Interview of Camille Nuamah, Country Manager to Tirana Times Newspaper

Mrs. Nuamah, Albania was ranked as one of the top ten reformers in the world by “Doing Business 2009” report. What does this ranking mean and what is the impact on the potential foreign investors? 

The ranking means that Albania has increased its rank in the Doing Business ease of doing business indexby more than, all but one country - Azerbaijan, and reformed in at least 3 areas of the index.  Albania jumped 49 places on this index with ranks countries against their average performance on all the ten indices of Doing Business.  Its too early to say what will be the impact of the report on foreign investment in Albania.  However, for other countries both in Eastern Europe and around the world, FDI has increased more rapidly following significant reforms in the areas of the Doing Business indicators.  In Albania, the introduction of new rules on protecting investors will provide some comfort to foreign investors who invest here as minority shareholders with domestic firms.  Of course, application of the law will also depend on the effectiveness of the court system, which remains a key challenge in Albania as can be seen from the index on enforcing contracts.  However, it should also be remembered that laws in and of themselves can provide a benchmark for healthy businesses and a deterrent for unfair practices among private parties.   

Assessing the results of this report, which are the areas you suggest for improvements and reforms?  

There are six indicators in which Albania needs to improve further - getting a construciton periom.... .  In addition, even in the indicators that have already improved, in particular, starting a business,there is scope for improvement in terms of implementation.  One comment made at teh recent launch event hosted by the World Bank and IFC on September 18, 2008, one of the Doing Business responders noted that although the rules are good, implementation of these rules will require better staff training and public education, so that potential business registrants are also made aware of which documents they require and which they no longer require.  For example, it may not be clear for all that the Government has taken a decision to make registration or membership with the Chamber of Commerce as voluntary and not a requirement for business registration.  In addition, since many of these reforms require enforcement by the courts, Albania needs to move quickly to strengthen the efficiency and governance in the judiciary.  The introduction of Administrative Courts is a welcome step for dealing with disputes between businesses and the government, but a broader reform in the judiciary is required to strenghten courst that deal with disputes between the private sector.  Work on the alternative disputes resolution by the Bank and IFC have yet to achieve uptake by the private sector, but could provide an interim solution until the court system becomes more effective. 

There is a debate between experts. Some of them are skeptic on the results of this report, arguing that the report is mainly based on the approved laws and procedures, and what happens “in paper”, rather than what is really happening in real life where business is still suffering by bureaucracy. Can you please clarify this issue? 

In fact, six of the indicators of the ease of doing business index are in fact measured by time and motion studies looking at the actual experience of small and medium sized domestic businesses in completing the processes.  However, it should be noted that the study does not measure the frequency or the cost of requests and payments of bribes to ease administrative processes --administrative corruption.  This is clearly a limitation of the index, so we do not claim that it evaluates the whole experience of doing business in Albania even for the ten areas. The indicator does provide a picture of what the country would achieve if there were no corruption in the processes, and with that shows that there are still major reforms to be undertaken to streamline rules and regulations.  Of course, fixing rules and regulations can go along way to reducing administrative corruption by limiting the opportunities and incentives for bribe-paying and taking.  On the other four? indicators, it is correct to say that the index does measure mainly the quality of laws and regulations.  In this case, this method has been chosen because it is virtually impossible to measure the application or enforcement in a robust way across 181 countries.  This preserves the comparability of the indicators worldwide and its amenability to robust ranking.   

Do you think that the results of this report demonstrate the improvement of the business climate in the country? 

Yes, the report does indicate that there are key improvements in the cost and ease of doing business in Albania.  The report also confirms that in certain aspects areas of doing  business in Albania are better than in other places in the world, and in the region.  It should be noted that the Eastern Europe and Central Asia region have surpassed South East Asia in the area of simplifying and easing business procedures which means that Albania will have to compete in a very competitive region.  The country will have to continue improvements in infrastructure, skills base and rule of law, among other areas, to fully realize the benefits of it strategic location, natural and human resources.

Is the Albania image changing towards the investors? Is Albanian economy benefiting by the invitation to join NATO?  

May I suggest that you pose this question to a group of investors directly.  However, the World Bank has recently undertaken a follow-up survey of businesses locally as part of the forthcoming Investment Climate Assessment, which should shed some light on this issue.  Its too early to say what will be the impact of the report on foreign investment in Albania.  However, for other countries both in Eastern Europe and around the world, FDI has increased more rapidly following significant reforms in the areas of the Doing Business indicators.

Latest IMF reports rank Albania as one of the countries with a difficult business climate, where corruption is still a strong problem. What is your comment on this issue? 

The rank of 86 on the ease of doing business index, while much improved, is clearly not one of a satisfactory business climate.  I have already noted the areas in which further improvements will be needed.