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					EXPORT PROMOTION STRATEGY IN
          ALBANIA
CONTENTS
Acronyms and Abbreviations
1 INTRODUCTION
2 CURRENT SITUATION AND POTENTIALS
2.1 BRIEF OVERVIEW OF CURRENT FOREIGN TRADE PERFORMANCE
2.2 CURRENT COMPETITIVENESS OF THE ALBANIAN INDUSTRY
2.3 CURRENT BUSINESS ENVIRONMENT
2.4 ASSISTANCE PROGRAMMES
2.5 POTENTIALS FOR FUTURE EXPORT DEVELOPMENT
3 DRAFT EXPORT PROMOTION STRATEGY
3.1 EXPORT PROMOTION OBJECTIVES
3.2 ROLES OF MAIN STAKEHOLDERS
3.3 EFFICIENCY AND EFFECTIVENESS THROUGH STAKEHOLDER NETWORKING
3.4 POLICY ELEMENTS OF THE ALBANIAN EXPORT PROMOTION STRATEGY
3.4.1 Create enabling framework conditions
3.4.2 Establish business-oriented services
3.4.3 Improve the orientation of the production to market requirements
3.4.4 Management of the Export Promotion Strategy - from the strategy
to the implementation
4 CONCLUSIONS AND OUTLOOK
5 DRAFT ACTION PLAN
5.1 PROPOSED PRIORITY MEASURES
5.2 PROPOSED ACTION PLAN
INTRODUCTION
As a country in transition, Albania has experienced a quite difficult period of ten years
characterised by the process of privatisation, structural reforms and of adopting a marketoriented
economic system. It now faces the new challenge of increasing its
competitiveness in a globalised market and approaching the European Union.
Despite the severe challenges resulting from the transition process, the economic and
social crises in 1997 and the war in Kosovo in 1999, Albania made substantial progress in
macro-economic stabilisation and structural reforms. The fiscal deficit has been reduced
significantly, the current account deficit contained, foreign exchange reserves rebuilt, and
economic growth resumed. Due to a tight monetary policy, tariff cuts and a strong
exchange rate, GDP growth has remained steady so far, with 8 % in 1998 and 1999 and
7 % in 2000; inflation dropped from 42 % in 1997 to 9 % in 1998, in 1999 there was
even a mild deflation of 1 % and in 2000 it was 4,2 %. These favourable results reflect to
a large extent the authorities’ continued pursuit of sound macroeconomic policies.
Structural reforms have also carried on, with notable progress in the area of privatisation
in particular. Provided further satisfactory progress in strengthening governance,
macroeconomic stabilisation and structural reforms as well as internal and external
security will be achieved, growth rates could remain at high levels.
Although the Albanian economy regained growth, it has to be considered that growth
comes from a very low base and is to a major extent stimulated by remittances from
expatriate Albanians and donor contributions. Albania remains to be the poorest
European country with annual per capita GDP of only about US$ 1100, a highly negative
trade balance, a weak social safety net, a poor state of basic infrastructure, a financial
system which is not yet oriented towards the needs of the business sector as well as
public and private institutions which were not prepared to take over responsibilities in a
market-oriented environment.
Globalisation is changing the context in which the Albanian government, the institutions
and the business world have to operate. Products and companies are competing with
imports on the domestic market as well as for export shares in the global market and for
foreign direct investments. If Albania wants to benefit from globalisation and wants to
play a role in the regional and the European markets, the structures of the policy-making
systems as well as those of public and private services, not to forget production and
marketing systems of the industry need to be adjusted.
Main impulses for economic growth will certainly come from the private sector - as it has
been during the first years of transition as well as during the economic recovery after the
crises in 1997. Due to the problems mentioned above, the private sector has not yet
seized the opportunity of exploiting Albania's competitive advantages.
Creating an overall conducive legislative, administrative and institutional environment for
private sector development will thus have to become a priority of the economic and
financial policies.
2 CURRENT SITUATION AND POTENTIALS
2.1 Brief Overview of Current Foreign Trade Performance
As a result from successful trade liberalisation during recent years, the overall trade
volume of the Albanian economy has almost doubled (194,3 % or 27,8 % annually) as
compared to 1993, the base year for the last decade. As compared to the same base year,
export growth increased at a slightly higher rate of 212 %, equal to an annual rhythm of
30,3 %. Nevertheless, the trade balance has been highly negative over the entire last
decade with imports exceeding US$ one billion in 2000 resulting in a trade deficit of US$
814 billion. The increase in imports was due to increased domestic demand for imported
goods as well as large increases in electricity imports.
The export structure is mainly characterised by re-exports of sub-contracting in the light
industries (mainly shoes and textiles), which represented 71 % of total exports in 2000. In
the same year, sub-contracting contributed 5 % to overall export growth compared to
1999. Export earnings from domestic produce and processing only account for about
30 % of overall export income and decreased by 11 % as compared to the previous year.
Decreasing trade volume (10,7 %) and in particular exports during 2000 (6 %) were
mainly due to the increased trade with and aid supplies to Kosovo in 1999. But the IMF
attributes the fall in exports also to a decline in industrial production. The export share in
the gross domestic product (GDP) was 6,9 % in the year 2000, down from 7,5 % in the
previous year.
The product structure of exports from domestic production and processing is dominated
by: metal products, the product group of food, beverages and tobacco, vegetal products,
leather and mineral products. The European Union remains the largest trade partner for
Albania (about 93 % of total exports). Exports to Italy for 2000 recorded a figure about
70 % of overall turnover, exports to Greece about 13 % and to Germany about 7 %.
Trade with Balkan countries have been recorded at 18 % of total exports, with
Yugoslavia and Macedonia as main trade partners.
Imports for 2000 are estimated at about US$ 1088 billion, representing an increase of
18 % against 1999. Compared to the base year 1993 imports increased by 252,8 % or an
annual rate of 36 %. The ratio of imports to GDP was 28 % in 2000, with an increase by
4 % compared to 1999.




2.2 Current Competitiveness of the Albanian Industry
Albania has experienced serious political and socio-economic changes since the beginning
of the 1990s with the breakdown of the communist system, the unrest in 1997 and the
Kosovo war in 1999, which severely damaged the formerly existing base of agricultural
and industrial production.
Agriculture is the dominant sector of the economy, yet productivity and quality standards
are low and many farms depend on outside incomes. Imports of agricultural goods
outweigh agricultural exports by a factor of 7, the country thus is not self-sufficient. The
internal Albanian market is small (due to a population of only 3.5 million and low levels
of income), which is a disincentive for local and foreign investments. In consequence,
during the past decade, imports have replaced locally made products in various sectors,
and the trade balance of the country is strongly negative. As a result from two recent
analyses of the export performance of the Albanian industry, the following general
strengths and weaknesses have been identified1 2:
Determinants of the current competitiveness of the Albanian industry
Summary of STRENGTHS
• good reputation as business partner in selected sectors (e.g. garments and herbs),
• favourable natural conditions (e.g. for early and late vegetables, tourism, mining),
• proximity to the EU markets for technology transfer, sub-contracting, FDI and exports,
• relatively educated and technically trained workforce (e.g. manufacture of garments),
• existing facilities for storage and/or processing,
• existing infrastructure for ferry/sea transport,
• liberal regulations for foreign direct investments,
• low labour costs,
• under-exploited possibilities for cost reduction and capacity utilisation.
Summary of WEAKNESSES
• inadequate and partly obsolete technology,
• limited financial resources for investments and operational costs,
• limited access to information on modern production technologies and markets,
• inadequate communication capacities (e.g. internet-access, telephone lines),
• insufficient knowledge of modern methods of production,
• low labour and capital productivity,
• high unit production costs,
• low product quality lagging behind international standards,
• insufficient profitability of products and companies,
• inadequate skills for strategic management of companies and marketing,
• inadequate entrepreneurial culture with regard to market- and export-orientation.
Any development of exports starts from a rather weak basis and cannot be realised in the
short term (non-withstanding existing exemptions). Considerable efforts are needed
during the next decade in order to expand production and produce goods in acceptable
qualities and in sufficient quantities for export to regain the lost customer base (e.g. in
Eastern European countries) and to gain new customers in the EU and other target
markets (e.g. in the countries of the region).
1 Hiese, G. (2000): Assistance to an Albanian Export Promotion Strategy Project - Situation Analysis Vol.
II - Analyses of export potentials of the Albanian industry; MoE/GTZ/LUSO
2 FIAS - The Worldbank and IFC (2000): Office Memorandum: Back-to-office report: FIAS Diagnostic
mission in Albania
2.3 Current Business Environment
So far, the business environment in Albania does not really enable private sector led
economic growth. This is mainly due to weak law enforcement and weak economic and
social infrastructures, inefficient administrative and social services and bureaucratic
hindrances impeding the country from exploiting its competitive advantages and
from turning benefit out of its liberalised trade regime. As a result from a recent analyses
of the framework conditions for export development, the following main strengths and
weaknesses have been identified3 (for a summary of this analyses see ANNEX 1):
Current framework conditions for business development in Albania
Summary of STRENGTHS
• liberal economic policy and legal framework,
• growing positive attitude towards innovative approaches in business development and export
promotion among governmental organisations and private business institutions,
• advancing bi- and multilateral trade negotiations (e.g. WTO, EU, regional),
• political willingness to promote the regional development of Tirana and Durres,
• contributions of the Stability Pact to the economic development in Albania,
• progress in the banking sector reform,
• growing accountability of emerging private sector institutions,
• significant natural resources and
• geographical position (proximity to the EU-markets; East-Western corridor).
Summary of WEAKNESSES
• low profile of Albania as business partner for exports in many sectors,
• inadequate business-orientation of laws,
• weak enforcement of the legislation and inefficient administrative procedures,
• limited strategic planning and implementation capacities in public and private institutions,
• limited capacities and business-orientation of public and private service institutions,
• low level of physical infrastructure (e.g. transport, energy, water, communication),
• inadequate social infrastructure (education, training and social security),
• inadequate offer of the financial sector (banks, insurance and guarantee agencies),
• underdeveloped assets market (in particular land market),
• weak marketing systems (e.g. in the agricultural sector,
• weak communication and consensus building among stakeholders.
3 Will, M. (2000): Assistance to an Albanian Export Promotion Strategy Project - Situation Analysis Vol. I
-
Analyses of economic, legislative, administrative and institutional framework conditions;
MoE/GTZ/LUSO (for a summary see ANNEX 1).
2.4 Assistance Programmes
Quite a number of on-going and planned programmes and projects are aimed at
facilitating the development of the private business sector in Albania4. In view of export
promotion, the following approaches of different projects and programmes are of
particular interest:
Private sector development
- Priorities of on-going and recently approved projects and programmes
• promotion of the regional integration (in particular within the Balkan Stability Pact),
• financial and technical assistance to improve the physical infrastructure,
• facilitation of basic and vocational education and training programmes,
• reform of and capacity building within the public administration,
• privatisation/restructuring of the banking sector,
• establishment of appropriate credit and investment guarantee schemes,
• support to establishing export credit schemes,
• assistance to implement a trade insurance programme,
• regional development (urban and rural),
• promotion of free trade zones and industrial parks,
• capacity building and organisational development within service institutions,
• assistance to the privatisation and restructuring of public enterprises,
• assistance to the development of SMEs,
• sector projects (in particular in agriculture).
The vast offer of assistance of Albanian and international organisations represents an
almost unique opportunity to establish the necessary capacities with regard to sustained
political, institutional, technical and managerial assistance to business development as well
as export and foreign direct investment promotion.
But a major task will be to efficiently co-ordinate these programmes in view of turning
benefit out of complementary approaches and synergy effects.




2.5 Potentials for Future Export Development
In spite of the currently weak general competitiveness, there exists a potential for exports
as is reflected by a few companies that already export their products successfully. Future
assistance can build on these experiences so that efforts can take root to improve and
widen the export base.
4 Relevant donor-assisted programmes and projects have been described in brief in the a.m. report.
Potential for future export development has been identified for a number of products.
The following list has been drawn up as a result of the assessment of the situation in the
country (production, infrastructure, knowledge and skills, etc.) and of the potential
demand in different target markets, in the region, in Eastern Europe and the European
Union5 (for a summary of this analyses see ANNEX 2):
Product ranges with export potential
Agricultural and agro-industrial sectors 6
• medicinal plants and herbs (opportunities in the short term),
• early and late season fruits and vegetables (opportunities in the short to medium term),
• preserved products such as olives, olive oil, canned tomatoes (short to medium term),
• tobacco and cigarettes (short term),
• fresh fish and processed fish products (short to medium term),
• cheese (medium term).
The export potential for meat and meat products, wine, alcoholic beverages, honey and leather seems
less promising in the short term but exists in the medium to long term, provided the companies gain in
international competitiveness.
Further sectors 7
• garments and footwear (it is recommended to consolidate sub-contracting and further improve
international competitiveness),
• wood products (consolidation of sub-contracting and further development),
• tourism (in the long term after improvement of infrastructure and service capacities),
• strategic sectors for privatisation or concession such as chromium, gas production,
telecommunication, power distribution.
It must be noted, however, that Albania competes against other countries in the region or
even worldwide, some of which have similar natural resources, or offer similarly low
labour costs, have higher labour productivity to offer or have better infrastructure. Also,
some have larger internal markets in which emerging suppliers can gain experience.
Aiming at the EU market, Albania is a latecomer and, above all, enters a market that is
highly competitive and very demanding with regard to quality, reliability and efficiency of
supply. At the same time, there are potential markets in Eastern European countries
emerging, which have traditionally imported Albanian products, and in which they still
have a good image. Nevertheless, these markets are also changing, and Albanian
5 Hiese, G. (2000): Assistance to an Albanian Export Promotion Strategy Project - Situation Analysis Vol.
II - Analyses of export potentials of the Albanian industry; MoE/GTZ/LUSO (for a summary of this
analyses see ANNEX 2).
6 For the following reasons, it was decided to focus the potential analyses on the agricultural /
agroindustrial
sectors: (a) agriculture is still the most important sector within the Albanian economy
contributing up to 55 % to the gross domestic product; (b) the growth potential in the agricultural and
subsequent agro-industrial sectors is still considerable.
7 Since the a.m. analyses of export and investment potentials was limited to SMEs, sectors such as mining,
petrol and classical services (telecommunications, energy, water etc.) have not been taken into
consideration at this stage.
exporters will have to adapt to the new market conditions and the international
competition in these markets as well.
3 DRAFT
EXPORT PROMOTION STRATEGY
The present draft strategy is based on the analyses of the current framework conditions
and the potentials, which have been conducted in early 2000.
The challenge will be to
• establish a competitiveness framework,
• create an export culture and
• set-up a network among all stakeholders
in view of turning benefit out of existing potentials and developing new export industries.
With regard to the current performance of the Albanian industry in the regional and
international markets, it will not be sufficient to focus the export strategy only on trade
promotion (market access, promotional activities). Instead, the strategy will have to
address the fundamental constraint of the currently weak competitiveness. Many
neighbouring countries are competing hard for export markets. Therefore, appropriate
measures have to be designed aimed at developing strong export capacities that are
consistent with the requirements of the target markets.
The proposed Export Promotion Strategy is intended to create a proper policy
and institutional framework for sustainable business and trade development. It
does not focus on inefficient shortsighted effects but on a long-term impact on the
Albanian industry's performance. It is clear that most of the problems currently
hampering the private sector development cannot be solved quickly or easily. Albanian
exports cannot be expected to easily pick up without supportive activities. A period of
about 10 years appears to be the minimum time horizon that needs to be taken into
account before significant and sustainable improvements will be reached. In view of the
need to first improve the competitiveness in general, the Albanian Export Promotion
Strategy will have to be designed with a medium to long-term perspective, based on the
following vision:




3.1 Export Promotion Objectives
EXPORT PROMOTION OBJECTIVES
Economic and social objectives:
• maintain economic growth (GDP) through increased exports,
• improve trade balance through import substitution and export income generation,
• create employment through increased exports,
• increase social welfare and grant widespread prosperity.
Technical objectives:
• gain in international competitiveness and thus also in domestic markets,
• secure sustainable exploitation of natural resources,
• increase value-added production through sub-contracting and export diversification,
• generate new income sources through diversification of products and markets,
• achieve integration into the world economy (regional and EU markets, WTO),
• establish public-private partnership as a guarantor for sustained economic growth.
3.2 Roles of Main Stakeholders
There is a need for a coherent, interdisciplinary and multi-sector approach to
implementing export promotion. Thus, the underlying rationale of the strategy is the
concept of systemic competitiveness, which is based on the principle of sustained
public-private partnership:
Three pillars of the CONCEPT OF SYSTEMIC COMPETITIVENESS
• market-oriented production and logistics at the level of private businesses, i.e. at the microeconomic
level (product design, quality and presentation; realistic price calculation; continuity and
reliability of supplies etc.),
• business-oriented services at the institutional level i.e. the level of public and private institutions
(consultancy and financial services, research and development of technologies, marketing
information etc.) and
• business-oriented legislative and administrative framework conditions at the macroeconomic,
i.e. the governmental level (legislation, law enforcement, bureaucratic procedures and
infrastructure, which facilitate the development of the domestic industry).
The effectiveness of the partnership between the public and the private sectors will be
crucial for the success of export promotion. New roles of governmental, public and
private institutions in export promotion have to be defined against the background of
current political and economic trends:
• political liberalisation and decentralisation,
• reduction of public spending,
• partial retreat of state organisations from service provision,
• and the need to increase the efficiency of services provided to the export industry.
Role of the Government (Ministries) in export promotion
The role of the government is to guarantee the country’s economic and social development. In this
respect, the government must not take part in economic activities but has to secure the well
functioning of the economic and social systems in the interest to achieve sustained social welfare. In
view of improved market and private sector oriented services and scarce state budgets, the government
will have to refrain from those activities, which the private sector could take over. On the other hand,
the government should not only understand its future role as starting on the income side (taxes and
tariffs), but already beginning with building up an enabling environment for private sector and export
development. The new role of the government consists in:
• giving export promotion a high priority in economic development policies; thus granting sustained
commitment to export promotion,
• creating an enabling legal, regulatory and economic environment for private sector and export
development,
• provide policy guidance to strategic planning and implementation of export promotion,
• promote the competitiveness of the Albanian industry in view of promoting quality, cost
efficiency, productivity and responsiveness to market demand etc.
Role of public and private institutions in export promotion
The private sector would be best placed to render demand driven services; not only because of limited
public resources, but also because of the need for increased accountability and efficiency in service
provision. Albanian business people start to recognise their need for assistance by private institutions
(provided they provide quality services) as well as improved assistance from public institutions as far as
purely public services are concerned. The role of public and private institutions are to:
• facilitate export related procedures (governmental organisations such as agencies responsible for
planning and implementing development strategies, customs’ administration, tax offices, standards
and food control etc.),
• facilitate the self-help capacities of the private businesses through service provision (private
business institutions such as Business Associations, Chambers of Commerce, Regional
Development Agencies, consultancy companies etc.).
Role of the business community in export promotion
Main impulses for economic growth will certainly come from the private sector, provided the private
sector development will be embedded into an enabling political environment and backed up by
efficient and business-oriented public and private services. The role and responsibility of the business
community is to:
• become competitive in domestic, regional and international markets,
• produce market-oriented in terms of quality, design, pricing, timeliness etc.,
• join forces by establishing collaborative linkages with fellow entrepreneurs and service institutions
in order to strengthening the negotiation power of the individual (small / medium) companies and
gaining from economies of scale.




3.3 Efficiency and Effectiveness through Stakeholder
    Networking
As already pointed out, the Albanian industry could become competitive in international
markets if all operators - entrepreneurs, private business services and governmental
services - are willing to collaborate in building up the existing potential in a joint effort.
The following graph gives an idea of the operational linkages that will have to be
established in view of efficient and effective collaboration among stakeholders.




3.4 Policy Elements of the
Albanian Export Promotion Strategy
3.4.1 Create Enabling Framework Conditions
Create enabling framework conditions - a task for the government
Condition for a successful implementation of the Export Promotion Strategy:
Granting high level governmental commitment giving export promotion a high priority within
the overall development policy
Develop functional linkages with all stakeholders
• refrain from implementing activities and directing the private sector,
• grant continuity and autonomy to public and private service organisations,
• establish close linkages with public and private implementing institutions,
• strengthen non-governmental / private sector service institutions,
• improve information flows amongst public and private stakeholders,
• stimulate private sector participation (e.g. private investment into infrastructure),
• strengthen linkages to foreign countries (e.g. to facilitate access to business visa),
• harmonise the Export Promotion Strategy with the Investment Compact, SEETI and SEECI and
other initiatives,
• monitor the implementation and impact of the Export Promotion Strategy and refine the Action
Plan when necessary.
Maintain/improve the macro-economic framework conditions
• design an overall strategy for private sector led economic development,
• maintain stable and predictable political, macro-economic and social conditions (e.g. evaluate and
revise the current exchange rate policy as appropriate),
• improve sector policies with regard to an increased orientation to private sector needs,
• direct policies in the fields of physical infrastructure to export-requirements (e.g. roads, water and
electricity, industrial parks, free trade zones),
• adapt education, training and social policies to market-economy needs,
• strengthen the banking sector through accelerated restructuring and supervision.
Create a conducive legislative framework
• accelerate the ratification of relevant laws and regulations (competition, chambers of commerce
and industry, free trade zones, access to land, intellectual property etc.),
• adapt the laws and rules on the institutional set-up for export promotion to the needs of an
autonomous and private sector-led entity,
• harmonise the country's laws and regulations with EU/WTO principles (e.g. banking sector, FDI,
quality, environmental and social standards),
• improve the reliability through adopting a more coherent and strict jurisdiction,
• take the necessary provisions for establishing quality certification schemes in the country,
• take the necessary provisions for establishing an arbitrage system,
• improve information and thus transparency on legal and regulatory matters.
Create enabling framework conditions - a task for the government
- continued
Let the Albanian industry benefit from international trade liberalisation
• prepare further negotiations with WTO with regard to the interests of the country’s development
perspectives and of the business community,
• prepare the association and integration process with the EU in a professional way (in particular
with a view of defending the interest of the Albanian business community and the country's overall
economic interests),
• further negotiate liberalisation of trade and transport facilitation with neighbouring countries with
regard to facilitating the access to regional markets, cross-border sub-contracting and reducing
transaction costs etc.,
• establish cross border partnerships to benefit from synergy effects (e.g. in the field of
infrastructure, transport, education, customs, co-operation of business organisations),
• develop, negotiate and implement tax treaties / tax treaty networks.
Introduce appropriate export incentive schemes
• create awareness among stakeholders, that non-financial incentives are as important as financial
incentives,
• review current provisions in Albania and analyse incentives provided in countries competing with
Albania in international markets,
• recommend appropriate adaptation of the Albanian incentives’ scheme in line with WTO and EU
standards, (e.g. tax incentives to export pioneers, incentives for introducing new technologies, for
job creation, for diversification of products and markets etc.),
• review current policy of exchange rates and revise if appropriate,
• maintain, monitor and adapt if appropriate the policies of duty-free imports of inputs destined for
export production,
• promote and support the foundation of credit guarantee schemes covering political and
commercial risks,
• review and improve procedures of current provisions (e.g. reimbursement of VAT, streamlining of
taxes, loss carry forward or accelerated depreciation,)
• facilitate the access to land appropriate for industrial use (e.g. industrial parks),
• stimulate banks to introduce credit lines for the modernisation of companies as well as for export
financing.




3.4.2 Establish Business-Oriented Services
Establish business-oriented services
- a task for public and private service institutions
Condition for a successful implementation of the Export Promotion Strategy:
Strengthening public and private institutions to improve their services with regard to
increasing the international competitiveness of the Albanian industry.
1. Public service organisations:
Improve administrative services for export promotion
• create awareness among public organisations on the importance of the private sector for the
overall economic development,
• further restructure public administration (mission statements, structures, procedures, capacities
and supervision) to gain in efficiency, transparency and client-orientation,
• mobilise necessary resources in a sustainable way (e.g. extension services, customs, Directorate of
Taxes, Directorate of Standards, certification, laboratory control),
• train technical staff in export related tasks in order to streamline service provision (customs,
technology import, licensing and quality control, commercial attachés etc.),
• train technical staff in project feasibility assessment, project planning, management, procurement,
monitoring and supervision,
• train teachers and trainers in appropriate vocational education and training subjects as well as
techniques with regard to specific labour requirements of different business sectors,
• establish/improve functional linkages between the respective public and private institutions.
2. Private business institutions:
Set-up an appropriate institution for export promotion8
• found an autonomous, private sector-led Albanian Export Promotion Center (AEPC) with a clear
legal mandate for the promotion of exports,
• identify private and public sector shareholders for the AEPC,
• let the business community elect their representatives for the AEPC supervisory board,
• as well as the donor community in addition to public sector shareholders,
• assign a supervisory board and a Board of Directors including key high-level public
representatives, and in which the private sector has got the majority,
• assist in establishing an efficient management (selection of personnel, adequate structure, strategic
planning, financial, human resources and service management etc.),
• develop, market and implement high quality and targeted business services (provision of
information, promotion of business contacts, training, advocacy etc.),
• train staff to adequately fulfil their tasks (service provision as well as project manage-ment
including strategic planning, implementation and performance assessment),
• establish a network with other private institutions, public organisations and donor agencies in view
of benefiting from complementary services' offer and synergy effects,
• promote partnership projects with international business organisations.
8 See also project proposal of MoE
- a task for public and private service institutions - continued
Promote the competitiveness and exports of the Albanian industry 9
• set-up principles of targeted promotion activities (e.g. identify priority target markets and priority
sectors; define appropriate export promotion activities),
• select key export sectors, analyse companies' potentials, strengths and weaknesses and identify
companies with potential in selected target markets,
• assist the business community to become competitive in the domestic, regional and international
markets (e.g. management, marketing training, technology transfer etc.),
• facilitate the creation of exporters' and sector associations and assist to set up appropriate business
services,
• facilitate the access to financial resources (assistance in business planning, credit assessment and
financial management techniques etc.),
• promote international standard quality control as well as auditing services,
• identify the potential for export diversification (markets, value-added products etc.),
• improve the image of Albania as reliable business partner, attractive location for investments and
interesting direction for different types of tourists (image building),
• facilitate the establishment of business contacts of Albanian companies with foreign companies
(technology transfer, exports),
• seek for strategic partners abroad interested in sub-contracting Albanian companies,
• organise business trips to and participations in trade fairs abroad.
Set-up a marketing / trade information system 10
• set-up a Marketing and Trade Information Center (MTIC) or decide on integrating this task into
an appropriate private sector-oriented institution,
• set-up a website (portal) with relevant information services with links to respective organisations
worldwide,
• collect, analyse and disseminate export-related information on domestic and international markets
(e.g. exporter databank, technical regulations, technology, marketing subjects, trade opportunities,
business contacts),
• integrate into international and regional information networks,
• improve information management and information sharing techniques within and amongst public
and private organisations,
• encourage the set-up of information infrastructure in public and private organisations and firms as
well in the major cities as at regional and local level,
• offer education / training in information management to public and private organisations as well
as to firms.
Establish appropriate export credit, insurance and guarantee schemes 11
• assess the need for establishing a training center for banks with regard to improve the offer of
export credit schemes (training of bank mangers and bank officers in risk management techniques,
portfolio management, credit and collateral assessment etc.),
• establish a credit information bureau in view of facilitating banks the risk assessment of credits,
• support the Albanian Guarantee Agency (AGA) in enlarging their services from pure political risk
guarantees to commercial risk guarantees,
• assist the insurance sector in setting up improved services for the business community (e.g. export
insurance schemes).
9 See also project proposals of MoEashtu te
10 See also project proposals of MoE
11 See also project proposals of MoE




3.4.3 Improve the Orientation of the Production to Market
Requirements
Improve the orientation of the production to market requirements
- a task for the business community
Condition for a successful implementation of the Export Promotion Strategy:
The readiness of the business people to collaborate with public and private institutions aimed
at catching up with competitors in international markets
The Strategy as such cannot give directives to individual business people. But, the agents who will
implement the strategy are supposed to create awareness among the business community with regard
to the opportunities offered through increased international competitiveness. Furthermore, they are
meant to motivate private sector participation in view of improving the framework conditions and
infrastructure for private business and overall economic development as well as the active participation
of the business community in the bi and multilateral negotiations. With respect to the contribution,
business people can make to successfully implementing export promotion, the following
recommendations can be given. The business community should:
• contribute to efficient public-private partnership in business development,
• take actively part in the proposed Albanian Export Promotion Center (AEPC),
• join forces among entrepreneurs by establishing horizontal collaboration within industrial sectors
(e.g. joint market research and marketing) in view of benefiting from complementary objectives
and activities,
• join forces among entrepreneurs by strengthening backward and forward linkages among local
industries (vertical co-ordination e.g. from raw material supply up to the processing industry and
export trade),
• develop innovative solutions in technology, product and market development,
• improve management skills (financial, human resources management etc.),
• improve marketing skills (products, prices, distribution and communication),
• improve the international competitiveness (product presentation, productivity, quality, timeliness,
respect of international environmental and social standards etc.),
• co-finance certification (quality management, organic production etc.),
• co-finance joint appearances on target markets (fairs / exhibitions / trade missions).
3.4.4 Management of the Export Promotion Strategy -
From the Strategy to the Implementation
After elaboration and ratification of the Albanian Export Promotion Strategy, the real
challenge will be to successfully implement it.
Though the proposed Export Promotion Strategy reflects the reality and the necessities
for intervention as has been agreed upon with relevant stakeholders, the list of policy
elements is certainly not comprehensive. Some policy elements might gain in importance
in the near future and will thus need more attention than proposed in the present
strategy. New challenges will arise and will have to be considered within the strategy and
the relevance of some other policy elements might prove to be less important than
estimated at the time being.
It will thus be the future task of all stakeholders to manage their contributions to the
implementation of the Export Promotion Strategy and to monitor its implementation and
impact with regard to evaluating the proposed strategy elements and revising the strategy
if required.
It is already set up the Management Unit for Export Promotion within the Ministry of
Economy which, besides other duties, will be charged with
• co-ordinating the implementation of the strategy at governmental level and
• establishing a permanent public-private sector dialogue with regard to monitoring and
revising the strategy if necessary (stakeholder network)
• promotion of implementation of this strategy
Since effective strategies are based on a continuous process involving design,
implementation, monitoring and evaluation, feedback and refinement, the task of
the strategy makers i.e. all stakeholders involved, does not end with the design of the
strategy: designing the strategy is only the first step. Monitoring the process, assessing the
impact and refining the strategy during implementation are even more crucial.
The benefits from monitoring and performance assessment for those who are involved in
strategy planning and implementation (government, public and private implementing
agencies) and in particular for those who gain from its services (the business community)
are obvious. Monitoring the costs and benefits and assessing the impact on export
performance of the Albanian industry will help the implementing agents to:
• justify the resources spent for export development,
• identify needs and supply with arguments for additional resource allocations,
• enable the stakeholders to learn from the experience, and
• give the information for necessary refinement of the strategy with regard to achieving
the objectives set.
The following graph shows the proposed management cycle for the implementation of
the Albanian Export Promotion Strategy.
Public sector:
Strategy adjustment,
Public information
Private sector:
Advice, Direction
THE
The management cycle for implementing the Export Promotion Strategy
The success of the implementation of the Export Promotion Strategy will highly depend
on the establishment of efficient functional linkages and sustained willingness of all
stakeholders to contribute. The strategic linkages between the main stakeholders are
shown in the following graph.
Business Advisory Council
(public-private sector council)
Ministry of Economic Co-operation
and Trade - Management
Unit for Export Promotion
Albanian Export Promotion Center
(private sector-led body)
Line
Ministries
Ministry of Finance
Ministry of Foreign Affairs
Council of Ministers
Ministry of Economic
Co-operation and Trade
PRIVATE SECTOR PRIVATE SECTOR
e.g.
• Business Associations
• Chambers of Commerce and Industry
• Regional Development Agencies
Private Sector
Business
Associations
Chambers of
Commerce and
Industry
Strategic linkages for planning, implementing and monitoring the
Albanian Export Promotion Strategy




4 CONCLUSIONS AND OUTLOOK
With regard to the current negative trade balance, the Albanian government sees the only
alternative for a long-term and sustainable economic development in the translation of
existing potentials into increasing exports to regional and international markets. Assisting
the Albanian industry to become competitive in international markets also is a must prior
to the integration into the European Union.
A strategy designed and implemented in isolation from other economic and commercial
initiatives is unlikely to succeed. Therefore, it is proposed to embed the Albanian Export
Promotion Strategy into an overall Albanian Economic Development Strategy. Within
this framework, the political intent should be guaranteed to give export promotion
a high priority.
The major challenge will be to improve the long-term competitiveness as reflected in the
ability to respond to the changing conditions in the business environment and to the
increasing competition within the national, regional and international markets. The
strategy is a vehicle for achieving higher industrial growth and creating employment. All,
by taking into consideration the current strengths and weaknesses of the Albanian
industry. To increase export performance, a coherent, interdisciplinary and multi-sector
approach is needed. Thus, the concept of systemic competitiveness has been chosen
as underlying rationale of the Albanian Export Promotion Strategy, based on the
principle of sustained public-private partnership in an integrated approach including:
• market-oriented production and logistics (the role of the business community),
• business-oriented services (the role of public and private organisations),
• business-oriented legislative and administrative framework conditions (the role of the
government).
Foreign Direct Investment is a way to develop existing export potentials, acquire new
export capacities, obtain immediate access to foreign markets and generate dynamic
competitive advantages. Therefore, attracting FDI will play an important role in
supporting export-oriented manufacturing in Albania. Furthermore, the recently
approved SME strategy contributes to improving the performance of the Albanian
industry, which is mainly composed of small and medium sized enterprises. For these
reasons, a holistic approach should be adopted in order to turn benefit out of
complementary approaches to SME, FDI and export promotion.
The strategic approach to export promotion strives for close co-operation and
collaboration among all stakeholders in order to turn benefit from complementary
approaches and synergy effects. Thus, the functional linkages between and contributions
of the government, public and private organisations, the business community and donor
organisations will be decisive for the success of the Albanian Export Promotion Strategy.
Main issues that characterise the Albanian approach to export promotion - as it has been
laid down in the present strategy - are to
• formally integrate export promotion into the overall economic development strategy,
• institutionalise the public-private partnership in strategy planning, implementation,
monitoring and refinement,
• designate an organisation to promote exports, which will co-ordinate its activities
with a network of implementing agencies,
• improve the legal framework and streamline administrative procedures,
• promote the Albanian industry in an integrated approach, starting from improving
the international competitiveness by promoting SMEs up to investment and export
promotion.
For the benefit of the overall economic development of Albania, use should be made of
complementary approaches and synergy effects. Therefore, focus will be laid on an
effective collaboration among all stakeholders and efficient co-ordination of donor
contributions.
5 DRAFT ACTION PLAN
5.1 Proposed Priority Measures
With regard to establishing sustainable structures for export promotion, the Government
of Albania (GoA) defines as priority measures:
• Institutionalisation of public-private sector partnership in the management and
monitoring of the Albanian Export Promotion Strategy (AEPS);
• Establishment of an Albanian Export Promotion Center (AEPC);
• Establishment of a network of public and private stakeholders for strategy
implementation (public services, chambers, business associations, regional
development agencies, training and research centers, consulting companies etc.);
• Establishment of appropriate export guarantee schemes;
• Establishment of appropriate export credit schemes;
• Establishment of efficient Marketing and Trade Information Systems;
• Improvement of legislative and administrative framework conditions;
• Improvement of the international competitiveness of the Albanian industry;
• Promotion of the Albanian export potential in regional and international markets.


5.2 Proposed Action Plan
All stakeholders are invited to join forces with regard to enabling the Albanian
industry to become competitive and thus contributing to the overall economic
development of the Republic of Albania.
With regard to assigning appropriate organisations with the implementation of specific
parts of the strategy, the proposed action plan already defines responsibilities and
recommends partner institutions for the implementation of the Export Promotion
Strategy. On these responsibilities and the contributions of the different stakeholders it
has to be agreed upon at an early stage of strategy implementation. It is therefore
recommended to hold a workshop after ratification of the Albanian Export
Promotion Strategy with the objective to conclude agreements with all
stakeholders about their specific contributions.
The following draft action plan only strives for proposing priority actions to be taken.
For specific areas of the Export Promotion Strategy, project proposals have been
elaborated giving detailed recommendations for actions to be taken (defining results to be
achieved and activities to be implemented).
Draft Action Plan
Activities Responsible Partners
Immediate Action (as soon as possible)
Ratify the Albanian Export Promotion Strategy (AEPS) and give export promotion a high
priority in economic development policies.
Prime Minister's Office,
all relevant Ministries
BAC
Assign one governmental body with the overall responsibility for implementing the
governmental part of the AEPS, managing and monitoring the AEPS with regard to granting
sustainable governmental commitment to export promotion and to avoiding duplication
between governmental institutions (in the following, it will be assumed that the MoE will
be assigned with this task – if not, the present Action Plan will have to be revised
accordingly).
Prime Minister's Office
Grant sustained support to the MoE (body assigned with the management of the AEPS) with
regard to ensuring effective and efficient collaboration with and assistance from other
Ministries.
Prime Minister's Office MoE and all other Ministries
Establish a Management Unit for Export Promotion (MUEP), which will be responsible for
managing the governmental part of the AEPS and monitoring of the implementation and
impact of the AEPS.
MoE
Ensure the compliance of the activities and financing of the AEPS with the Investment
Compact, SEETI, SEECI and other initiatives.
MoE, MoF Donor organisations
Inform the public / business people about the ratification of the Export Promotion Strategy
and on a regular basis about further actions to be taken (objective: promote the AEPS and
convince stakeholders to take part).
MoE
Restart the process of establishing an export processing / free trade zone (search for investors,
revise existing plans etc.).
MoE, MoE, MoF EBRD, IMF;
interested developers

Activities Responsible Partners
Immediate Action (
as soon as possible) –
continued
Organise for an information trip to neighbouring and/or transition countries to identify
appropriate examples /
best practices for setting up an Albanian Export Promotion Center
(
AEPC) e.g. to Greece, Slovenia, Hungary.
MoE, MoE Respective organisations in
the countries; donor
organisations
(
1) Adapt proposed project proposals to the needs (
if necessary); (
2) prepare further project
proposals as required; (3) submit project proposals to different donor organisations; (
4) discuss
project proposals in negotiations with bi- and multi-lateral donor organisations; (
5) agree on
donor technical/financial assistance to
•
establish the Management Unit for Export Promotion

organisational development and training etc.)
•set up the AEPC
improve the international competitiveness of the Albanian industry and promoting its
export
•establish an appropriate Marketing and Trade Information

MoE Business associations, RDA,
chambers, consultancy,
training and research
centers, other NGOs;
donor organisations
Activities Responsible Partners
Short Term (1st year) and on-going in the Medium Term (2nd year onwards)
Organise a conference with relevant players in order to agree on collaborative links
(stakeholder networking) and on contributions/responsibilities of all stakeholders.
MoE Relevant Ministries; private
and public stakeholders;
donor org.
Set-up a private sector led Albanian Export Promotion Center (AEPC): decide on the
structure, statutes, functions, financing; prepare job descriptions, contract staff experienced in
private sector and export promotion (for further action: see summary project proposal in
)
MoE; MoF; BAC Business associations, RDA,
chambers, consultancy,
training and research
centers, other NGOs
Institutionalise private sector participation in strategy planning, implementation, monitoring
and refinement together with the Management Unit for Export Promotion (MUEP) by
establishing a private sector led Board of Directors / Supervisory Board for the AEPC (with
private sector majority).
MoE BAC; business associations,
chambers, RDA
Let the private sector establish its own election principles and let them elect its members of the
Board of Directors / Supervisory Board of the AEPC.
Business associations, RDA,
chambers, consultancy,
training and research
centers, other NGOs

				
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