In The World Bank’s forecasts of long-term convergence, Albania will reach EU average living standards in 22 years Income convergence in Europe The convergence With economic growth of 6 percent per year, it would take ten years for Albania to catch up with EU11 countries and over 22 years to reach EU average living standards Expanding the growth potential through structural reforms in a stable macroeconomic environment drives strong income convergence Source: The World Bank

Moreover, Albania’s exports to the EU are estimated at 40% below potential, the highest in the SSE region Albania’s potential in global trade, mln USD Albania’s export potential Albania’s import potential +49% 7,690 +67% 4,107 5,152 2,464 2013 Potential 2013 Potential According to The World Bank, Albania’s exports to the EU are estimated at 40% below potential, the highest in the region Imports from the EU are estimated to be below potential by 33 percent Source: The World Bank

To unlock its growth potential, Albania will benefit from its extensive FTAs with EU and other neighboring countries, which cover a market of over 600 million customers Can reach any major city in Europe within 3 days by truck Albania will be part of the EU’s market, the largest in the world, of 620 million customers CEFTA is a market of 26 million customers 7 million is the size of the Albanian speaking market within CEFTA Albania is a Member of WTO and applies WTO rules on import licensing Bringing down trade barriers Trade agreements with the US Free trade advantage CEFTA EU World CEFTA 1 EU 2 World 3 Source: Ministry of Economic Development, Tourism, Trade and Entrepreneurship

A B C D Export-oriented Growth Competitive Human Capital Four major reasons to invest in Albania: healthy growth, young workforce, vibrant industries and comprehensive structural reforms A Export-oriented Growth Albania’s export has a 24% annual growth rate for the past five years and its trade with many EU countries has been surging B Competitive Human Capital 57% of Albania’s population is under age of 35 and the average wage is one of the most competitive in the region C Promising Sectoral Opportunities Promising industries include manufacturing, energy, agriculture, mechanic industry and tourism D Comprehensive Structural Reforms Government is launching major reforms to better share growth with foreign investors Source: Ministry of Economic Development, Tourism, Trade and Entrepreneurship

A Export-oriented Growth Albania’s export has a 24% annual growth rate for the past five years, growing from 1 billion USD to 2.5 billion Albania’s dynamic export sector, mln USD Total export, 2009-2014 Total import, 2009-2014 +5.4% +21% Already as one of the largest sectors, the growth rate of trade is still above average Import has been declining since 2011 Source: Income statement, investments and macroeconomic variables for all market producers of goods and services 2006 - 2014, Institute of Statistics of Albania

A Export-oriented Growth Trade is playing an increasingly important role in Albania, contributing almost half of the country’s GDP in 2012 The importance of trade in Albania’s economy Albania’s Trade as % of GDP, 1990-2014 Share of total income by sector, 2014 Albania has a dynamic manufacturing sector and an increasingly efficient logistic system, which has boosted the trade sector Total income from producers of goods and services is 15.3 billion USD The contribution of industry is growing steadily Source: The World Bank

A Export-oriented Growth Thanks to closer economic integration, Albania’s export to Spain, Germany, Italy and other major economies in the UE has surged despite debt crisis Albania’s export to Western Europe Spain Germany France 80% +108% +28% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Albania’s export to Spain is more than doubling every year in average Albania’s export to Germany is growing fast at 28% per year Albania’s exports to France have increased 80% from 2009 Source: Export by Countries (1993-2013), Institute of Statistics of Albania

57% of Albania’s population is under age of 35 Competitive Human Capital In terms of human capital, Albania has a young workforce that are well-educated and highly-motivated 57% of Albania’s population is under age of 35 The median age of Albania’s population is 31.2 years They are well-educated, highly-motivated Many can speak English, Italian and Greek There are over 1,000,000 of them Source: Ministry of Economic Development, Tourism, Trade and Entrepreneurship

B Competitive Human Capital Albania has one of the lowest median age in the region, and a well-educated workforce comparatively Median age, 2010 Average years of schooling, 2012 Kosovo Bosnia Albania Greece Macedonia Italy Montenegro Serbia Romania Bosnia Romania Serbia Albania Bulgaria Montenegro Slovenia Bulgaria Greece Italy Slovenia Source: The World Bank, CIA World Factbook; UNESCO

B Competitive Human Capital Many from the workforce have great language skills and have received professional training Language skills Professional training Workforce availability Albania’s workforce has proficiency in foreign languages English, Italian and Greek are widely spoken French and German included in the education system Professional Trainings driven by market needs Vocational trainings and hands on trainings at leader factories in each sector Flexible structure, to support workforce needs in different regions Approximately 116,000 students register annually in all the universities The budget of the National Employment Service will be tripled next year Support funding available for businesses expanding Source: Ministry of Economic Development, Tourism, Trade and Entrepreneurship

B Competitive Human Capital Compared with neighboring countries, Albania’s wage level is the most competitive Monthly minimum wages in EUR, 2013 Average monthly wage in EUR, 2013 Montenegro Albania Albania Bulgaria Bosnia and Herz. Macedonia Bulgaria Romania Macedonia Bosnia and Herz. Serbia Serbia Romania Montenegro Turkey Turkey According to the latest minimum wage law of Albania, it is the second lowest in the region The average monthly wage of Albanian workers is as low as 310 euros Source: The World Bank; Ministry of Economic Development, Tourism, Trade and Entrepreneurship

1 2 3 4 5 Tourism Agriculture Manufacturing TEDA-s Promising Sectoral Opportunities New industries are developing rapidly contributing significantly to exports growth thanks to the new economic model 1 Tourism 2 Agriculture 3 Manufacturing 4 TEDA-s 5 Auto-motive and mechanic Source: Albanian Investment Development Agency

C Promising Sectoral Opportunities The government has rolled out the Textile and Footwear Industry Package 2014, giving a strong stimulus to the fashion industry Albania’s export in manufacturing, mln USD, 2012-2014 New stimulus given to the sector Significant growth in exports +18 In 2014, exports in manufacturing increased by 24,6% or 165 million dollars. 5,000 new jobs were created within the year 14% increase in imports of machineries and equipment. Under the slogan “a new chapter for employment”; A symbolic rent of EUR 1 when leasing from gov’t; A one-stop shop dedicated solely to the sector; Instant reimbursement of VAT; Simplification of procedures. Source: Export by Countries (1993-2014), Institute of Statistics of Albania

C Promising Sectoral Opportunities The government has rolled out the Plastic Industry Package in early 2015 Albania’s export in chemicals and plastics, mln USD, 2012-2014 New stimulus given to the sector Significant growth in exports +31 Instant reimbursement of VAT; Financial support for participation in trade fairs and international. The exports of the sector have increased by 18% in 2014. The share of the sector in total exports increased to 1.3% in 2014 from 1.17% that it was in 2013 Source: Export by Countries (1993-2014), Institute of Statistics of Albania

C Promising Sectoral Opportunities The agricultural sector of Albania has distinct natural advantages and superior market conditions Albania’s agricultural output, mln USD, 2008-2012 Natural and market advantages Steady growth in the past five years +7% 3,330 3,520 3,125 2,646 2,750 2008 2009 2010 2011 2012 Favorable climate Average 16 degrees in the costal areas Diverse micro-climate that is suitable for different products Suitable soil and abundant water Advantages from preferential trade agreements with EU on the increase in exports The agricultural sector has grown steadily in the past five years This sector has not been affected by the European debt crisis In 2014 the Government launched a new package to support the sector 18% increase in exports within the year. Source: Albanian Investment Development Agency

C Promising Sectoral Opportunities Albania has a dynamic sector of renewable energy and tremendous untapped potential of green power Hydro power Wind and solar energy Petroleum and gas energy Eight large rivers run through the country from the mountainous East to the Adriatic and Ionian seas To date only 35% of Hydro- Energetic potential of the country is utilized, and total resources are about 4,500 MW Albania has favorable conditions for development of solar energy – solar radiation is calculated to be more than 1,500 kWh/m2/yr Albania has an untapped wind power potential, in particular along the Adriatic coast Albania has significant oil reserves and produced about 1.2 million tons in 2013 Its oil exports to foreign markets at the end of 2012 amounted to 567 million USD, dominating the total domestic exports Source: Ministry of Economic Development, Trade and Entrepreneurship

A B C D E F Macro-economic reform Energy reform Pension reform Comprehensive Structural Reforms A new economic model is in place, with focus on production and exports through major structural reforms A Macro-economic reform B Energy reform C Pension reform D Territorial-administrative reform E Business climate reform F Deregulation reform

Business climate Tax & customs One Stop Shop D Comprehensive Structural Reforms Further business climate reform is taking place in order to better share the growth opportunities with foreign investors Business climate Gov’t is increasing the efficiency of tax administration and fight against corruption through the National Economic Council, which operates under the auspices of the Prime Minister. An anti-evasion reform has started on 1st of September 2015 Tax & customs Corporate tax rate - 15 % VAT – 20% Personal tax rate from 0 - 23 % Favorable tax system for Small Businesses - 7.5% Treaties for the Avoidance of Double Taxation with over 30 countries One Stop Shop Introduction of e-registration and electronic notification of balance sheets and financial reports. The registration completed with less than one euro; registration and licensing to be offered through one unique window by 2016 Source: Albanian Investment Development Agency

1 2 3 4 No restriction on capital transfer D Comprehensive Structural Reforms Furthermore, Albania has no restriction on capital movement and has one of the most competitive tax rates in the region 1 No restriction on capital transfer 2 No restrictions on repatriation of profits 3 Simplified tax procedures 4 Competitive tax rate Source: Albanian Investment Development Agency

Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors No limitation and full openness Full protection and equal treatment Full protection of foreign investment Foreign investment may not be expropriated or nationalized directly or indirectly, except in special cases, in the interest of the public us as defined by law Foreign investors have the right to expatriate all funds and contributions in kind of their investment Equal and unbiased treatment In all cases and at all times investments will have an equal and unbiased treatment, and will have complete protection In any case foreign investment will have a treatment equal to what common international practice allows The implementation of the economic reforms constitutes the main engagement of the Government for the country’s social-economic development, with the final goal of integration with the European Union No prior government authorization is needed and no sector restrictions to foreign investments There is no limitation on the percentage share of foreign participation in companies- 100% foreign ownership is possible Source: Albanian Investment Development Agency

Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors The new Law on Tourism The new Strategic Investments Law Tourism is considered a strategic sector, in line with the other legislation on strategic investors Provides a comprehensive approach for an integrated and sustainable development of tourism Create areas to be developed by investors, and provide for public – private partnerships Provide expedited procedures for land acquisition and leases up to 99 years Introduce international standards and certifications for a sustainable tourist sector Stimulate and support strategic investments in fast growing sectors Facilitate administrative procedures, increase transparency, and reduce legislative complexity for strategic investments Increased predictability and security of state - investor contracts through ratification of contracts by statutes Expedited due diligence procedure (AIDA completes the due diligence within 30 days of the submission of an application) Support with the necessary infrastructure Provision of immovable assets to develop and implement strategic investment projects Source: Albanian Investment Development Agency

1 2 3 4 5 6 The new law on Technical and Economic Development Areas E Legal Framework The new law on Technical and Economic Development Areas 1 Developers and users shall be exempted from 50% of the profit tax rate for a period of 5 years For developers that invest in the area, within 3 years of commencement of work or the investor that shall invest in the area within 3 years of commencement of the economic activity in the area, the annual capital expenses shall be 20 % deductible, regardless of the sum of depreciation, pursuant to the law on profit tax, during a period of 2 (two) years; 2 3 Supply of Albanian goods, intended to enter the area, shall be considered as a supply for export at zero scale 4 Developer’s project shall be exempted from infrastructure tax; 5 Buildings constructed in the area shall be exempted from real estate tax for a period of 5 years and from tax for transfer of ownership 6 Wages and social costs shall be 150 % deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 % deductible for the subsequent years Source: Albanian Investment Development Agency

7 8 1 2 The new law on Technical and Economic Development Areas Legal Framework The new law on Technical and Economic Development Areas 7 Training costs for employees and expenses for R&D in the area, shall be doubly deductible for a period of 10 years, from the beginning of operations; 8 Wages and social costs shall be 150 % deductible for the first year, and new expenses for wages and social costs compared to the previous year are 150 % deductible for the subsequent years; Procedural and administrative incentives 1 Shortens the application period to up to 15 days from the submission of the application 2 Provides guaranties for the investor against financial consequences caused by changes in the legislation for a period of 10 years Source: Albanian Investment Development Agency

TEDA - SPITALLE Duration for the operation of the TEDA Area: 501.9 ha Manufacturing – industrial and agro-processing New innovative industries with high – tech Energy-efficient industries High-productivity industries IT activities Automotive spare parts, construction materials etc. Commercial and goods storage Services (Administration, Banking, Customs, Health-care, legal, insurance companies, notaries etc.) Transport activities Support logistics Duration for the operation of the TEDA 99 years Area: 501.9 ha

TEDA - SPITALLE Located close to the city of Durrës, the second most developed city in Albania 6.4 km from the port of Durrës, the biggest and most important port in Albania 30 km from Tirana International Airport “Mother Teresa” 37 km from the capital city of Albania, Tirana Contract Notice was published on the Procurement Agency on 24/08/2015 and FT on 26-27-28/08.2015 Deadline for submission of offers: 28/10/2015 Standard bit documents on: www.ekonomia.gov.al www.aida.gov.al Area: 501.9 ha

Visit us at teda.gov.al

Touristic development & investment project at Gjiri i Lalezit by Omnix Albania 2017 - 2022 Total value of investment: US$1.2 billion Five Star Luxurious Hotel & Spa, 250 keys, conference hall 500-seats. Retail Boulevard, Leisure & Entertainment zone includes food & beverages outlets, cafes, dining and boutique shops. Atlantis 3,200/day capacity Aqua park and treasure island (allocated 450 car parks) Themed park, dry sports area, adventure golf, children’s birds park. 500 Residential luxurious apartments. 1750 car lots 1430 jobs generated 1050 monthly payroll 380 indirect services related to the development project Start of project 2017 – End of project 2022

Overall Master Plan

Investors already present in Albania Source: Albanian Investment Development Agency