Sarajevo, 19 June 2013

1. MINISTRY OF ECONOMY, TRADE AND ENERGY GENERAL DIRECTORATE OF POLICIES NATIONAL (SECTORIAL) STRATEGIC DOCUMENT “BUSINESS AND Investment development strategy” (Draft) AND ALIGNMENT WITH see Strategy 2020 Sarajevo, 19 June 2013

2. THE LINK OF SECTOR STRATEGY WITH SEE STRATEGY 2020 “BUSINESS AND INVESTMENT DEVELOPMENT STRATEGY (BIDS) 2013-2020” In line with: NSDI Strategy 2014-2020, with strategic priorities and policy objectives in the field of private sector (SME-s) ; National Plan for the Implementation of the Stabilization Association Agreement (NPI SAA) 2012-2015. EU Strategy “Europe 2020”(smart, sustainable and inclusive); Recommendation of the European Commission dated 9.01.2013 ” Entrepreneurship 2020 action Plan”, Strategy of South East Europe 2020; European Small Business Act (SBA) The National Vision: “A competitive Albania with a dynamic entrepreneurship and productive industry”. The challenge of the strategy : “ to enable and guide investments, which will gradually transform the economic structure and products with more added value”. The implementation of BIDS (2013-2020), fits with SEE regional strategy and is a key contributor for the realization of the headline targets of SEE 2020 strategy .

3. THE FOCUS OF STRATEGY The convergence of 4 pillars: -Business climate and SMEs; - Industry and mining; - Trade integration, promotion of exports; and - FDI-s; Support sustainable economic development based on the development of domestic manufacturing capacity, expansion and diversification of the export products and increase employment; Improving competitiveness ability at enterprise level; ICT -as a cross cutting issue, which helps to revolutionize both processes and business methods, increasing both productivity and competitiveness, stimulating ”Digital entrepreneurs”; Costs and financial resources of this strategy are in compliance with budgetary programming policies; The measures set out in each of objectives will be converted into project fiches in order to be welcomed by the donors.

4. INTEGRATED GROWTH • Strategic objective for exports: Integration of products and services towards regional and European markets. • Increase exports in goods, by increasing and diversification of new products, aiming an increase progressive annual value by 9%; • Maintaining the export growth and reaching 20% of GDP in 2020. • Increasing exports from domestic production to 60% and 40% from export processing in 2020; • Strategic Objective of FDI-s : Increasing FDI inflows through: the green field investments, concessions in the sectors of energy, oil, mining, tourism, infrastructure, etc; • Development of economic zones and industrial parks; • Improving the country image as an attractive investment destination; • Increase the FDI-s value by 6,3% annually; • FDI share to GDP by 9% in 2020.

5. INCLUSIVE GROWTH • The strategic objective : Skills development and stimulating the increase of new enterprises and employment; • Promotion of entrepreneurial culture & trainings to support growth and new enterprises; • Implementation of the training program for 2,000 young entrepreneurs and start-ups; • Support for 470 creative businesses; • Increase the share of women-led companies (35% of total active businesses till 2020); • Promotion of the social business (legal framework, regulations and financial incentives in this area).

6. GOVERNANCE FOR GROWTH • Strategic Objective : Create a business environment where entrepreneurs can flourish and grow ; • Easier business transfers : adoption of a legal framework and the financial account provisions that address obstacles for cross-border transfer of a businesses within the European market; • “Second chances” for honest bankrupts, development programm in terms of mentoring, training and involvement in the business network; • The consolidation of the Inspection System - Reduction the number of inspection bodies and time of inspection from 45 to 12 days; • The full installation of RIA system and establishing the RIA structures in each ministry; • The establishment of the National Council for Competitiveness ; • Adoption of legal framework for new financial schemes like venture capital, equity fund and business angels; • Strengthening the institutional capacities in policy- making levels & implementing agencies like AIDA/BRIC and ARTI

7. SUSTAINABLE GROWTH • Increasing the range of industry products, based on energy efficiency and cleaner production, aiming the average growth of enterprises of 3-5% per year; • Promoting and supporting the industrial enterprises by spill over effect : as a result of cooperation between foreign investors with local industries, estimating an increase of the output in average of 0.5 - 1% per year; • The development of recycling industry, in the field of metals, plastic, glass and paper. • Growth, diversification and stimulation of inward processing operations; • Support towards 100% full cycle of production (BYOB), to become direct exporter; • Increasing access to finance for SMEs : • Strengthen the Albanian Credit Guarantee Fund, (second phase with the support of Italian government of €15 million); • Creation of financial schemes to support start-up for subsidizing loans/lower interest; • Creating venture capital schemes, business angels, etc; • Financial support to 100 women entrepreneurs through subsidized or low interest loans; • Establish a program to support 1,000 new businesses (start- ups), through grants and low interest loans.

8. SMART GROWTH • Increase the ability of the Albanian businesses to develop, use, adopt and commercialize technology; • Capacity development and technology transfer will be achieved through the provision of information, demonstration of projects, technical assistance programs, training of labor force and technical institutions, such as centers of excellence and innovation centers; • The support of business innovation – in order to offer help to Business Service Providers (BSPs), and consultancy, to increase human capacity in the auditing of technology, the management of innovation, exchange of information as well as easiness of financing for the enterprises; • Development of business infrastructure : the establishment of 1 technology business incubator & 3 new industry clusters; • Promoting "Digital entrepreneurs“, in this context, the EU initiative: " Smart use of information technologies and the integration of SMEs in global industrial value chains” ,to become part of the global digital network; • Improvement of business services, the dissemination of the Nucleus Approach , which aims at mobilizing individual enterprises, particularly SMEs, as well as stimulating organizational development processes of chambers of commerce or business associations; • Strengthening the national innovation system; • Support business innovation - 500 businesses will benefit with information, services and grants from Innovation Fund;

9. AREAS OF INTERVENTION UNDER IPA II The alignment of the implementation of BIDS under IPA II is a need and a “guarantee” for the contribution of Albania in realizing the headline targets of SEE 2020 strategy;

10. INNOVATIVE SME-s (smart specialization) I. Dedicate sufficient funds to the implementation of the Innovation strategy, policies and programmes: 1. Awareness raising; 2. Business Innovation Support Programme; 3. Innovation Fund; 4. Business Incubation programme and Cluster programme II. Access to Finance for SMEs • Investment readiness and financial reporting of entrepreneurs • Voucher innovation, venture capital and business angels schemes development • Grants and guarantee schemes for innovative SMEs III. Export developmentprogramme: • Programme for import substitution; • Reducing administrative costs and non-tariff trade barriers; • Promotion of products "Made in Albania" • Support business associations and exporting companies; further extension of the Competitiveness fund; Export credit guarantee fund; €10 Mio. (20% state budget + 80% donors) € 108 Mio. (15 Italian Gov.) € 6 Mio. (IPA )

11. IMPROVING BUSINESS CLIMATE AND STRENGTHENING INSTITUTIONAL CAPACITY € 14 Mio. (state budget + donors) IV. • The full installation of RIA system and establishing the RIA structures in each ministry; • The support for the establishment and operation of the National Council for Competitiveness ; • Training program for SMEs and potential young entrepreneurs and start-ups; • Programmes for the development of creative economy, programmes for the promotion of entrepreneurship culture, support for economic empowerment of women in business , programmes for social business and Corporate Social Responsibility; • Technical assistance in legislative area, for : • business transfer; • new financial schemes like venture capital, equity fund and business angels; • Technical assistance in support for capacity building for BRIC & AIDA; • Technical assistance and strengthening capacities within METE, creating a new sector for entrepreneurship and sector for business innovation.

12. OTHER PRIORITIES € 102 Mio. (5.1 state + donors + 97 private inv.) IV. Promotion of FDI-s • Development of the FDI promotion programme; • Establishment of the Industrial Parks & economic zones. V. Industry sector: • Technical assistance programme in support of the development of recycling industry; • Programme in support for the development the range of ecological products that are based on the effective use of resources for cleaner production; • Support programmeIncreasing investment in scientific research and development of new products and innovation in the manufacturing industry. VI. Mining sector • Assistance in drafting Legal framework in comply with EU directives; • Strengthening institutional capacities; • Development programme for monitoring; • Development programme for environment protection . € 21 Mio. € 20 Mill. (mainly state budget)

14. THANK YOU ! Bashkim Sykja DIRECTOR OF COMPETITIVENESS POLICY DEPARTMENT Ministry of Economy, Trade & Energy bashkim.sykja@mete.gov.al