Albania’s telecom market has potential for further development. Although the penetration rates in the fixed-line and broadband sectors remains low by European standards, there are opportunities for further investment in networks upgrades. Use of mobile phones is widespread in the country, partly to compensate a deficient fixed-line infrastructure. The telecoms sector has greatly benefited from closer ties to the European Union in recent years due to more strict regulations and injection of EU funds to modernize infrastructure. The Electronic and Postal Communications Authority (AKEP) is the regulatory body in the field of electronic communications and postal service, which supervises the regulatory framework defined by the law on electronic communications.
Albania, a formerly closed, centrally-planned state, is a developing country with a modern open-market economy. The recent global financial crisis has put pressure on the Albanian economy, resulting in a significant economic slowdown. While the government is focused on establishing a favorable business climate through the simplification of licensing requirements and tax codes, it entered into a new arrangement with the IMF for additional financial and technical support. Complex tax codes and licensing requirements, a weak judicial system, endemic corruption, poor enforcement of contracts and property issues, and antiquated infrastructure contribute to Albania’s poor business environment and make attracting foreign investment difficult. Inward FDI has significantly increased in recent years as the government has embarked on an ambitious program to improve the business climate through fiscal and legislative reforms. Albania’s electricity supply is uneven despite upgraded transmission capacities with neighboring countries. Technical and non-technical losses in electricity – including theft and non-payment – continue to undermine the financial viability of the entire system, although the government has taken steps to stem non-technical losses and begin to upgrade the distribution grid. Also, with help from international donors, the government is taking steps to improve the poor national road and rail network, a long-standing barrier to sustained economic growth. The country will continue to face challenges from increasing public debt. Strong trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of debt crises and weak growth in the euro zone.