Armenia's Economic Pulse

[Armanen]

Re: Armenia's Economic Pulse

I truly have no idea how anyone with a straight face can say Armenia has a "Market Driven" Economy. Any failures the Armenian Economy and Nation are experiencing are due to the people's dragging foot on implementing true Capitalism. How can you claim to be a "Market" Economy when you don't follow basic and essential rules of the Market, such as the individual right to property. This is why the ROA is stuck in a rut, because we have people who simply refuse to be realists and instead advocate policies that have failed over and over again every time they've been implemented.
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Shirinian: The Perils of Open Market Economy in Armenia



http://www.hairenik.com/weekly/2009/...my-in-armenia/

There are three issues that play into the current economic affairs of Armenia. The political: instability in georgia, blockade by turkey/azerbaijan, war with azerbaijan, and Iran being treated as a pariah by the West. Historical: 70 years of communist rule which ran under a command driven economy, plus the fact that before communism Armenians were living in empires that were not capitalist. Finally the legal: the laws on monopoly are weak and not enforced which allows oligrachs with government connections to essentially take over entire sectors of the market.

Two eu members, Bulgaria and romania are not any more 'market driven' than Armenia but because of their geopolitical situation they are members.

[Haykakan]

Re: Armenia's Economic Pulse

TBILISI DISCUSSES BORDER OPENING
By Temuri Kiguradze

The Messenger
Nov 16 2009
Georgia

The Georgian Government discussed the planned opening of the state
border with Russia at a session of the Georgian National Security
Council (NSC) on November 13. The participants of this meeting,
chaired by President Mikheil Saakashvili, spoke about progress in
negotiations over the reopening of the Zemo Larsi border checkpoint.

"We have had talks in Yerevan - Georgian-Armenian talks with
the participation of Russians - on the reopening of this point,"
Saakashvili said at the meeting. "Some fear this possible reopening;
we will brief you about the information available to us and you can
then draw your own conclusions," he said.

Answering the accusations of opposition parties that there were
doubtful benefits for Georgia in opening this checkpoint and the
country's security might be compromised Secretary of the National
Security Council Eka Tkeshelashvili, stated that the process "will
only be positive for us and our neighbour [Armenia] and in no way
pose a security threat to our country."

Armenia has a special interest in the reopening of the Zemo Larsi point
as it is the only way it can connect with the Russian Federation
by land, as Armenia can't gain access to Russian goods through
its other neighbour Azerbaijan because of the tensions between two
countries. "We will try to protect the interests both of Georgia and
Armenia," stated Tkeshelashvili. She added that the "leading role" in
negotiations with the Russian side trough Armenian mediators will be
taken by the Georgian Foreign Ministry. "This step [the border opening]
will be beneficial both from the economic and social points of view,"
the NSC Secretary added.

In his opening remarks at the Council session President Saakashvili
welcomed opposition politicians' participation in the meeting, saying
it was an example of cooperation between the authorities and the
opposition, including those "who were throwing carrots" at him. This
comment was a reference to the opposition rallies conducted at the
Presidential Residence, when some protesters threw vegetables into
it calling him a "coward rabbit." "Now I think we are moving from
carrot politics to serious politics," Saakashvili told the session,
which was also attended by MP Konstantine Gamsakhurdia, whose Freedom
Party was among the group of opposition parties behind the street
protest rallies.

Land connection between Georgia and Russia ceased with the closure of
the Zemo Larsi border crossing point by Russia in July 2006. There
are two other checkpoints, in breakaway Abkhazia and South Ossetia,
but these are considered by Georgia to be operating illegally and
entry into Abkhazia and South Ossetia through those points is banned
by Georgian law as those Georgian breakaway regions are considered
occupied by Russian troops.

The official reason for the closure of the Zemo Larsi checkpoint
was the need to undertake repair work. On September 4 2009 this was
completed. The United States allocated Georgia USD 2.4 million to add
more traffic lanes on its side of the checkpoint, install modern search
equipment and construct offices and barracks for the Georgian Patrol
Police and Revenue Service, as well as installing radiation equipment
to detect radioactive materials. The U.S. Army Corps of Engineers
oversaw the reconstruction of the Georgian side of the checkpoint.

[Icy]

Re: Armenia's Economic Pulse

TBILISI DISCUSSES BORDER OPENING
By Temuri Kiguradze

The Messenger
Nov 16 2009
Georgia

The Georgian Government discussed the planned opening of the state
border with Russia at a session of the Georgian National Security
Council (NSC) on November 13. The participants of this meeting,
chaired by President Mikheil Saakashvili, spoke about progress in
negotiations over the reopening of the Zemo Larsi border checkpoint.

"We have had talks in Yerevan - Georgian-Armenian talks with
the participation of Russians - on the reopening of this point,"
Saakashvili said at the meeting. "Some fear this possible reopening;
we will brief you about the information available to us and you can
then draw your own conclusions," he said.

Answering the accusations of opposition parties that there were
doubtful benefits for Georgia in opening this checkpoint and the
country's security might be compromised Secretary of the National
Security Council Eka Tkeshelashvili, stated that the process "will
only be positive for us and our neighbour [Armenia] and in no way
pose a security threat to our country."

Armenia has a special interest in the reopening of the Zemo Larsi point
as it is the only way it can connect with the Russian Federation
by land, as Armenia can't gain access to Russian goods through
its other neighbour Azerbaijan because of the tensions between two
countries. "We will try to protect the interests both of Georgia and
Armenia," stated Tkeshelashvili. She added that the "leading role" in
negotiations with the Russian side trough Armenian mediators will be
taken by the Georgian Foreign Ministry. "This step [the border opening]
will be beneficial both from the economic and social points of view,"
the NSC Secretary added.

In his opening remarks at the Council session President Saakashvili
welcomed opposition politicians' participation in the meeting, saying
it was an example of cooperation between the authorities and the
opposition, including those "who were throwing carrots" at him. This
comment was a reference to the opposition rallies conducted at the
Presidential Residence, when some protesters threw vegetables into
it calling him a "coward rabbit." "Now I think we are moving from
carrot politics to serious politics," Saakashvili told the session,
which was also attended by MP Konstantine Gamsakhurdia, whose Freedom
Party was among the group of opposition parties behind the street
protest rallies.

Land connection between Georgia and Russia ceased with the closure of
the Zemo Larsi border crossing point by Russia in July 2006. There
are two other checkpoints, in breakaway Abkhazia and South Ossetia,
but these are considered by Georgia to be operating illegally and
entry into Abkhazia and South Ossetia through those points is banned
by Georgian law as those Georgian breakaway regions are considered
occupied by Russian troops.

The official reason for the closure of the Zemo Larsi checkpoint
was the need to undertake repair work. On September 4 2009 this was
completed. The United States allocated Georgia USD 2.4 million to add
more traffic lanes on its side of the checkpoint, install modern search
equipment and construct offices and barracks for the Georgian Patrol
Police and Revenue Service, as well as installing radiation equipment
to detect radioactive materials. The U.S. Army Corps of Engineers
oversaw the reconstruction of the Georgian side of the checkpoint.

This is also great news for Armenia, becuase we can now ship to Russia,
faster and cheaper than before.

[Haykakan]

Re: Armenia's Economic Pulse

If Armenia can take advantage of her important geographic location then it has the chance to grow and prosper but she does need open borders to do that.

[Haykakan]

Re: Armenia's Economic Pulse

ARMENIANS ARE NOT SO POOR
By Albert Khachatryan

news.am
Nov 17 2009
Armenia

In dealing with the consequences of the global economic crisis, many
governments' top priority is improving the population's solvency. They
are employing various mechanisms, the aim being the same - preventing
the reduction of population's real incomes and, within the limits of
the possible, improving the population's solvency.

Of course, steadily rising prices for goods and services causes a
relative reduction in solvent demand. The recently observed steady
tendency toward higher wages, which form a major part of the Armenian
population's incomes, is counterbalancing this process. The minimum
basket of goods may serve as a standard for estimating wages.

Specifically, this January-September the average nominal monthly wages
reached 98,400 AMD (about U.S. $258) in Armenia - 3.6 times as much
as the cost of the minimum basket of goods in the 3rd quarter of 2009.

One would only be happy about such "fine figures" but for...

The monthly cost of the minimum basket of goods for a four-member
family (two parents and two children) is 109,500 AMD. Thus, if only
one of the parents is the breadwinner (which is usual in Armenia),
the aforementioned average monthly wages mean such a family will
find itself among "poor" families. With the income tax, 6,500 AMD,
withheld from the nominal monthly wages, the actual amount received
by an employee is reduced to around 91,900 AMD.

According to the Introduction to a table compiled by the RA Statistical
Service, the cost of the minimum basket of goods was calculated
"as a result of an integrated survey involving 6,816 households and
conducted with the use of methods developed by the World Bank, from
April 1, 2004, to March 31, 2005." The first question is: who are
the respondents? The richest sections of the population were hardly
involved in the survey. We do not think that the statisticians would
deny this fact. So the actual figures could have been better. It is
not a question of principle, however. What is worse is that the "aim"
of the basket itself is poverty - abject poverty.

Citizens of developed countries may be shocked at the figures showing
the minimum daily amount of food used by their counterparts in Armenia,
so we are citing annual indices. Well, the annual amount of meat
per capita is 19.3 kg (against 40 kg in the mind-1980s), fish 3 kg
(several kilos less than 20 years ago), and so on and so forth. On the
other hand, baked goods and potatoes "have made progress" - 178.5 kg
and 56.4 kg respectively. Of course, Armenians are great lovers of
bread, and bread consumption in Armenia much exceeds the "refined"
European standards. It is a deplorable fact, but low-income families
have to use relatively cheap bread as "compensation" for high-calorie
and much more expensive products - meat, fish, eggs...

The daily caloric value of the minimum basket of goods is 2,232
calories. Before analyzing this figure, we would like to note that
children aged 7-10 need at least 2,380 calories daily. This shows that
the caloric value of the food basket in Armenia actually means chronic
malnutrition. The problem is, however, much more serious. Baked
goods are the main source of calories, their share in the daily
"caloric content" being 61%. The caloric value of one "weight unit"
of baked goods is 1.4 times as much as that of meat products, whereas
the price of one kilocalorie is 3.9 times as low. So minimizing the
cost of the minimum food basket will bring double "gain"!

Although our citizens are complaining about a massive price rise,
the cost of the minimum food basket rose by only 249.6 AMD in the
3rd quarter of this year as compared with the corresponding period
last year! The explanation is quite simple. Against the rising prices
for most of the "basket-forming" products, a 7.9% fall in the price
for baked goods was registered. As a result, due to baked goods, the
cost of the minimum food basket even "fell" by 513 AMD, which was a
partial compensation for a rise in price for meat products (3.2%),
for fish (86.8%!), for fats (3.6%), and so on.

As regards the fall in the prices for baked goods, particularly for
bread, it is common knowledge that the actual weight of one loaf of
bread is much lower than the figures indicated on the labels. The
competing producers reduce the price - and weight -- of one loaf to
attract consumers. So what is really behind the "cheaper" bread -
a lower price or producers' new trick?

The low caloric value of the minimum food basket and the "overweight"
of "cheap" baked goods result in its purely "symbolic cost." In the
3rd quarter of this year it was less than 17,700 AMD, which, in turn,
allows the "derivative", minimum food basket, to be "optimized."

Unlike many countries, where the nonfood component of the "basket"
is calculated on the basis of natural consumption coefficient for key
products and services, Armenia chose a much easier way - multiplying
the cost of the monthly food basket by 1.55. Thus, the monthly cost
of the minimum food basket turned out to be less than 27,400 AMD in
the 3rd quarter - less than U.S. $77 a month, a "standard" amount in
poor countries. The situation is slightly better in the Baltic States,
which had the same initial position as the Commonweal of Independent
States (CIS). Specifically, in Latvia in the 2nd quarter of this year,
the monthly cost of the minimum basket of goods was around U.S. $348.

It would be naĂŻve to speak "in terms of prices." We are all well
aware of the fact that the prices for consumer goods have reached
the much talked-about European standards, and, in some cases, have
even exceeded them.

In "rich" countries the cost of the minimum basket of goods is much
higher than in Armenia, with even recreation and car maintenance costs
included. We had better not make any unfavorable comparisons. The
social consumption standard in effect is essential for normal life,
and its norms must be constituents of the basket of goods. The "1.55"
coefficient implies that expenses on food constitute a major part
of the population's expenses (almost 65%), against 10% in developed
countries.

Other questions can be raised as well. In Russia the law determines the
"federal basket of goods", and the Government approves the quarterly
living wage (the cost of the minimum basket of goods inclusive of
mandatory taxes and duties). In Armenia, it is a speculative index,
which is not "underpinned" by any statutory acts or Government
resolutions. Even in the statistical reports released by the RA
Statistical Service this most important index is included in the
section entitled "Entertaining statistics". No comments... A logical
question is: who, and what for, needs a "basket" without any legal
force?

The answer is a simple one. The low cost of the minimum basket of
goods "justifies" the low minimum monthly wages (30,000 AMD or about
U.S. $90). The average monthly wages are 2,000 or 3,000 AMD higher
than the cost of the minimum basket of goods, aren't they? Well
and good! The employer, without feeling any remorse, can square up
with a hired worker by paying him the aforementioned sum! Another
important fact is that the minimum basket of goods makes "struggle"
against poverty much easier. Armenia has made "dramatic" progress on
this front: 56% of Armenia's population was below the poverty line in
1998-1999 (the per capita income was lower than the cost of the minimum
basket of goods), whereas the figure was brought down to 25% in 2007!

[Haykakan]

Re: Armenia's Economic Pulse

ARMENIA TO ABOLISH STUDENT SCHOLARSHIPS

PanARMENIAN.Net
17.11.2009 19:29 GMT+04:00

/PanARMENIAN.Net/ "The 2010 State Budget does not envisage reduction
of expenses in the sphere of science, but budgetary allocations will
be reduced considering certain demographic issues. This, however,
will not affect educational system at all," said Minister of Education
Armen Ashotyan.

At that he noted that Ministry plans to abolish monthly student
scholarships.

"Since the 1990s, scholarships, even those paid to excellent students,
have comprised AMD 5 thousand. This is a very small sum not enough for
meeting even minimal needs. Hence, under the joint program implemented
with World Bank the sum will be directed at forming a student credit
fund. Such credits will be accessible to a large group of students,"
Ashotyan explained.

Minister also promised to discuss elaborated project with students.

[Haykakan]

Re: Armenia's Economic Pulse

CONSTRUCTION OF IRAN-ARMENIA OIL PRODUCTS PIPELINE WITH ANNUAL CAPACITY OF 1.5 MILLION TONS TO BE LAUNCHED IN 2010

ArmInfo
2009-11-19 14:36:00

ArmInfo. Construction of Tabriz (Iran) - Yerashkh (south of Armenia)
oil products pipeline with annual capacity of 1.5 million tons
is to be launched in 2010, Armen Movsisyan, Minister of Energy and
Natural Resources of Armenia told media on Thursday. He said internal
consumption of oil products in Armenia is less than 1.5 million tons,
but the project is designed considering the expected growth of internal
demand for the coming 10-15 years and export opportunities.

(Earlier the minister said that Armenia consumes 450-500,000 tons of
fuel yearly). Project design and preparations have been completed.

Armenia, Russia and Iran have announced their participation in the
project. Iran will be the key financier of the project. Gazprom may
invest 10%, he said. The minister highlighted that transportation
of oil products via the pipeline is up to 8 times cheaper than by
railway. In addition, Tbilisi-Yerevan railway is in poor state
and needs serious reconstruction, A. Movsisyan said. A storage
terminal for oil products is to be built in the town of Yerashkh
in future. Construction will take 2 years. The project will cost
nearly $250-$260 million inclusive of construction of the oil products
pipeline and terminal, the minister said. He mentioned that the 250mm
pipeline will extend 300km from Tabrzi to Yersakh.

[Federate]

Re: Armenia's Economic Pulse

Armenia’s IT sector shows 20% growth

The crisis has hardly affected the Armenian IT companies, Karen Vardanyan, Executive Director of the Union of Information Technology Enterprises (UITE) Karen Vardanyan told NEWS.am. He said that surveys to specify the figures are under way now.

“Pressured by the crisis, the enterprises operating in other fields are thinking of enhancing their business efficiency, and IT application is one of the ways of doing it. But this figure cannot even be considered satisfactory,” he said. “The IT development concept approved in 2008 points out that the number of IT enterprises is to reach 1,000 by 2018. But, statistical data show that only one of five enterprises survives. That is 500 rather than 100 enterprises have to be opened annually, whereas only 40 have been opened this year. But we do not know whether the enterprises will survive on the market,” Vardanyan said.

According to the concept, the number of employees at the Armenian IT enterprises is to reach 20,000 in eight years. “Everything remained on paper. And it is the Government, enterprises, as well as the society, that are responsible for the idea not being implemented,” Vardanyan said. He believes that the sector’s development requires “the domestic market’s response, which implies a change in the people’s way of thinking.”

Vardanyan pointed out three lines of developments of the Armenian IT sector: the state government system and modernization of military equipment; business; households. IT application will rule out shadow businesses and embezzlement, while some people would object to it. “80% of businesses in Armenia are either monopolies or controlled by government agencies. Such businesses are not drawn in competition, while competing businesses need IT technologies,” Vardanyan said.

Educational software is considered a personal product worldwide, but in Armenia hardly anyone is serious about education – both students and their parents. “People worldwide view PCs as a means of education, but our students use computers for playing, chatting or visiting porno sites,” Vardanyan said.

One of the major problems is that the IT enterprises do not ensure enough discoveries and publications." We have a lack of interesting ideas and need new discoveries. When they happen, they are recognized the best in the world. This year a contest involving 400 venture companies has been held in the United States, and an Armenian company’s innovation was recognized the best," Vardanyan said.

http://news.am/en/news/9233.html

[Icy]

Re: Armenia's Economic Pulse

Apple Computer Wants Big Bite Out of Armenian Market



Not content with the sales of millions of iPods and other Apple items, the company recently began its presence in the Armenian market.
Officially the [Apple] Center opened on December 15, 2006, and the Company was registered in May 2005. There is demand practically for all the "Apple" production. The Armenian computer market is already practically formed, and the "Apple" production is a somewhat different approach to the world of computers.

In the nearest future we intend to cover the level of 30-40% of the market - this is a very serious index. It is reasoned by the quality of the production and the pricing policy of "Apple". So, in Yerevan the "Apple" equipment cost only 5-7% more expensive than in the USA.

The prices of the "Apple" computers in the Armenian Center start from $1700. We also realize credit sales with 20% pre-pay and 6-12 months credit term.
It's always surprising to me that there are people in Armenia with enough money to buy $100,000 cars, $2,000 computers, and $5,000 purses. Besides the minority that rules the country in a virtual monopoly, how do the rest of them generate such enormous sums? What percent of Armenians can afford a $1,700 computer?

Source: http://www.thearmeniablog.com/2007/0...-armenian.html

[Muhaha]

Re: Armenia's Economic Pulse

If the products cost 5-7 percent more in Armenia than in the U.S and Apple is actually selling at that price, it's got to be some sort of voodoo magic ROA citizens are pulling, I really don't see how that's possible.