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Armenia's Economic Pulse

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  • #21
    Re: Armenia's Economic Pulse

    By Aghavni Harutyunian

    AZG Armenian Daily #142

    On July 26, Armenian-European Policy and Legal Advice Center (AEPLAC)
    presented its "The Armenian Economic Trends: 2006 Annual Report"

    "Annual Economic Report - 2006" contains in-depth analyses of the
    main macroeconomic developments in Armenia in 2006, with extensive
    international comparisons by using a number of indicators, said the
    European Director of AEPLAC Kenneth Myunter

    According to AEPLAC's Senior Expert of Economic Issues Artashes
    Shaboyan, the analyses consists of various chapters which cast a light
    upon key topics such as composition, structure and per capita levels of
    the Gross Domestic Product, and a sectored structure of the outputs,
    which includes industrial production, agriculture, construction and
    other sectors. These are followed by chapters related to inflation,
    labor market, financial / banking sectors, the state budget, external
    debt and developments in the external sector.

    According to the report, GDP rose three times in the last 5 years,
    from that only 61% is the real growth.

    Inflation in the economy is 14%; the rest 25% was formed because of
    the devaluation of the US dollar against the Armenian dram.

    Providing 13,3% economic growth in 2006 Armenia became the fifth in
    the list of the 181 countries. Azerbaijan gained the first rank with
    its unprecedented indices of the economic growth in the last two years.

    If the economic growth in Armenia continues at the average rate of the
    last 5 years, Armenia will reach the medium index of the 27 European
    countries in 2023.

    The key branch in GDP: the construction's high rates of growth
    continue, moreover, it provided half of the GDP growth in 2006. It
    is one of the peculiarities of the economic development of Armenia
    during the last years.

    At the same time the index of the apartments' construction is not
    high as compared with the CIS countries.

    In regard to the industry, GDP decreased in the spheres of cigarette,
    chemistry and gold xxxellery

    A growth of productivity is recorded in the agricultural sphere.

    The 2,9% index of inflation is close to the medium index of the 27
    European countries.

    Unemployment decreased and reached to 7,4%, the medium monthly wages

    Head of the World Bank's Armenian Office Aristomene Varudakis spoke
    about the following challenges for Armenia: development of other
    branches besides construction, adoption of the amendments of the
    second generation, improvement of the investments' atmosphere,
    stimulation of the rivalry, etc.


    • #22
      Re: Armenia's Economic Pulse


      ARKA News Agency, Armenia
      July 27 2007

      YEREVAN, July 27. /ARKA/. Ten years are required for complete formation
      of Armenia's securities market, said Chairman of the Central Bank
      of Armenia (CBA) Tigran Sargsyan. According to him, the rates of
      development of Armenia's securities market are conditions by the rate
      of implementation of programs of the OMX operator, which intends to
      purchase the Armenian Stock Exchange (ArmEx) and the depositary.

      "The terms of development of Armenia's securities market are acceptable
      for Armenia, and the principal program is the OMX's entry to Armenia's
      market," Sargsyan said.

      According to him, the CBA is rendering assistance to the development
      of Armenia's securities market by affording enterprises ampler
      opportunities to enter Armenia's financial market, offering new
      instruments to them.

      'We are making our first steps in the development of securities
      market, and it is natural that the companies that will be the first
      to issue their bonds on the market will be able to make use of the
      CBA's assistance," Sargsyan said.

      He pointed out that the bonds of the CBA-rated companies will be
      equaled to government bonds as to their reliability and liquidity
      during REPO transactions between the CBA and commercial banks.

      He pointed out that all the companies have equal rights to be rated
      by the CBA. Sargsyan added that the CBA has no intention to limit
      the terms of this instrument.

      "Specifically, the Valleta Company with its initial public offering is
      supposed to set an example to all the organizations seeking alternative
      sources of financing and play an essential role in the reduction of
      shadow economy," Sargsyan said.

      In September 2005, the CBA published the first rating of Armenia's
      enterprises. The CBA was monitoring 30 enterprises in 2005, with 15
      of them getting the first-calls ratings. If enterprises get higher
      ratings, the CBA publishes their names with their consent.

      The CBA is ready to accept bonds of the companies with high ratings
      (A, B, C) as a security during REPO transactions banks. A privileged
      scale of credit risks during the allocation of bank credits is intended
      for the highly rated companies.

      The CBA-published rating includes 29 enterprises.

      What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


      • #23
        Re: Armenia's Economic Pulse


        2007-07-24 09:53:00

        At the end of 2008 and at the beginning of 2009 the authorized capital
        of Armenian-Russian "ArmRosgazprom" CJSC will amount to $850-900mln,
        and the capitalization, according to the estimations of the company's
        specialists, will exceed $1,5bln, Chairman of the Board, Director
        General of "ArmRosgazprom" CJSC Karen Karapetyan said on Monday.

        According to him, from today on the company is preparing to start
        Initial Public Offer. For that purpose international audit has already
        been conducted in the company for 4 years. From the current year on
        the "Ernst and Yang" company is conducting the audit. K. Karapetyan
        recalled that "ArmRosgazprom" CSJS has already placed coupon
        obligations in a 1bln AMD emission volume, with a circulation period
        of 18 months and with 9% annual percentage rate. The emission volume
        in 1bln AMD is a bit more than 0,5% of the company's assets, the
        Director General noted. He added that the company intends to emit
        obligations with a volume of 5bln AMD in the nearest future.

        Director of the Central Bank of Armenia Tigran Sargsyan said that the
        emission of obligations of "ArmRosgazprom" CJSC arouse much interest in
        the financial system of the country and, presently, the demand exceeds
        the supply by several times. He added that "ArmRosgazprom" CJSC plans
        to conduct a rating of the Central Bank's enterprises, which will
        give the commercial banks, interested in the company's obligations,
        an opportunity to transact deals with the Central Bank. In that way,
        for the Central Bank will consider the obligations of "ArmRosgazprom"
        CJSC as liquid assets and the latter will work with commercial banks
        through REPO agreement, he clarified.

        He noted that the entrance of such system forming structure as
        "ArmRosgazprom" CJSC into the bond market is a guarantee for the
        dynamic development of that market. He added that in the nearest
        future two more of the best enterprises in Armenia will be involved
        in the bond market. T.

        Sargsyan expressed hope that, thanks to "ArmRosgazprom" CJSC's
        cooperation with Stockholm burse OMX, which plans to buy "Armenian
        Stock Exchange", the company will start IPO. This will mean integrating
        Armenian and world bond markets, he said.

        To recall, "ArmRosgazprom" CJSC was founded in December 1997 and is
        the exclusive importer of natural gas into Armenia. As a result of
        "ArmRosgazprom" CJSC's extra emission by $111,8 mln, the company's
        authorized capital increased from the former $280mln up to $391,8mln.

        "Gazprom" JSC raised its share in "ArmRosgazprom" CJSC's authorized
        capital from the former 45% up to 57,59%. The share of the Armenian
        Government in the company's authorized capital, accordingly reduced
        from 45% to 34,7%, and the share of "Itera" company reduced from the
        former 10% up to 7,71%.

        What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


        • #24
          Re: Armenia's Economic Pulse

          [It is true that $12M is a negligible amount, but establishing business relations with Citigroup may become of value. Siamanto.]

          By Anna Saghabalian

          Radio Liberty, Czech Rep.
          Aug 3 2007

          The European Bank for Reconstruction and Development (EBRD) and
          a leading U.S. financial services group unveiled on Friday a joint
          lending program for small and medium-sized Armenian companies seeking
          cheap credit.

          The EBRD and the Citigroup financial conglomerate said they will
          each lend $6 million to one of Armenia's largest commercial banks,
          ACBA-Credit Agricole, that will manage the scheme. Under the terms
          of an appropriate agreement signed in Yerevan by the three sides,
          ACBA-Credit Agricole will in turn use the money to extend loans to
          expanding small and medium-sized firms.

          According to the ACBA chairman, Stepan Gishian, the maximum amount
          of a single loan to be provided under the scheme will be set at
          $300,000. He could not specify the cost of such borrowing, saying
          only that it will be below his bank's current lending rates.

          ACBA, in which the French bank Credit Agricole is the principal
          shareholder, currently makes loans repayable in up to five years, with
          interest rates varying from 16 to 22 percent. With inflation in Armenia
          remaining in single digits and the national currency increasingly
          strong, such rates are hardly affordable for many small firms.

          Officials present at the signing ceremony, emphasized the fact that
          it is the first time that an Armenian bank borrows a substantial
          amount of cash from a Western bank on a commercial basis. "We are
          talking about purely market-based relations," Gishian said, pointing
          out that similar lending programs have until now been implemented in
          Armenia only by non-commercial development institutions like the EBRD
          and the World Bank.

          Michael Weinstein, head of the EBRD office in Yerevan, described
          the deal as a "historic" event for Armenia. He said the London-based
          lending agency helped to negotiate it as part of its growing presence
          in the country. "We now pay a lot of attention to the Caucasus region
          and Armenia in particular," he said. "We hope that our involvement
          in Armenia will continue and deepen."

          The EBRD has spent some $180 million on loans to and equity purchases
          in various Armenian companies ever since it opened an office in Yerevan
          in the mid-1990s. A large part of the sum has reached the country in
          the past few years.

          What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


          • #25
            Re: Armenia's Economic Pulse


            Noyan Tapan
            Aug 09 2007

            YEREVAN, AUGUST 9, NOYAN TAPAN. More than 25 representatives of
            Armenia's business community participated in the August 9 seminar
            on corporate social investments held in Yerevan, during which
            the experience of Russia, the US and the UK in this sphere was
            presented. The Eurasia Foundation' new program aimed at developing
            Armenian businessmen's skills at making strategical social investments
            was launched at the event.

            In the words of the director of Eurasia Foundation Juliet Stein,
            strengthening local businessmen's strategical potential to make
            corporate investments will result in positive, lasting changes
            in the country. The deputy ambassador of the US to Armenia Joseph
            Pennington said that following suit of rich Americans, prominent
            Armenian businessmen have begun to invest part of their profit in
            the social sphere, as well as education and culture.

            Studies conducted among Armenian businessmen show that they have
            insufficient comprehension of the significance of social investments.

            According to surveys, social investments usually do not exceed 1% of
            the annual income of the given company. Most of social investments
            are made in such spheres as social assistance, science, culture,
            health care, and education. As a rule, these investments are one-off,
            unplanned and do not make part of long-term programs or strategy
            on social investment: they are made in the form of humanitarian or
            charitable assistance, individual sponsorship or one-off grants.

            The executive director of the Union of Manufacturers and Businessmen
            of Armenia (UMBA) Gagik Makarian underlined the importance of the fact
            that the ideas of collective contracts, creation of trade unions,
            as well as the idea of trade union - employer - government social
            partnership have been included in the new Labor Code of the RA. He
            noted that the cooperation of these structures has been put at a
            new level.

            G. Makarian at the same time said that making social investments
            ensures reduction in tax liabilities for businessmen abroad, whereas
            such practice is absent in Armenia. According to him, the Union of
            Employers currently at the stage of formation will deal with this

            What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


            • #26
              Re: Armenia's Economic Pulse


              2007-08-07 18:47:00

              The results of Armenian Technology Congress'07 (ArmTech'07)
              exceeded the organizers' expectations, Director General of Technopark
              "Viasphere", Co-Chairman of the Organizing Committee of the Congress
              Aram Vardanian said at a press conference on Tuesday. The Congress
              was held in San-Francisco, 4-7 July.

              According to him, more than 350 entrepreneurs from Armenia, Diaspora
              and big offshore companies participated in the Congress's work. Not
              only big Armenian companies, some of which were granted Diplomas
              of California Senate, but also beginners were presented at the
              Congress. He noted that the country's biggest accomplishments in the
              spheres of information, high technology and laser technology, the
              newest technologies of alternative energy sources, as well as reports,
              technical and business articles were presented at the event. "During
              the event Armenian companies attracted international investors'
              big interest, and some of them got concrete proposals", A. Vardanian
              emphasized. He noted that launching of the Congress's site, opening
              of an office in Armenia and organizing of regional smaller similar
              congresses are planned till the next ArmTech 2009. It was already
              suggested that a regional ArmTech Congress be held in Venice. "As
              a result and also thanks to integration into the world community of
              high technologies, more than 20 000 work places will be created in
              IT sphere in Armenia", he added.

              For his part, the coordinator of the data clusters of IT program
              USAID CAPS (Competitive Armenian Private Sector) Garegin Chugaszyan
              noted that such large-scale congresses are popular particularly in
              the countries of East Asia and West Europe.

              According to the Director General of SYNOPSYS Armenia Rich Goldman,
              entrepreneurs from Armenia, San-Francisco, Los-Angeles, France,
              Russia, the Middle East, South America made their contribution in
              organizing ArmTech'07.

              "All of them reached their main aim: a long-term partnership network
              was established. During the discussions a certain platform was created,
              which will serve a basis for further cooperation, for identifying
              and settling priority IT problems", he emphasized.

              To recall, Armenian Foreign Minister Vardan Oskanyan, Advisor to
              the Armenian President on Economic Issues Vahram Nersisian, Synopsys
              President and Chief Operating Officer Chi-Foon Chan, the President of
              Viasphere International Tony Moroyan and other high rank officials
              participated in the ArmTech'07 work. The event is devoted to the
              global unification of Armenian society, as well as of specialists
              interested in the development of technology sphere in Armenia.

              The primary sponsors of ArmTech'07 are VivaCell and Synopsys, Inc.


              Mining Journal Online, UK
              Aug 9 2007

              The government of Armenia has secured a supply of rough diamonds
              from Russia for the country`s cutting and polishing plants. Under
              the agreement, Alrosa will provide Armenian companies with part of
              its rough-diamond production that is not economically viable to be
              cut in Russia.

              The agreement was signed during a visit to Yerevan this week by
              Alrosa`s president Sergey Vybornov, who met with Armenia`s president
              Robert Kocharyan and prime minister Serzh Sargsyan. Armenia`s minister
              of trade and economic development, Nerses Yeritsyan, explained that
              the agreement will allow for renewed diamond-cutting activities,
              and that, longer term, Alrosa would extend the co-operation to the
              xxxellery sector.

              In the recently published `From Mine to Mistress` book, Chaim
              Even-Zohar notes that planned (but unattainable) polished exports for
              2006 from Armenia were US$400 million. In actuality they only reached
              US$245 million, which still represents over 30% of the nation`s
              overall exports. This dependency on diamonds led the International
              Monetary Fund to warn of a "serious threat to Armenia`s overall
              export performance".

              Diamond sales by Alrosa to Armenia is not a new development; Alrosa
              has previously been committed to sell the country 450,000 ct/y of
              gem-quality rough, supposedly at `attractive` prices. However, as Mr
              Even-Zohar notes, Russia has previously reneged on that undertaking.

              In 2005, Armenia processed some 800,000 ct of rough, of which only
              180,000 ct were supplied by Alrosa.

              The most important foreign diamond investors that are operating
              in Armenia include Lev Leviev (Israel), Tache (Belgium), Rosy Blue
              (Belgium) and Arslanian Brothers (Belgium).

              What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


              • #27
                Re: Armenia's Economic Pulse

                By Ara Martirosian

                AZG Armenian Daily

                What tendencies have been recorded in the first six months of 2007,
                what is the situation compared with the first and second six months
                of last year, what prices have been recorded in June and what may we
                expect in the coming months in this market?

                All these questions can get their answers from the analyses of Cadastre
                State Committee of Real Estate.

                According to it, transactions increased in the first six months of
                2007 as compared with the first and second six months of 2006.

                Alienations gain a large part in transactions - 40 percent, from
                which sales and purchases - 87 percent.

                The rest are donations and interchanges.

                The biggest parts of sales and purchases have the apartments of
                residential buildings - 2/3 of a total.

                The recorded 7029 transactions are a little more as compared with
                the same period of last year. Here a decrease of transactions by 18,5
                percent is recorded as compared with the second six months of 2006.

                Anyway, the prices of the apartments have been increased in Yerevan
                as compared with the first (by 30,6 %) and the second (by 16,1 %)
                six months of 2006.

                The same situation is in the provinces (marzes) of Armenia - the
                prices of the apartments increased here by 48,3 percent as compared
                with the same period of the last year, and by 19,8 percent compared
                with the second half year of 2006.

                The average market price of one square meter of residential
                buildings' apartments in Yerevan made 258 thousand drams in June of
                2007: in Center - 454 thousand drams, Arabkir - 372 thousand drams,
                Kanaker-Zeytun - 273 thousand drams, Davitashen - 246 thousand drams,
                Shengavit - 244 thousand drams, Agapnyak - 237 thousand drams, Nor
                Nork - 228 thousand drams, Malatia-Sebastia - 226 thousand drams,
                Erebuni - 221 thousand drams, Avan - 217 thousand drams and Nubarashen
                - 124 thousand drams.

                Out of Yerevan the highest prices have been recorded in Abovian: one
                square meter - 145 thousand drams, in Vagharshapat - 126 thousand
                drams, Ashtarak - 107 thousand drams, Jermuk - 102 thousand drams
                (the prices here increased twice).

                2964 transactions on sales and purchases of detached houses were
                recorded in the first six months of 2007: 560 in Yerevan. The
                transactions decreased by 16,5 percent as compared with the second
                six months of 2006, and increased by 15,4 percent compared with the
                first six months of 2006.

                The average market price of one square meter of 250 square meter
                construction and 400 square meter house of a personal plot is the
                following in different parts of Yerevan: in Center - 469 thousand
                drams (about $1350), Arabkir- 376 thousand drams, Kanaker-Zeytun -
                275 thousand drams, Davitashen - 250 thousand drams, Shengavit -
                245 thousand drams, Agapnyak - 241 thousand drams, Nork-Marash -
                233 thousand drams, Malatia-Sebastia - 229 thousand drams, Erebuni -
                225 thousand drams, Avan - 219 thousand drams and Nubarashen - 127
                thousand drams.

                The most expensive houses are again in Abovian. Here the average
                market price of one square meter of 200 square meter construction
                and 1000 square meter personal plot is 149 thousand drams. Then comes
                Vagharshapat - 130 thousand drams, Tsaghkadzor - 127 thousand drams,
                Ashtarak - 109 thousand drams and Nor Hachn - 104 thousand drams.

                What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


                • #28
                  Re: Armenia's Economic Pulse

                  Foundation for Economic Development
                  104 North Belmont Street, Suite 200

                  Glendale, Ca 91206
                  Tel: 323.888.0049
                  Fax: 323.888.0043

                  PRESS RELEASE
                  : August 20, 2007

                  Contact: Taleen Mardirossian
                  Tel: 818-500-1918

                  Armenia: Promoting Economic Activity and Investment through an Improved
                  Business Environment

                  By Karen Grigorian

                  Courtesy of the CALIFORNIA TRADE OFFICE

                  In the early '90s, the Armenian government successfully implemented its
                  first generation of reforms, which provided a strong foundation for
                  sustainable growth. Since 1994, the Armenian economy began to show signs of
                  recovery from a major contraction experienced during 1991-93 when the
                  country lost nearly 60% of its output. This transformation rapidly
                  accelerated from the beginning to mid-2000 thanks to a focused effort aimed
                  at improving the overall business environment and the supporting framework
                  for investment. The country continued enjoying relatively high rates of
                  economic expansion and recorded an incessant double-digit growth since 2002.
                  Demand for Armenian products abroad also grew significantly.

                  This strong performance has been largely dependent on financial assistance
                  from the Diaspora, World Bank, USAID, UN organizations, European Union, and
                  bilateral donors. Acceleration in private-sector investment, reflecting an
                  improving business environment, is also a determinant cause of this

                  The government's economic policy adopted Private Sector Development (PSD) as
                  one of its key elements since the beginning. This is mainly evident from the
                  massive privatization effort undertaken by the state where about 90% of the
                  economy was sold to private entities, as well as in the enactment of a
                  number of economic policies that supported the growth of the private sector.
                  These actions set the tone for the coming economic growth.

                  Armenia's good performance in the last 3 years, in particular, was
                  reinforced by a certain diversification of the economy. While agriculture
                  and food processing continued to grow, the light industries sector also
                  showed signs of vitality and at times a very strong recovery. The backdrop
                  for all this remained a solid and stable macroeconomic framework and an
                  improved fiscal performance. The latter is a significant achievement for the
                  state, i.e. while the fiscal situation improves and becomes stronger, the
                  government has more flexibility in terms of revenue mobilization and public
                  expenditures. This also means more flexibility to undertake larger and
                  long-term initiatives rather than crisis management. The government, indeed,
                  now enjoys a much better prospect for controlling the economy and planning
                  its development.

                  The achievements attained by Armenia came at a cost and despite some serious
                  constraints. Particularly, to-date, transport costs within and out of the
                  country remains high and freight forwarding is still a complicated affair in
                  respect to other countries in the region. Nonetheless, the economy continues
                  to develop -- not to a lesser degree thanks to Diaspora interventions. From
                  this perspective, the importance of Armenians living outside of Armenia
                  should not be overlooked. Remittances by family members living abroad remain
                  a very important part of the economy and appear as the single biggest source
                  of foreign currency source for Armenia. This is also telling from the
                  point-of-view of Armenians who have successfully established themselves in
                  foreign countries and continue to support their relatives and friends.

                  Armenia is one of the most liberal and open market economies in the region
                  and even globally according to a number of recent studies and surveys. Moody's
                  just rated Armenia Ba2, while the Economic Freedom Index released by the
                  Heritage Foundation and Wall Street Journal ranked Armenia 27th out of more
                  than 150 countries. The latter uses 50 indicators such as capital flows and
                  foreign investments, banking and financial systems, monetary, budget and
                  trade polices, salaries and prices, state interference in the economy,
                  property rights and regulations and black markets. This demonstrates that
                  progress in trade and price liberalization, increased investments in
                  infrastructure, privatization or closure of most state-owned enterprises,
                  and efforts to streamline government regulation, have considerably enhanced
                  the business environment.

                  The 2006Annual Administrative and Regulatory Cost Survey also suggests
                  noteworthy improvements in the business environment. When asked about the
                  general satisfaction with the quality of regulations, administrative
                  requirements and bureaucratic behavior of state agencies, only 38% of
                  Armenian businesses considered it as a problematic constraint, while the
                  average rating was 3.50 (somewhat satisfied)[1]. This percentage is
                  calculated as the sum of the number of companies responding very
                  dissatisfied, dissatisfied and somewhat dissatisfied. This is a
                  considerable improvement over the results of the 2004 and 2000 surveys, when
                  respectively more than 60% and 71% of companies were dissatisfied with the
                  overall quality of business regulations. It is also worth noting that in the
                  2006 Survey large companies were somehow more dissatisfied (45.83% of large
                  companies) with government regulations than medium (41.41%) and small-sized
                  (35.03%) enterprises. Furthermore, companies operating in different sectors
                  of the economy have almost the same level of dissatisfaction with government
                  regulations - commercial companies being a little more constrained with the
                  overall quality of business regulations.

                  In spite of all commendable improvements, corruption remains a key area of
                  constraint and needs to be addressed. Armenia's ranking in the Corruption
                  Perception Index has not improved marginally between 2000 and 2004, thus,
                  indicating persistent administrative barriers/discretion to doing business.

                  Transparency International Corruption Perception Index

                  Rank 2000 (1-90)
                  Rank 2004 (1-133)
                  Score 2000
                  Score 2004





                  Czech Republic







                  There are also overall concerns regarding the tax, customs and general
                  public administration areas. Firms, especially small and medium-sized ones,
                  still feel there is room for improvements in this area. Many argued that
                  dealing with taxes and other regulatory requirements is time consuming, not
                  transparent and adds to the overall cost of doing business. In other words,
                  it evidently puts strain on the private sector's capacity to do business
                  since dealing with administrative issues is time-consuming and costly.

                  On the other hand, Authorities seem to be genuinely pushing for improvements
                  allowing for transparency and openness. In the tax and customs systems, they
                  aim to make it easier for clients to interact with these agencies, although
                  it is obvious that it is not enough to change pertinent laws, but,
                  institutional cultures must also be changed. However, sustained effort and
                  time are needed for bringing about institutional change. Sustained effort
                  means that the government has to commit itself to progressive improvement
                  aimed at eradicating this cancer from the system. Some of it can be dealt
                  with by obvious administrative changes such as the ongoing implementation of
                  self-declarations for taxes and customs that aim at reducing contact with
                  customs and tax officials.

                  Another important area for consideration in terms of improving the business
                  climate is the need to reduce the overall transaction costs for doing
                  business. This doesn't just mean bills for utilities or transport, it also
                  means time and other wasted efforts. This area needs to be progressively
                  improved and adjusted over time. Confidently, progress is already being
                  made, but certainly there is no impression that this is a very easy task.

                  The Administrative Barriers Study prepared by the Foreign Investment
                  Advisory Services (FIAS) of the World Bank Group suggests that, in general,
                  there have been notable improvements in a number of administrative
                  procedures affecting businesses since 2000 -- including business
                  registration and licensing. While strongly commending these achievements, it
                  is important to record that the more difficult tasks of ensuring efficient
                  and fair tax and customs administration, transparent privatization and lease
                  of public land and construction coordination remain to be tackled.
                  Therefore, it is of critical importance that the government recognizes and
                  prioritizes some fundamental issues that have not been fully addressed over
                  the last several years. While certain areas, such as enterprise
                  registration, licensing and title transfer registration have seen consistent
                  improvements, there are plenty of administrative procedures that remain
                  complex and cumbersome, especially for smaller businesses and new entries
                  (both local and foreign).

                  Comparing Armenia with other countries based on the official time for
                  company registration indicates that there is still room for reductions to
                  catch up with best practice countries in terms of simplicity and speed of
                  enterprise registration and related institutional arrangements (such as
                  information sharing among government institutions, use of single
                  registration form and identification number).

                  Over the past four years, a variety of changes have occurred in various
                  locating processes that have helped to accelerate land acquisition and
                  planning approval procedures. Although significant progress has been made,
                  further streamlining measures should be implemented to remove existing
                  development barriers for investors. Attention should be given to further
                  streamlining the existing land and construction processes, which remain
                  cumbersome for investors and are not always transparent or accountable.

                  The activities of the Business Support Council (BSC) were instrumental in
                  bringing a number of investment climate issues to the agenda of the
                  government in recent years.

                  The BSC served as the high-level forum for identifying administrative
                  barriers, addressing them at the technical level through public-private
                  sector dialogue, and implementing reform in a comprehensive manner that
                  ensures accountability within government and to the business community.

                  Following the findings of the FIAS study, an action plan was developed by
                  BSC. A critical component of this effort is to assist the Armenian
                  government in implementing the proposed action plan for the removal of
                  administrative barriers to investment, which could serve as a tool for
                  achieving ongoing and sustained improvements.

                  Experience suggests that an action plan is most effective when it is
                  detailed, when it accurately presents the concerns of businesses, when it
                  includes feasible solutions that are the result of public consultations, and
                  when it mandates responsibilities and imposes realistic deadlines. It
                  should also contain performance indicators to evaluate if the desired impact
                  is being achieved. In Armenia, the level of public-private interaction that
                  took place in preparing the agendas of the Business Council meetings and
                  follow up on the originally agreed action plan was not sufficient to tap
                  into the full potential of such an instrument.

                  In summary, there is no reason to believe that the momentum created in the
                  country cannot be sustained (despite a number of risks), and, if progress
                  continues this way, confidently, the economic growth will benefit all
                  segments of Armenian society.

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                  [1] On a six -point scale, where 6 stands for very satisfied, 5 - for
                  satisfied, 4 - for somewhat satisfied, 3 - for somewhat dissatisfied, 2 -
                  for dissatisfied and 1 - for very dissatisfied.

                  What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


                  • #29
                    Re: Armenia's Economic Pulse

                    AZG Armenian Daily #153, 25/08/2007

                    Armenia-Russia relations


                    On August 23, Russian and Armenian presidents Vladimir Putin and
                    Robert Kocharian met in Sochi (Russia). Vladimir Putin expressed his
                    content with development of Armenian-Russian bilateral relations:
                    increase in commodity turnover and allied cooperation in political
                    sphere, "Novosti Armenia" agency informed.

                    Russian President V. Putin assured of $1,5 billion Russian investments
                    in the Armenian economy in 2007.

                    In his turn, Robert Kocharian mentioned that Armenian-Russian
                    relations develop in all directions: there is evident increase in
                    investments, commodity turnover, military-technical and political

                    There is an evident development process of mutual relations, according
                    to the Armenian president, and the Armenian side expresses its perfect
                    willingness to contribute to that process.

                    It's worth to mention that this kind of meetings between the Russian
                    and Armenian presidents at the Russian president's residence "Bocharov
                    Ruchey" in Sochi have become a tradition for the two presidents. As
                    many politicians mention, those meetings aim to regulate bilateral
                    relations of the two states: to give a new impetus and quality to

                    It's the forth meeting of the presidents Putin and Kocharian this
                    year; the second in Sochi.

                    It's worth to mention, that if before we could say that the political
                    issues were preliminary in the Armenian-Russian relations, today the
                    situation has changed. The economic factor is a dominant issue in
                    Armenia-Russia bilateral relations: over the first six months of 2007
                    the trade turnover between the two countries increased by 70% and at
                    the end of the year it will probably exceed $500 mln.

                    Russia has become the Number One country with its investments in the
                    Armenian economy ("Gasprom", "Vimpelcom", "Rusal" and other giant

                    On the other hand, there are serious problems in political relations
                    of these two states: the mass media of the two countries write about
                    it from time to time.

                    If the Russian politicians and experts do not hide their
                    dissatisfaction at the Armenia-NATO developing relations, then we are
                    not satisfied with the military relations of our military ally with
                    Azerbaijan and Turkey.

                    Anyway, according to the Russian media one of the main issues of the
                    Kocharian-Putin meeting is the military-political relations between
                    the two states. According to the analysts, being a member of
                    Collective Security Treaty Organization (CSTO), Armenia wants to
                    deepen the mutual military relations with Russia. It means that these
                    meeting will take place with the motto "Deepening of bilateral
                    military relations".

                    In the background of the new developments in the region, the
                    Armenian-Russian bilateral military relations have gained a new
                    meaning and come from the interests of our country's national

                    In this context, we can perceive the logic of the Armenia-NATO
                    deepening relations.

                    The meeting of the two presidents has also a symbolic meaning, as it
                    takes place close to the date of the 10th anniversary of the
                    Armenian-Russian friendship and cooperation strategic agreement (on
                    August 29, 1997). This agreement became the basis of the
                    Armenian-Russian wide-ranging military cooperation.

                    By Armen Manvelian

                    What if I find someone else when looking for you? My soul shivers as the idea invades my mind.


                    • #30
                      Re: Armenia's Economic Pulse


                      EurasiaNet, 8/27/07

                      Fueled by high economic growth rates, Armenia’s banking sector is rapidly expanding, with several new, large-scale multi-million dollar foreign investments expected in the coming months.

                      Yerevan’s Garegin Nzhdeh Square illustrates the transition involved. The square’s sidewalks are packed with street traders, one of the clearest signs that Armenia’s "shadow economy" lingers. The lines of people at three nearby automatic bank tellers waiting to pay utility bills or get cash, however, suggests a parallel trend: the old Soviet image of banks as just a place where extra money could be stored is beginning to fade.

                      Armenia’s ongoing high rate of economic growth (12.1 percent for the first six months of 2007, according to official statistics) largely explains the trend. In 2000, average monthly salaries stood at roughly $55, while today they average $205. With incomes rising, residents are turning to bank loans, with interest rates ranging from 15-22 percent, to expand their purchasing power still further.

                      Since 2004, the banking sector has expanded at a rate of between 10 to 20 percent a year to stand currently at more than $1.6 billion. In the first six months of 2007, banking assets’ value climbed by $244 million, or about 83 billion dram, according to the Central Bank. Nonetheless, in terms of the ratio of total bank assets to Gross Domestic Product, Armenia ranks as an outsider country. This ratio, commonly used by specialists to evaluate the banking sector, was just over 19 percent by the end of 2006. In most post-Soviet countries, it can stand as high as 50 percent.

                      Central Bank officials put that difference down to relatively strict requirements for issuance of loans and reserve levels, among other indicators, and the Central Bank’s weekly verification of commercial banks’ balance sheets.

                      Some experts agree. "Indeed, Armenian banks are probably the best among the CIS countries in terms of the quality of assets," commented Tigran Jrbashian, the Armenian director of the Armenian-European Policy Legal Center, a European Union-funded think tank in Yerevan.

                      With additional investors moving into the field and demand for bank services growing, competition is becoming key. In addition to banks from Russia, the United Kingdom and Iran, new banks have been formed in recent years with capital from the US, Switzerland, Ukraine and Kazakhstan.

                      The Central Bank announced in July that Russia’s Gazprombank, Austria’s Raiffeisen Banking Group and the Lebanese Biblos Bank have indicated their intention to invest in the Armenian banking sector, either via takeovers or by creating subsidiaries. In addition, Arminfo has reported that the German-based ProCredit Holding AG, an investment company that is the majority shareholder in a bank group for transition and developing economies, and the Russian investment bank Troyka Dialog are also considering entering Armenia through similar routes.

                      The British-run HSBC Group Holdings, which has been working in Armenia since 1996, has announced plans to make new investments and open several new branches. Details were not available. The expansion plans of ACBA-Credit Agricole, an Armenian-French joint venture, is being backed by a $12 million loan from Citigroup and the European Bank of Reconstruction and Development.

                      The entrance of GazPromBank, in particular, is thought likely to fuel competition with one of the largest foreign bank players in Armenia’s market -- Russia’s VTB Bank, which took over the Armenian Savings Bank in 2004. In late July, VTB Armenia Chief Executive Officer Valery Ovsiannikov told ArmInfo news agency that the bank is looking for capital to see through proposed projects worth $500 million.

                      With the expansion, expert Jrbashian hopes that the quality of banking services could improve, too. Already, banks are increasing interest rates for deposits, while some are also venturing into relatively new products for the region – student loans, low-fee credit cards for account holders and cumulative interest-rate accounts that vest to accountholders’ children upon their reaching adulthood.

                      But more banking activity could mean higher inflation, a situation often seen in rapidly growing economies which consume large sums of money in a short time. The Central Bank has hoped that a stock market, planned for introduction in the coming year or two, could help keep that risk even lower, but, for now, as bank investment grows, the outcome is far from certain.

                      Bankers say that inflation could provide a clue. Despite earlier fears that inflation for July 2007 compared with December 2006 might be as high as 4 percent, the increase ranked a mere 0.6 percent. This slight jump, despite above-average growth in the banking sector, has suggested that money supplies have not yet outstripped economic activity. For now, the bets are on that the Armenian economy has room to absorb still more.

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