"Two factors above all hinder the establishment of a healthy environment for FDI [foreign direct investment] in the region [Western Balkans]. The first one relates to existing corruption practices and the second to the uncertainty or unpredictability of the legal and regulatory framework," notes the 40-page report, co-financed by the European Commission.
"In spite of an increasingly positive appraisal of the overall climate for FDI in the region, significant gaps remain between the current situation and the potential for investements," the document stresses.
According to a survey carried out by the report's authors, 52% of Western Balkan entrepreneurs remain dissatisfied with the existing legal framework in their country, claiming that it does not prove a reliable tool for resolving disputes between their business and public authorities.
Investors in the region are also sceptical about the skills available in the labour market and they complain about the lack of private-sector consultation in the education reform process.
However, the main problem for investment and efficient business in the region remains corruption. 54% of EU and domestic enterprises see this as the main hurdle to competitiveness.
According to Dirk Vantyghem, director of international affairs at Eurochambres, the EU and Western Balkans "must intensify their cooperation in order to combat the absence of transparency and uncertainty in a legal and regulatory context, this move would benefit the economies in both regions".
Vantyghem also stressed that the countries which have made the biggest effort are those where reforms were more necessary, like Albania and Montengro, "which at the same time are the countries with the longest battle to fight".
The report concludes by stressing concerns about "the limited knowledge about business opportunity and investment-related issues in Western Balkans" on the EU side.
"This finding clearly calls for a reinforced communication strategy on the part of relevant actors concerning all the factors deemed to influence the attraction and retention of FDI in the region," it says.
