInvest), the website of KPMG Albania or the law firm Boga & Associates.

The contribution to social security and health insurance is regulated by Act No. 1114 of 30/07/2008. For the year 2022, it applies that employees, self-employed persons and persons paying a voluntary contribution pay contributions from the salary, which reaches a minimum amount of 32,000 ALL of gross salary, while the maximum amount of salary for calculating the allowance is 132,312 ALL of gross salary.

The social security contribution amounts to 27.9%, of which 16.7% is paid by the employer (15.0% social insurance, 1.7% health insurance) and 11.2% by the employee (9.5% social insurance, 1.7% health insurance). For self-employed persons and persons paying a voluntary contribution to health insurance, the basis is twice the minimum wage, i.e. 64,000 ALL gross salary (thereby paying 3.4% for themselves).

Fairs and events

The most important fair of the year is the Tirana International Trade Fair, which is held every year in late November/early December. Current information is available on the website of the organizer of the fair, which is KLIK EKSPO GROUP.

The level of fairs and exhibitions in Albania is very low, major companies from the region exhibit here. This also applies to the Tirana International Trade Fair. Current information about all other fairs (not only in Albania) can be found on the AUMA website .

Albania Market Entry