The new draft law on investment, which repeals the controversial strategic investments law, has been criticized for essentially retaining the same mechanisms for providing public benefits while introducing competition for investment projects involving state-owned land.
A decade after the Strategic Investments Law was passed, the government has proposed a new legal framework that brings the treatment of domestic and foreign investors together under a single law, but retains the mechanisms and benefits of the previous legislation.
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The draft law “On Investment,” published on the public consultation platform, repeals the 2015 Strategic Investments Law and the 1993 Foreign Investments Law, but does not abandon the tools that allow the state to support private projects through public property, infrastructure, administrative facilitation and access to the seashore.
Frequently criticized by EU institutions as a law that favors a group of people close to the government, the Strategic Investments Law remains in force until the end of this year, after the Socialist majority extended its effects six times in a row since 2015.
In its explanatory report on the new legislative initiative, the government acknowledges that implementation of the law has been accompanied by numerous problems, including the concentration of investment in tourism; projects that have not been completed or have been delayed; inadequate monitoring; a lack of transparent criteria and sustainable institutional capacity; and fiscal, legal and reputational risks arising from state support measures.
The government’s rationale acknowledges the need for more standardized criteria, transparency, cost-benefit assessments and continuous monitoring to address the problems encountered.
Nevertheless, the draft law retains or expands an important set of public support mechanisms, including the use of state property, infrastructure interventions, land consolidation and the right to use the seashore.
The new provisions envisage public tenders, cost-benefit analyses and monitoring, but also provide for exemptions from competitive bidding, mainly for investments on private property.
The law also establishes an investment promotion fund, similar to the fund for strategic investments, which may include state-owned real estate in areas with development potential and make it available to selected investments.
A special state body will administer investment support schemes, similar to the Strategic Investments Committee, which was headed by Prime Minister Edi Rama. The body will be called the Investment Promotion Committee and will be headed by the Minister of Economy.
The draft law’s transitional provisions stipulate that any strategic investor who received benefits under the old law will continue to receive support under the procedures approved pursuant to that law.
Opposition lawmakers and economic experts question whether the new law will resolve the problems encountered with “strategic investments” and warn that its adoption in this form will again lead to problems with transparency, monitoring and the use of public property.
Democratic Party lawmaker Jorida Tabaku says the new legislative initiative preserves the mechanisms and benefits that have favored “friends of those in power” and, contrary to its promises, does not meet the standards for alignment with European legislation as part of the negotiation process.
As a lawmaker and member of the Parliamentary Committee on Economy, Tabaku says she has sent international institutions her objections in an analysis of the proposed legal provisions, comparing them with the legislation supporting strategic investments.
The analytical document Tabaku provided to BIRN suggests that “there is essentially no difference from the law in force today,” apart from changes in terminology.
“Under the new law, they call them ‘Priority Development Areas’ instead of ‘Strategic Investments,’ while beneficiaries receive public property and assets, special treatment status, tax cuts and every other benefit currently available to strategic investment beneficiaries,” Tabaku argues.
According to her, the new provisions do not bring the strategic investment regime to an end, but reorganize it and preserve the old law’s application to current strategic investors and those who applied before the new law enters into force.
According to the analysis, the draft law creates two routes for supporting investors: public tenders for state-owned property and approval without competitive bidding for projects developed on private property.
One of Tabaku’s main concerns is that projects on private property may receive state support without competing against other investors and without minimum investment or employment thresholds set out in the law.
In addition to administrative facilitation, these projects may receive public infrastructure, land consolidation and the right to use the seashore.
Another problem she highlights in the new initiative is the use of the seashore without a time limit and the lack of clear consequences when investors fail to meet their commitments.
In conclusion, Tabaku’s analysis notes that the legislative initiative includes improvements related to public tenders for state-owned property, preliminary assessment of state aid, cost-benefit analysis, disclosure of beneficial owners and publication of decisions.
However, she says these safeguards risk remaining limited as long as decisions on benefits are concentrated in a committee of ministers, some forms of support are exempt from competitive bidding and clear accountability mechanisms are lacking.
Economic expert Eduart Gjokutaj, head of the ALTAX organization, also says the new draft investment law retains the main mechanisms for granting benefits to investors, and that the effectiveness of its implementation will depend on selection criteria, economic assessments of benefits, monitoring and accountability.
According to Gjokutaj, the new draft law “changes the form of support for investors, but essentially retains most of the mechanisms and benefits provided for by Law No. 55/2015 on Strategic Investments.”
According to Gjokutaj, the individual status of strategic investor is replaced by the classification of areas with development potential, competitive procedures and decisions by the Investment Promotion Committee. The real test of the reform’s implementation will depend on “the integrity with which these public assets are administered.”
He notes that, for the first time, the law provides for the preliminary screening of foreign investments as a tool to protect the country’s strategic interests. However, “the draft law continues to guarantee easier access to public property, use of the seashore, provision of supporting infrastructure and state participation in investments.”
In this context, Gjokutaj says the change is more institutional and procedural than fundamental, since “investment preferences are reorganized, while the scope for administrative discretion remains considerable and dependent on secondary legislation.”
As a result, he says, the main challenge facing the new legal framework remains ensuring transparency, genuine competition and protection of the value of public assets.
“As long as these mechanisms are unclear, challenges related to the unequal distribution of benefits, uncertainty over ownership and the concentration of investment solely in tourism and real estate will remain,” Gjokutaj concluded. /BIRN
