"I deal with trade because I don't know what else to do. Anything goes, as long as I live. If it doesn't flow, it drips." Fatosi, 40 years old, owns a small grocery store on Qelqi street in Kombinat. For 3 years he has been selling various products, mainly to the residents of the neighborhood.
Like his store, there are many in every neighborhood of the capital and throughout Albania. There are thousands of those who deal with services today and not only in trade, but also in transport and tourism. Many others are employed in the banking system and insurance companies. It is these branches that make up what we know as the service sector and that provide the Albanian economy with millions of euros and thousands of jobs, compensating for the lack of production.
"The services account registered a positive balance of about 380 million euros, about 111 million euros higher compared to the same period in the previous year. The main contribution to this development resulted from the expansion of the respective surpluses in the items 'other business services', 'travel services'", the Bank of Albania notes in the Balance of Payments for the third quarter of 2017.
The technical statement of the banking supervisory institution clearly hints that services are the ones that are performing better in the Albanian economy, which warns that it will be one of the pillars for the future as well.
"The service sector, from only 10-15% in the period 1960-1990, now occupies about 75-80% of Albanian enterprises. The main place in this sector is occupied by transport, wholesale and retail trade, as well as banking and insurance. The most successful within the service sector is transportation, which has increased the fleet of vehicles dozens of times and increased the wages of personnel more than in any branch of the economy. And behind it, banking and insurance. The service sector will continue to play a leading role in the Albanian economy for a long time, even though it cannot serve as its engine (because it is not a sector that creates value from production)", Enriko Ceko, expert, explains to the Citizens Channel for the economy.
Services are also assessed as a basic sector by Arbër Agalliu, an expert on the economy. But he estimates that the main problem remains the low level of qualification of employees in this sector, which is particularly evident in tourism.
"Albanian economy is an economy that focuses more on the service sector. Due to its very characteristics, in Albania, other sectors find it difficult to develop, given that comparative advantages are significantly lacking. The service sector, although it has important representatives, such as the banking system, insurance companies or telecommunication companies, has many problems, the most important of which is the qualification of human capital. The tourism sector can be mentioned here", says Agalliu for Citizens Channel.
Tourism, dilemmas of the priority sector
The Bank of Albania has assessed the performance of the tourism sector as quite good. Thanks to the summer we left behind, travel services closed the third quarter of 2017 with a positive balance of 181 million euros or 18% higher compared to the same period of the previous year.
What is found is an increase in the number of foreign tourists who have visited Albania and the money they have spent. "During the third quarter of 2017, the export of travel services provided the local economy with around 588 million euros. The annual increase in income was influenced by the increase in the number of foreign (non-resident) visitors to the country (about 3%), together with the increase in the average expenses of this group (by 16%), says the Bank of Albania.
On the other hand, the number of Albanians who have spent their holidays abroad has also increased. Official data show that resident travelers (Albanian and foreign) have spent 407 million euros on their trips abroad. Their number has increased by 5% in the space of one year. The number of days spent is also increasing, while the expenses they have incurred have decreased.
Experts appreciate the progress of the sector so far, but according to them there are still strong problems carried over for years that have also led to a lack of basic services that tourism should offer.
"Tourism in Albania has had a segmented development for many reasons, starting from problems, such as the unstable political situation during these years, lack of infrastructure, physical and road safety, health centers and up to unsuitable conditions, which are sold very expensively. Another element is the lack of qualification of human capital in the tourism sector, where the service offered in all directions leaves much to be desired", says Arbër Agalliu, an expert on the economy.
For Enriko Ceko, the government still has time to orient the development of tourism in a strong connection with agriculture and thus provide a complete offer for tourists.
"Tourism constitutes about 10-12% of the GDP, but there is a premise, if agriculture becomes the engine of the Albanian economy to supply agro-processing and tourism with fresh agricultural and livestock products", Ceko declares for Citizens Channel.
Government measures for tourism
The government has defined tourism as a priority sector. A policy that is mainly reflected in fiscal facilities. During 2017, the VAT for tourism was reduced to 6%, less than the regional average, in an effort to make our country attractive for foreign tourists. Less than a year later, the Ministry of Finance brought another draft law for this sector. Starting from January 1, 2018, 4- and 5-star hotels will be exempt for 10 years from profit tax (currently 15%) and for 5-star hotels also from infrastructure tax.
"The reduction of VAT by 6% is only converted to about 5 million euros per year in total because it is only for the service of hotel rooms. But it's not bad for a start. As for 5-star hotels, it is a very big dream. Zero tax for this type of service will bring a lot of confusion because there is no such hotel in the country yet and there is no accredited agency that certifies hotels in the country. Who assigns hotel stars? No one. This can create a problem even with the market of ordinary hotels", explains the economic expert Ceko.
With or without elite tourism, Albania has potential for this sector, as long as God has spared the sea and the sand. For others, much more needs to be done. Tax cuts help, but we also need roads, controlled food, safety and cleanliness. Above all, good service is needed, and here, we all agree: It's a big problem!
Author: Aurora Sulçe*
The author of the article is the author and moderator of the economic shows "Ecopolitikë" and "Para e passuri" on "Ora News" TV.
