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Armenia's Economic Pulse

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  • Re: Armenia's Economic Pulse
    Sept 16 2015

    Armenia Looks to China, Russia for Stronger Ties with Iran

    September 16, 2015 - 10:37am, by Giorgi Lomsadze

    In a setup indicative of the changing economic and, possibly,
    geopolitical dynamics in the South Caucasus, Armenia hopes China soon
    will agree to pay for a planned railway to Iran. At the same time, it
    also is lobbying for a free-trade agreement between Iran and the
    Russian-led Eurasian Economic Union.

    Economically and otherwise dependent on the big brother to the north,
    Russia, and sandwiched between hostile Azerbaijan and Turkey to the
    east and west, Armenia hopes that things can go south, to Iran. The
    planned railway could give Iran access to the Black Sea for
    large-scale shipments of exports and landlocked Armenia a significant
    role as a transit country.

    The state of the railway link is not clear yet. Iranian officials said
    they are building their portion of it, while Armenia is looking for
    the means to construct its own. Armenian Prime Minister Hovik
    Abrahamian hopes to scare up investment for the railroad from China
    during his upcoming September 23-25 visit. Yerevan and Beijing have
    already been in touch about the railway, according to Abrahamian.

    For China, projects like the Armenia-Iran railway dovetail with its
    plan for an East-West trade and infrastructure corridor. Beijing is
    already looking into energy and logistics infrastructure development
    in Armenia's neighbor, Georgia, where Chinese business initiatives are
    warmly embraced.

    As China is increasing its presence in the Caucasus, Iran may follow
    suit. The compromise on Iran's nuclear program (still awaiting an
    all-clear in the US Senate) has encouraged Tehran to explore trade
    opportunities in its neighborhood. Tehran already expressed an
    interest to get onboard with the energy export corridor that for now
    begins in Azerbaijan and goes to Europe.

    Russia in the past was believed to want to hem in Iranian economic
    clout in the Caucasus; mainly in Armenia. But with a growing
    partnership with Tehran on the Syrian crisis and a desire to increase
    the influence of the Eurasian Economic Union, of which Armenia is a
    member, the Kremlin no doubt senses an opportunity. Along with fellow
    EEU members Belarus and Kazakhstan, Moscow is reviewing the motion for
    a free-trade agreement with Iran.

    The deal "would involve a range of goods that will be subject to
    exemptions, and negotiations are in progress for each of them,"
    Armenia's Deputy Foreign Minister Shavash Kocharian said in a recent
    interview with the Armenian daily Haykakan Zhamanak.

    These movements may put more pressure on Georgia to allow a northeast
    railway transit through its territory. Such a route would go through
    breakaway Abkhazia, where Russian troops have been busy restoring
    Soviet-era tracks. Faced with domestic pressure not to compromise on
    the railway with Russian troops stationed in Abkhazia, Tbilisi insists
    that restoration of the Russia-Georgia-Armenia link is not possible
    for now.
    Hayastan or Bust.


    • Re: Armenia's Economic Pulse

      Armenian IT Startups Get Tax Breaks:

      Dozens of small information technology (IT) firms set up in Armenia recently have reportedly been granted tax breaks which the Armenian government hopes will give a further boost to the fastest-growing sector of the domestic economy.

      Under a government bill passed by the National Assembly in December, they will be exempt from profit tax until the end of 2019. They will also enjoy a preferential income tax rate for their employees, equivalent to 10 percent of their gross wages. The minimum payroll tax rate in Armenia is set at 24.4 percent.

      The tax breaks are granted on a case-by-case basis by a special commission comprising not only government officials but also representatives of the country’s burgeoning IT industry. IT startups employing up to 30 people can apply for such privileges by December 2017.

      “We had expected that an average of 40 companies will be set up [for the tax breaks] annually, but we issued [tax credit] certificates to this many firms as of September 9,” Bagrat Yengibarian, a member of the government commission, told the Armenpress news agency. “We are very happy that most of these companies are aiming to create their own products and sell them in the Armenian and international markets.”

      Yengibarian, who also heads Armenia’s Enterprise Incubator Foundation promoting the spread of IT, said many of those firms are run by young IT specialists who have “worked at home” for foreign clients and have paid no taxes until now. “They are now coming out and registering firms,” he said. “It looked as though we [the state] will lose money by exempting them from taxes, but no, we will actually earn the state budget more revenue. We are enabling people to enter the tax field without fear.”

      In Yengibarian’s words, the 40 startups cleared by his commission are currently employing 171 people. “They are tiny now but they will have a lot of revenue in the future,” added the official.

      According to government data, nearly 400 IT firms operated in Armenia as of last December. Their combined output soared by 25 percent to $475 million last year. The figure was equivalent to about 5 percent of Armenia’s 2014 Gross Domestic Product.

      The Armenian IT sector, which is dominated by local subsidiaries of U.S. software giants, generated only 1.7 percent of GDP in 2010. The total number of skilled personnel working there has since more than doubled to around 11,600, the government figures show. The export-oriented sector expanded by an average of 22 percent annually from 2008-2013.

      Much of this rapid growth has been driven by U.S. hi-tech firms such as Synopsys, National Instruments, Mentor Graphics and VMware.

      Several other international hi-tech heavyweights have established or stepped up their presence in Armenia in the past several months. Oracle, the world’s second largest software developer, opened a branch in Yerevan in November 2014, while Taiwan’s D-Link Corporation, a leading manufacturer of computer networking equipment, inaugurated its newly constructed research and development center in Gyumri in May 2015. Later in May, Microsoft announced plans to open in Yerevan soon a regional center for mobile applications and so-called “cloud computing,” which allows such software to be operated over the Internet.

      The government expects the sector’s double-digit growth to continue unabated in the coming years. Some government officials have forecast that its annual operating revenue will pass the $1 billion mark by 2019.


      • Re: Armenia's Economic Pulse


        15:13, 22 September, 2015

        YEREVAN, SEPTEMBER 22, ARMENPRESS. Republic of Armenia Prime Minister
        Hovik Abrahamyan met with Premier of the State Council of the People's
        Republic of China Li Keqiang on September 22. "Armenpress" was informed
        by the Information and Public Relations Department of the Government
        of the Republic of Armenia, that the Premier of the State Council of
        the PRC greeted the Prime Minister, thanking him for accepting the
        invitation of visiting China and participating in Eurasian Economic
        Forum. He highly valued the present level of Armenian-Chinese relations
        and expressed his confidence that PM Abrahamyan's visit to China will
        promote further development and strengthening of cooperation.

        PM Hovik Abrahamyan thanked Li Keqiang for a warm reception and
        noted that the development of Armenian-Chinese relations is one of
        the priorities of Armenia foreign policy.

        The Prime Ministers of the two courtiers attached importance to further
        cooperation development and realization of joint projects in fields of
        infrastructure development, energetics, transport, chemical industry,
        agriculture, tourism, science, education, culture, civil aviation.

        Armenia and Chinese Prime Ministers carefully discussed investment
        projects of construction of Iran-Armenia railway and the North-South
        Transport Corridor. China PM reconfirmed China's being interested
        in the issue. He expressed readiness to implement joint projects in
        infrastructure development sphere in Armenia, industry, humanitarian
        and others fields.

        PM Hovik Abrahamyan invited Premier of the State Council of the
        People's Republic of China Li Keqiang to pay a working visit to
        Armenia which the Premier gladly accepted.
        Hayastan or Bust.


        • Re: Armenia's Economic Pulse


          YEREVAN, September 24. / ARKA /. Armenia can increase electricity
          shipments to neighboring Iran four times, deputy energy and natural
          resources minister Areg Galstyan told a September 23 public debate
          on the future of the country's power grid.

          According to him, in view of recent processes around the Iranian
          nuclear program and the removal of Western sanctions from Iran, good
          opportunities, including increase of exports to Iran are opening up
          for Armenia.

          He said the current annual exports of electricity- 1.8 billion KWh-
          can be increased to 6.9 billion KWh.

          Armenia and Iran are building now the third high-voltage electricity
          transmission line which is planned to be completed until 2018.

          The deputy minister spoke also about the Meghri hydroelectric power
          station on the Armenian-Iranian border, saying this project is
          mutually beneficial with all the arrangements being achieved and the
          only obstacle to kicking it off is absence of stable funding for the
          project, which the Iranian side has assumed.

          The Meghri power plant is supposed to be the most powerful
          hydroelectric power stations in the South Caucasus. From the Armenian
          side the hydroelectric power station will be located in Meghri,
          and from the Iranian side - in Karachilar.

          The construction of the hydroelectric power stations in Meghri and
          Karachilar will proceed simultaneously, allowing to scale back expenses
          by 10-15%.

          Each of the stations will generate yearly 793 mln kilowatt-hour of
          electricity. The designed capacity of Meghri hydroelectric power
          station is 130 megawatt.

          The cost of the construction of Meghri hydroelectric power station is
          estimated at $323 mln, to be funded by an Iranian investment company.

          The generated energy will be shipped to Iran via a 230 KW transmission
          line now under construction.

          After the facility is built it will be operated for 15 years by the
          Iranian Farat-Sepasat company.

          The electricity will be supplied to Iran to pay off the Iranian
          investment. After 15 years of operation, the hydropower will become
          the property of Armenia. ---0----

          Hayastan or Bust.


          • Re: Armenia's Economic Pulse


            11:30 â[email protected]¢ 23.09.15

            The Armenian authorities must spare no effort to accomplish the
            construction of an Iran-Armenia railway and, if necessary, make its
            strategic partner, Russia, understand that operation of the railway is
            of vital importance to Armenia to break through the Azerbaijani-Turkish
            blockade, a political analyst has said, attaching a high value to
            China's possible assistance in the initiative.

            "[It is vital] given that Armenia's eastern and western borders are
            closed and the country has poor access to the north, Georgia, and
            the south, Iran. The access is poor because the way ends in Georgia.

            Indeed, it will be a highly valuable alternative way, which could
            break the blockade against Armenia by Azerbaijan and Turkey," the
            Gagik Hambaryan told as commenting on the premier-led Armenian
            delegation's recent visit to China.

            Earlier, Minister Transport and Communication Gagik Beglaryan stated
            that the issue of an Iran-Armenia railway would be on the agenda of
            an Armenian delegation's visit to China this September and Armenia had
            received business proposals, including ones from China. Armenian Prime
            Minister Hovik Abrahamyan held a meeting with his Chinese counterpart
            Li Keqiang in Beijing, on Tuesday. Armenia's premier is also scheduled
            to meet with Ms Hu Xiaolian, Chairperson of the Export-import Bank
            of China, and with the vice-president of the China Civil Engineering
            Construction Corporation (CCECC).

            It is planned to launch the railway construction in 2016; the project's
            estimated duration is six years.

            As to how realistic such a project is given the pessimistic attitude
            our Armenia's strategic partner, Mr Hambaryan said that Russia is
            seeking to promote an Iran-Azerbaijan-Russia railway project rather
            than an Iran-Armenia-Georgia project. Another reason is that it is
            easier and less expensive.

            Russia is just concerned over its finances because, with a 90-km
            section to be funded by Iran, the Armenian section is estimated at
            US $3-3.5bn. "I think that Armenia has its own interests and, if
            necessary, we could make our strategic partner understand that it is
            their own business if they object. And Armenia must pursue its own
            foreign policy, which may in many respect run counter to Russia's,"
            the expert said.

            Armenia cannot repeat a gross mistake similar to that of the gas
            pipeline. Mr Hambaryan calls on Armenian oligarchs to invest in an
            Iran-Armenia railway project.

            As to China's consistent interest in the project, Mr Habamaryan said
            that Turkey has overtly been sponsoring the clashes in eastern China.

            "And the Turkish president, who has declared himself ombudsman of
            Islam, has most actively been commenting on the clashes, defending
            the Uyghurs."

            That is, China and Armenia have identical interests in the region,
            the expert added.

            Hambaryan said he would prefer the road not to cross Turkic-speaking
            states' territory. "So in that sense, China, which pursues major
            interests, is eager to see that part of the Silk Road set in operation
            as part of the plan to lift the Iran sanctions, and it would prefer
            that route to extend from Iran to Armenia and then cross Georgia's
            territory to reach Russia. For Iran, that route is of more importance
            than the one that proposes connecting it with Azerbaijan and later
            Russia," the analyst added.

            Hayastan or Bust.


            • Re: Armenia's Economic Pulse


              15:03, 25 September, 2015

              YEREVAN, SEPTEMBER 25, ARMENPRESS. Li Keqiang, Premier of the State
              Council of the People's Republic of China, assigned corresponding
              government officials to coordinate with the Armenian party the
              activities of Armenia-Iran railway construction, in particular
              study technical-economic feasibility, the volume of products to be
              transferred via the railway.

              Republic of Armenia Minister of Economy Karen Chshmaritian said the
              aforementioned during his meeting with the journalists after Government
              session, when introducing the results of PM Hovik Abrahamyan's visit
              to China.

              "It was noted that this is the basic and concrete historical part of
              the Great Silk Road. The atmosphere was rather constructive at the
              meeting. The cornerstone of the project is to link China with Europe;"
              "Armenpress" reports, Karen Chshmaritian said, adding that no deadlines
              had been set for the studies of the project. According to Minister,
              if the results of the studies are beneficial to the Chinese, China
              will finance the railway construction that will cost 3,2 billion USD.

              Hayastan or Bust.


              • Re: Armenia's Economic Pulse

                IMF revises upward its outlook for Armenia’s growth in 2015

                YEREVAN, September 25. / ARKA /. The International Monetary Fund (IMF) has revised upward its previous forecast of economic growth in Armenia for 2015, Mark Horton, IMF Mission Chief to Armenia, told reporters on Friday.

                Mr. Horton said according to an earlier IMF forecast, the economic growth in Armenia in 2015 was to be 1%, but given the GDP growth in the first half and the ongoing trends IMF believes that Armenia will close the year with a 2.5% growth.

                He said the growth in the first six months was driven by several factors that are unlikely to repeat in 2016- namely, the commissioning of a new copper mine and a very favorable year for agriculture.

                Mr. Horton said the IMF projection is based on GDP growth that accelerated to 4.1% in the first half of 2015 from 2.6% in the same period in 2014. He also said IMF expects the economic growth in 2016 to be 2.2%, a little lower than in 2015.

                The IMF Mission Chief to Armenia said the economic slowdown in 2016 will result from high interest rates on loans, lower levels of lending and reduction in the profitability of Armenian banks.

                According to him, this suggests the need for aggressive changes in the market, diversification of industries and trade areas. He also singled out Armenia’s efforts to activate trade contacts with the Middle East and China.

                At the same time, Mr. Horton pointed out a ‘mysterious’ phenomena, namely high economic growth in the first half and a fairly low level of tax collection, but added this may be conditioned by growth in sectors, which are tax-free or enjoy preferential tax terms – agriculture and services. At the same time, the government can increase tax collection rate through VAT payments by the Eurasian Economic Union, which are paid within 50 days after the import of goods.

                The Armenian government’s projection of 2015 GDP growth is 4.1%. The Asian Development Bank (ADB) has downgraded the outlook for growth of Armenia's GDP in 2015 from 1.6% to 1.2%. The World Bank and the Eurasian Development Bank expect it to grow by 0.8%, the EBRD predicts stagnation. In its latest review the Central Bank of Armenia has improved its forecast to 2.1%-2.5%.

                <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


                • Re: Armenia's Economic Pulse

                  More Competitive: Armenian economy up in WEF’s global rankings

                  Armenia has improved its position in the Global Competitiveness Index rankings.The World Economic Forum has published the Global Competitiveness Report of 2015-2016, according to which, Armenia has climbed from 85th to 82nd place in rankings.

                  Like during the previous review, Switzerland, Singapore, and the United States remain in the top three nations on the list of 140.

                  From neighboring countries Russia has jumped to 45th from 53rd place, but it still continues to yield to its partner Eurasian country Kazakhstan which is in the 42nd place, and China, which is in the 28th position. Azerbaijan lost two points and is now ranked 40th. Turkey likewise has gone down in the rankings. Georgia currently ranks 66th on the list.

                  The objective the World Economic Forum is to show the advantages of national economies and the factors which hamper those advantages. It is drawn upon the basis of 111 indicators, which are presented in 12 groups.



                  • Re: Armenia's Economic Pulse

                    Originally posted by HyeSocialist View Post
                    More Competitive: Armenian economy up in WEF’s global rankings

                    Armenia has improved its position in the Global Competitiveness Index rankings.The World Economic Forum has published the Global Competitiveness Report of 2015-2016, according to which, Armenia has climbed from 85th to 82nd place in rankings.

                    Like during the previous review, Switzerland, Singapore, and the United States remain in the top three nations on the list of 140.

                    From neighboring countries Russia has jumped to 45th from 53rd place, but it still continues to yield to its partner Eurasian country Kazakhstan which is in the 42nd place, and China, which is in the 28th position. Azerbaijan lost two points and is now ranked 40th. Turkey likewise has gone down in the rankings. Georgia currently ranks 66th on the list.

                    The objective the World Economic Forum is to show the advantages of national economies and the factors which hamper those advantages. It is drawn upon the basis of 111 indicators, which are presented in 12 groups.


                    Welcome to the forum. You should introduce yourself.
                    Hayastan or Bust.


                    • Re: Armenia's Economic Pulse


                      YEREVAN, September 30. /ARKA/. Armenia's brandy industry keeps falling,
                      according to the National Statistical Service of Armenia.

                      Its output shrank 10.7% in Jan-Aug 2015, compared with the same period
                      a year earlier, to 8, 872,600 liters.

                      Vodka and beer production fell as well. In particular, vodka output
                      dropped 6.1% to 5,581,800 liters and beer 12.4% to 16,139,300 liters.

                      Instead, wine output grew 7.8% to 3,485,200 liters and champagne 6.6%
                      to 225,000 liters.

                      According to the statistical report, 50,741,300 liters of soft drinks
                      were produced in Jan-Aug 2015 - 4.7% more than at the same period a
                      year before. ---0-----

                      Hayastan or Bust.