The New Concession Law - Key Instrument for Economic Development

HE the Prime Minister, Minister Ruli, Minister Basha, Minister Bode, Minister Gjana, Deputy Minister Bojaxhi, Honorable Ambassadors and Head of Agencies, Ladies and Gentlemen,

I would like to express our appreciation to the Government of Albania for their commitment and determination to make the necessary legal changes for an enabling environment for investment and development. Last month we celebrated the preparation of the new Public Procurement Law (with strong support of the EC, USAID and the World Bank) and today is the second important milestone in these efforts: the preparation of a new law for concessions and public-private partnerships.

I would like also to express our appreciation for the efforts and the leadership of Minister Ruli and Deputy Minister Bojaxhi and the Government team who has been working for months on this new law.

Let me focus on the importance of having a good concession law.

Albania made impressive record in GDP growth. These efforts have to be sustained and accelerated for faster poverty reduction efforts. Investment and the business environment are critical for these efforts.

A lot challenges are ahead of Albania in terms of needed investments in infrastructure to European standards, particularly after the signature of the SAA. In energy we need, say some $ 1 bn. We need more in investments in water supply and sanitation. Even higher investments are required in road transport and other transport projects. Social infrastructure needs to be upgraded. And so on. Minister Basha gave even high estimates in each in his statement.

These investments cannot be fully financed from government own resources. Despite impressive revenue mobilization efforts. This is not enough and add to it foreign financing of investments. Thus fiscal space is limited. Fiscal discipline in necessary for economic stability and growth. Improved efficiency of investment can help.

What can then Albania do? Part of the answer is increased reliance on private investment. Domestic investment has to increase and the country has to attract by far higher levels of FDI that what it currently attract FDI remains small and mainly associated with privatization.

Here efforts for public private partnership are needed. Therefore, the enactment of a good framework law for concession is a high priority. We welcome government efforts (ministry of Economy in particular with the support of IFC PEPSI). This is also IDA DPL prior condition after agreement with the Government on its content.

What are the good elements we expect in the law? (i) Transparency: private sector needs clarity on the rules of the game (discretion and exemptions distort the climate). Same rule apply to all; (ii) fairness: the government rights and the private sector rights needs to be respected in the law; (iii) efficiency: processes have to be clear, contestable and efficient. Minister Ruli gave a number of good examples when transparent and competitive processes have led to good outcomes and I am sure you do not need me to give you examples where not so good processes have led to problematic concessions. HE the Prime Minister and Mr. Boxhaji provided examples.

What areas can Albania attract PPPs and concessions? (i) Energy sector is a high priority (hydro, thermal, etc.); (ii) transport (ports, toll roads, etc); (iii) mining; (iv) we even see scope in social sectors, etc.

Is a good Concession law enough? Certainly not. Albania should embark on a new privatization program. It should also work on the business climate (registration, licenses, custom and tax reforms; inspection, etc) -- as it is doing as part of the BERIS. More efforts are needed in property rights (land titles, etc.). Certainly government efforts in fighting corruption and crime will improve the image of the country and the environment. Just last night, Transparency International releases its new Corruption Perception Index. Albania moved from 126 to 111. This is welcome and more efforts are needed. These are crucial for the business environment. We look forward to consolidating efforts in different areas in a bolder new drive.

The World Bank is committed, as a development partner to Albania, to continue its role in providing good policy advice and best international practices and financing services to address these constraints.