2015/05/27

Zeri interview: Albanian Diaspora, foreign investment and political stability

I have faith, and I look on the future with optimism.

The well-known global businessman Mr. Lazim Destani, Honorary Chairman of the Albanian Business Diaspora Union, talks about shaping the idea of networking and the multidimensional effects that can produce such a structure. This well-organized Union, structured according to the “All Wins” model, benefits both businesses and companies coming from the diaspora and  companies here in the Albanian-speaking areas and the region. It generates profits and increases the well-being of the community in the region and is especially useful for Kosovar society.

Zeri: Are there concrete initiatives from Albanian diaspora for investing in Kosova?

Destani: This is the second Union meeting since its formation a year ago in Pristina. It has received the support of the institutions of the Republic of Kosova, especially the Ministry of Diaspora, Diaspora Directorate, and support from the international community through UNDP (United Nations Development Programme), IOM (International Organization for Migration), and countries such as Norway and Switzerland that supported this association in creation.

Today we have 18 official branches in the most developed countries in the world, joined by thousands of Albanian companies from these countries. As an example, New York as a separate branch has managed to attract over 170 companies in only one year, Germany has attracted over 200, and so on.

At our annual meeting, participants reported on the progress made in their final formulations as well as on the initiatives, ties, and achievements so far. Though we are still at the beginning, there are already many concrete achievements in business relations between diaspora and local companies, especially from Kosova. The developed economic world works with business networking. We just have to follow this model by including our specifics in the Balkans. Many companies reported millions of turnover with Kosova companies and projects in the initial phase of concrete investments.

Zeri: Have you identified an investment sector in Kosova?

Destani: From the “Economic” Ministries (Industry and Commerce, Economic Development, Finance, and Diaspora) and from the communities of municipalities, we asked to be established as an inter-ministerial or inter-institutional group of experts. This group will summarize potentials and projects with some initial descriptions and attributes in the relevant sectors — processing and food industry, primary and processing agriculture, services sector, energy, infrastructure, etc. That will be a starting point for us to identify ourselves and the partners we work with.

At the same time, there will be a summary of the business environment in Kosova, which will outline economic policies and the incentives that can be included in these investments.

We requested a similar arrangement at the Institutions of Republic of Albania and we hope to create such a project in Macedonia. These materials will be published on the network’s website.

Afterward, the investors with their partners will have the option of choosing which sectors are most competitive (primary and secondary business). This database will be updated continually with members’ suggestions and proposals.

Inter-institutional cooperation, especially at different levels of institutions (both central and local) is very important because a lack of coordination brings barriers and delays in the realization of investments.

Zeri:  Is Kosova still attractive for foreign investors?

Destani: Of course, yes, despite many disappointments and not such good experiences in this regard. Kosova has a system of liberal economic laws; it is understood that it is very important to implement them. When the law treats all subjects fairly, each and every state, municipality, agency, enterprise, individual, etc., will be careful how they behave. The problem is that when this does not function well, we have delays in all other institutions. We are happy that we have support and a commitment from the highest levels. That was confirmed by the presence of the Prime Minister and almost half of the government attending our conference here in Pristina.

Zeri:  Foreign companies have mainly invested in banking and real estate. Why are they not investing in production? What do you think the problem is?

Destani: Quite an apt question. We as the Union Network have not yet made such an analysis. I think we should have our experts partner with institutions in these areas to study the situation.

One example of a production investment made by our group is when we invested in the Jeans Factory Kosovatex in Pristina. This factory has been running for five years, there are over 300 employees, and 95 percent of production is exported to Germany.

There is also a need for other exports, but production is a difficult and complex business, with many prerequisites. In the first two to three years, we had a problem with finding skilled workers while we were also having problems with productivity.

It is not easy to bring back the culture and industrial tradition into a Kosova that has been deindustrialized for 30 years now. Everyone wants to become somebody with a Master’s degree, but there are few who know how to work.

Frankly said, there are two prerequisites — to love work and to know how to work successfully. It’s a little hard to find both of these in one person, especially when everyone wants to work in the office!

But I believe that this situation will necessarily change, and here is where institutions need to do their job. It is a pity when our management tells us that there are problems with finding workers who want and know how to work.

The number of those who want to get rich within the night is not small. All of us from the diaspora know well the struggles we’ve faced.

Zeri: What are the institutional barriers to foreign investors?

Destani: Above all, I emphasize the need for the efficient functioning of state institutions. Perhaps unconsciously and quite unintentionally, this turns away investors due to bureaucratic constraints as a result of conflict and lack of institutional coordination.

Corruption is mentioned often, but, honestly, in the 10 years we have been in Kosova, we did not have a single such case. Perhaps delays in the institutions are related to this, but we don’t know.

We have subjects waiting for years in the institutional labyrinths, including the courts. You cannot attract investors just by lowering taxes, especially when taxes change frequently. It’s better to have slightly higher taxes, along with an efficient institutional administration system, in terms of quickly processing cases. This is what I’m hearing from foreign investors we work with in other countries.

Zeri: Recently, some Kosovar businesses have fled to Macedonia. Why is this, in your opinion?
Destani: I think that these are very rare cases and if there were any advantages in Macedonia, I would say that for the moment they are only the free economic zones. But from the Minister of Trade and Tourism, we heard that soon similar areas will be created in Kosova. Our business group operates with companies in Macedonia and I can say that the positive difference there is small.

Zeri: Replacing foreign products with domestic ones has been discussed. How can this happen?

Destani: Kosova imports everything and from everywhere. We discussed this at the conference, and one of the experts suggested that we look at the balance of trade and reports from Kosova’s customs to conclude which products are needed from abroad.

Prices are the main factor, but do not forget the quality side of the products. The customs points are missing quality control institutions, which would protect the Kosova market and its products.

I think that agriculture, the food processing industry, and light industry (clothing, basic household needs) should be the starting point. There is also plenty of potential for export. We exported enough people and manpower to earn enough money to spend on imported products (even from some neighbors with lesser-quality goods).

Zeri: As a businessman, you operate in other countries outside of Kosova. How do they compare?

Destani: Compared to Kosova, there are many places where commerce functions better, especially in Europe and America, but also more recently in Asia. Of course, Germany has a great business climate, but an expensive one regarding taxes. Despite that, it is worth doing business there because the legal certainty, efficiency, and precision from government and regulatory institutions is an added value above any other cost. This is what investors want everywhere, even here in Kosova.

Zeri: How are you treated by Kosovar institutions?

Destani: As I mentioned earlier, as an owner I enjoy excellent treatment at all levels. But I have to say that the commitments and promises we receive from the highest institutional levels are often not met until the latest possible moment and not always effortlessly, leading to unexplained obstacles and delays.  I am more optimistic and encouraged this year in that the World Bank report for business facilitation ranked Kosova six places higher than its previous placement.

Zeri: Do you have plans for business development in Kosova? If so, in what areas do you see potential?

Destani:  Although the businesses of my family group are mainly developed in international markets, my staff and I pay special attention to investment potentials in Albania and the Balkans. Of course, we have many investment plans, ranging from clothing production to organic food. We also consider this in our markets in the Middle East and Africa, where we provide food supplies and services for the commercial and government sectors.

We are currently in the waiting phase for the development of the project “Green City” in an 11-hectare area of Kosovatex in Pristina. This multimillion-euro project includes schools, a shopping mall, hotel, and residential apartments.

Zeri: How do you see the political situation in Macedonia?

Destani: By nature, I am an optimist. But unfortunately the current situation in Macedonia is deteriorating, and this is happening at a time when there is greater focus on fulfilling the requirements and standards for membership in the European Union and NATO.

Meanwhile, recent developments and the ambiguous response from institutions have the potential to destabilize the country. I would not want to refer to the saying that in the Balkans things first should be done badly in order to start over from the beginning, but if the current leadership does not follow the guidelines of the international community, there is a risk that such a thing happens to Macedonia. I hope that reason will prevail, because it is also what citizens desire.

To approach the issue from an economic standpoint, investing and doing business require peace and political and economic stability. Conflicting situations and lack of security obviously keep investors away and hinder business. I want order and peace to be returned as quickly as possible and everything to function normally.

Zeri: What should Kosova and Albania do in this situation?

Destani: I am not qualified to recommend what these two countries should do with their external policies, but it is more than clear that Macedonia is immersed in a deep political and economic crisis. Albania and Kosova for sure provide their support, as does the international community, in particular the EU and the United States. I welcome a resolution of the crisis in accordance with the definitions for peace and stability in the region.

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