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Armenia's Economic Pulse

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  • Re: Armenia's Economic Pulse

    First U.S. Investment in Armenian Energy Sector Announced

    WASHINGTON (RFE/RL)—Washington and Yerevan have welcomed what has been announced as the largest investment yet by a private U.S. company in Armenia and the first in the South Caucasus nation’s energy sector.

    According to the media note released by the U.S. Department of State after the 22nd United States-Armenia Joint Economic Task Force meeting in Washington, on Friday, the investment by the American company, Contour Global, in Armenia’s hydropower sector amounts to $180 million.

    “This investment, which is expected to be partially financed by the U.S. Overseas Private Investment Corporation, represents the largest U.S. private investment in Armenia’s history and the first U.S. investment in Armenia’s critical energy sector,” the statement added.

    The two sides apparently referred to the three big hydropower stations built along the fast-flowing Vorotan river in Armenia’s southeastern Syunik province that generate a considerable part of the country’s electricity. Still in June Contour Global announced that it was close to buying the plants and the Armenian government then confirmed that it was in negotiations with a U.S. energy company on the possible sale of the facilities. The Armenian side did not release any further details on the course of the negotiations afterwards.

    The latest USATF annual bilateral meeting aimed at promoting trade and investment between the United States and Armenia was hosted by the U.S. Department of State on November 22. It was attended by a delegation of Armenia led by Minister of Finance Davit Sarkisian and including Deputy Minister of Foreign Affairs Ashot Hovakimian and Armenian Ambassador to the United States Tatoul Markarian. The U.S. Government was represented by Deputy Assistant Secretary of State for European and Eurasian Affairs Eric Rubin, USAID Assistant Administrator Paige Alexander, and Coordinator of Assistance for Europe Daniel Rosenblum. U.S. Ambassador to Armenia John Heffern and USAID Armenia Mission Director Karen Hilliard also attended.

    “Both sides held discussions on mechanisms to deepen economic ties, increase trade and investment, and advance market reforms,” the U.S. Department of State said. “Participants discussed the bilateral launch of a visa liberalization process with the goal of achieving a visa-free regime for American travelers and ten-year multiple entry visas for Armenians, leading to increased bilateral trade and investment. The United States also encouraged implementation of Armenia’s civil aviation liberalization reforms.”

    The press release further stated that the United States highlighted Armenia’s selection as one of 20 focus countries for the U.S. Agency for International Development’s (USAID) Science, Technology, Innovation, and Partnerships. “Through this initiative, both countries have agreed to undertake a signature effort in the areas of clean energy and water,” it said.
    <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


    • Re: Armenia's Economic Pulse

      US takes direct action in Armenia
      29 November 2013 - 9:46am

      By David Stepanyan, Yerevan. Exclusively for Vestnik Kavkaza

      It seems that the US has taken direct action in Armenia after its refusal to sign the association agreement with Europe. The delegation headed by Armenian Minister for Finances David Sarkisyan has concluded talks in Washington and outlined a set of important fields of cooperation. First of all, Armenia and the US have started the process of liberalizing the visa regime. Secondly, US Contour Global, a hydro-energy company, plans to invest $180 million in Armenia.

      The Eastern Partnership was initiated by Poland and Sweden with US encouragement. Strategy-makers in Brussels wanted it to weaken Russian influence on the post-Soviet space. Six post-Soviet states of Eastern Europe and South Caucasus were involved in the partnership with Europe. Belarus was quickly dissociated from the partnership for the undemocratic policies of Alexander Lukashenko. Ukraine, Moldova, Georgia and Armenia expressed a readiness to association agreements and the DCFTA when Europe proposed a new format of cooperation in 2010.

      Yerevan suddenly expressed the will to join the Customs Union on September 3. Ukraine halted the process of signing the agreement with the EU for the sake of ‘national security.’ Communists in Moldova started mass protests against the ‘window to Europe’ opened by the government. Thus, Georgia will be the only one to sign the association agreement and the DCFTA in Vilnius. For a set of reasons, Washington predicted the scenario. And, of course, it made its own steps to preserve and increase influence in the states refusing association. In the case of Armenia, the idea was realized in the energy sector.

      Although neither the US State Department, nor the Armenian government have said directly, it is clear that they mean the Vorotan Complex of Hydro Power Plants. 100% of its shares belong to the government. The company owns the Tatev, Shamb and Spandaryan Dams on the Vorotan River, producing 404.2MW with an average annual projected output of 1.16KW/h. The nuclear energy block in Armenia produces 407MW of electricity, for comparison. So the cascade needs modernization.

      The Overseas Private Investment Corporation (OPIC) and the International Finance Corporation (IFC) will partly finance the process together with Contour Global. The investments will be the largest in the Armenian economy from US company and the first US investments in the energy sector of Armenia.

      Curiously, Russian private and state companies remain the monopolists in Armenian energy. What matters at this point is the reaction to the upcoming deal because Russian investments will be mixed with the US finances for the first time. Some experts in Armenia assume that the US are switching to the phase of active economic cooperation, ceding the political aspect to Russia.
      <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


      • Re: Armenia's Economic Pulse

        Russia Cancels Export Duties for Gas and Diamonds to Armenia

        YEREVAN, December 2 (RIA Novosti) – Russia and Armenia on Monday signed an intergovernmental agreement to cancel export duties for supplies of natural gas, oil products and diamonds to the South Caucasus nation.

        Russian President Vladimir Putin signed the deal with his Armenian counterpart, Serzh Sargsyan, during a high-level visit to the country.

        Armenia decided in September to join the Moscow-led Customs Union of Russia, Belarus and Kazakhstan. A roadmap on Yerevan’s admission is to be signed later in December.

        Sargsyan told journalists on Monday that his country would take the required steps to join the union as soon as possible, and Putin praised Armenia for its efforts.

        Reuters reported that some 500 people went out to the Armenian capital’s streets on Monday to protest the country’s plans to join the union. reported that more than 100 protesters were detained.

        The protests followed anti-government demonstrations in Ukraine, which last week halted plans to sign key agreements with the European Union in favor of stronger economic ties with Russia.

        Western critics have accused the Kremlin of pressuring former Soviet states to give up their attempts to closer integrate with the European Union. Russia has denied the accusations.

        Russia and Armenia have agreed that the gas price for Armenia would be cut down to $189 per 1,000 cubic meters, Putin told journalists in Yerevan on Monday.

        Armenian Prime Minister Tigran Sargsyan said earlier that the end price for Russian gas including customs duties was $270 per 1,000 cubic meters.

        The two countries also signed a contract to increase Russian gas deliveries.

        Russian energy giant Gazprom will supply up to 2.5 billion cubic meters of gas to Armenia each year from 2014 to 2018, in line with the deal. Last year Gazprom supplied 1.7 billion cubic meters of gas to Armenia.

        Putin thanked Armenia’s leadership for creating favorable conditions for Russian business there and said he hoped that bilateral trade this year would exceed last year’s $1.2 billion.

        The Russian president stressed that Russia remained Armenia’s leading trade and economic partner in terms of both trade and investment.

        In turn, Sargsyan pledged to do everything to “expand the positive results reached in the recent years” in bilateral collaboration.

        An intergovernmental agreement on cooperation in nuclear safety, a plan of action for economic collaboration and other deals were also signed following talks between the two presidents.

        Prior to the talks, Putin visited a Russian military base in the city of Gyumri.

        Last edited by Mher; 12-03-2013, 12:45 AM.
        <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


        • Re: Armenia's Economic Pulse

          Armenia Rises to 64th in Forbes Best Countries for Business

          YEREVAN—Armenia has climbed from 77th to 64th place among 145 countries in Forbes Best Countries for Business 2013 rating.

          According to Forbes, Armenia’s main economic indices are as follows: GDP growth – 7.2%; GDP per capita – $3,400; trade balance – 11.5%; public debt as percent of GDP – 42%; unemployment –7.0%; and inflation – 2.6%.

          Russia is 94th in the list, Georgia is 55th. Azerbaijan and Turkey are ranked 67th and 57th respectively, While Iran is 132nd.

          Ireland tops the rating, followed by New Zealand and Hong Kong. Denmark, Sweden, Finland, Singapore, Canada, Norway and the Netherlands are also in the top 10.

          Forbes determined the Best Countries for Business by grading 145 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.

          The data came from published reports from Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank and World Economic Forum.

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


          • Re: Armenia's Economic Pulse

            Smartphones, Tablets to Be Produced in Armenia

            YEREVAN—Preliminary examples of smartphones and tablets set to be produced in Armenia by 2014 were presented during Friday’s meeting of Armenia’s Industrial Council by the Prime Minister of Armenia.

            Prime Minister Tigran Sargsyan informed that the Armenian-American Technology and Science Dynamics Inc./Armtab Technologies Company has initiated the production of the first tablet computers in Armenia.

            President of the Company Vahan Shakaryan said the first prototype 7.85, 9, 9.7, and 10.1-inch tablets with an android operating system and 3G+WiFi phones have already been produced.

            The quality of the Armenia-made devices is in no way inferior to that of word-known brands, while the price is expected to be considerably lower, Shakaryan says.

            The software and hardware design has been developed in Armenia, while the devices have been assembled in the US and Hong Kong.

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


            • Re: Armenia's Economic Pulse

              Light industry main priority in Armenia’s 2014 economic development

              YEREVAN, December 20. /ARKA/. Armenia’s economic development will be tense in 2014, but the main focus will be placed on light industry, head of Union of Local Manufacturers of Armenia Vazgen Safaryan told reporters Friday.

              These industries, particularly shoe production using local rawstock, knitwear manufacture and chemical industry may help increase economic growth and budget receipts, as well as ensure execution of budget in terms of expenditures, Safaryan told a press conference Friday.

              In summarizing the 2013 results Safaryan said Armenia’s economic activity was 3.1% over the eleven months and keeps dropping, whereas industry output totaled 1.1 trillion drams, a 7.1% increase against the 2012 level.

              Safaryan said agriculture output rose by 6.1% to 857.3 billion drams, construction dropped to 356.5 billion drams, which is an 8.5% reduction compared to the same period of 2012.

              Negative trade balance totaling $2.7-2.8 billion (exports were $1.3bln and imports a $3.9-4bln) is the most sensitive issue of Armenian economy, head of the Union said.

              The most visible problems, according to Safaryan, are continuous migration, high unemployment level (18%), low salaries and pensions that are below the minimum consumer basket level, despite the expected increase as from January 1 2014.

              Armenia’s foreign trade turnover amounted to about $5,342.7 million in January-November, an increase of 5.2% compared to the same period of 2012. Armenia’s GDP growth target for 2013 was 6.2% under the budget. ($1=405.35drams). -0-

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


              • Re: Armenia's Economic Pulse

                Published on January 3, 2014
                Pirelli signs SR R&D pact in Armenia

                YEREVAN, Armenia (Jan. 3, 2013) — Pirelli & C. S.p.A. has agreed to partner with Russian petrochemical concerns to conduct joint research and development into synthetic rubber in Armenia, in part to support its growing tire manufacturing activities in Russia.

                The deal, with Russia's Rosneft L.L.C. and Oil Techno, relates primarily to styrene-butadiene rubber, the predominant tire polymer. Financial terms were not disclosed.

                Under the terms of the memorandum of understanding. Rosneft will be the leading investor in the SBR operation in Armenia and Oil Techno will be the local partner. Pirelli will cooperate jointly with Rosneft in R&D activities to develop SBR and is interested in entering into a long-term supply agreement to purchase the SBR produced.

                The firms also reference SBR's use in reduced rolling resistance, which would be a reference to solution-polymerized SBR, although the companies' releases don't state this specifically. There is one SR plant in Armenia, in Nairit.

                Igor Sechin, president and chairman of the management board of Rosneft, said: "The realization of the project will promote the revitalization of rubber industry in Armenia and will help strengthen Armenia's economy and industrial capabilities to compete in world market. Moreover this memorandum is an example of strengthening ties between Armenia and Russia following trade agreement ratification."

                The head of Pirelli Russia L.L.C., Aimone di Savoia, said: "This MOU to develop a new source of synthetic rubber is another sign of our commitment to and belief in Russia and the Russian market. It is also the fruit of our growing relationship with Rosneft, one of our key partners in the region."

                Rosneft is the leader of Russia's petroleum industry, and ranks among the world's top publicly traded oil and gas companies. The Company is primarily engaged in exploration and production of hydrocarbons, production of petroleum products and petrochemicals, and marketing of outputs. Business geography

                This agreement is in addition to a joint R&D deal Pirelli signed in November with Rosneft and Rostec State Corp. covering synthetic rubber, reinforcing materials and fillers such as carbon black, all developed in compliance with Pirelli's technical standards.

                Pirelli and Rostec are partners in Pirelli Tyre Russia, which operates tire plants in Kirov and Voronezh, Russia. Pirelli owns 65 percent of the venture, which is expected to generate $350 million in sales this year.

                Pirelli and Rosneft are involved in a separate project to build a network of premium "PZero Platinum" tire stores at Rosneft's branded filling stations throughout Russia.

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


                • Re: Armenia's Economic Pulse


         Business News
                  Jan 21 2014

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                  bne - 21.01.2014

                  For more than a year, Yerevan has been anticipating the opening of the
                  first Carrefour supermarket, expected shortly after the French retail
                  giant launched in neighbouring Georgia in September 2012. However, the
                  chain's entry into the Armenian market has been held back reportedly
                  by a group of local oligarchs who control the lucrative imports of
                  food and fast-moving consumer goods (FMCG) to the country.

                  While Armenia has seen an opening up of sectors such as air transport
                  in 2013, the country's economy remains one of the most monopolised in
                  the region, according to a World Bank report. The high concentration
                  of ownership among a handful of powerful individuals is a significant
                  barrier to competition and economic growth.

                  Opposition to Carrefour's entry to Armenia is believed to be led
                  by Samvel Alexanian, the ultimate owner of both Armenia's largest
                  supermarket chain, Yerevan City, and its largest food importer, Alex
                  Grig. Alexanian's control over the prices of two key imports - flour
                  and sugar - would be threatened by the entry of the world's second
                  largest retailer to the market. Alexanian is also rumoured to have
                  rented the largest retail space at the Dalma City Mall in Yerevan for
                  a Yerevan City supermarket to prevent Carrefour from using the space.

                  Carrefour is now expected to set up its first Yerevan store at another
                  mall, Yerevan Mall, which is due to open in February, and the French
                  chain is advertising for local staff. In his latest statement on the
                  issue, France's ambassador to Armenia, Henri Reynaud, told a press
                  conference in December that the launch was imminent. "It should not
                  be forgotten that France is the number one investor in Armenia. I
                  would like to inform you that the entrance of Carrefour to Armenia
                  is expected in mid-2014," Reynaud said, according to Armenpress.

                  Government officials including Prime Minister Tigran Sargsyan have
                  also weighed into the case. Sargsyan promised in early 2013 to do
                  everything possible to ensure that Carrefour was able to enter the
                  Armenian market. However, the lengthy delays have highlighted the
                  level of power wielded by the businessmen who hold sway over many
                  parts of the economy.

                  Barriers to entry

                  A World Bank report published in November singles out monopolisation
                  and a lack of competitiveness as one of four key problems holding
                  back development of the economy, along with problems connected to
                  investment, job creation and transport links. "Competition is... of
                  crucial importance for the dynamism of the economy. Pro-competition
                  reforms and effective implementation of antitrust rules can lead
                  to significant productivity gains and consumer savings," reads the
                  report titled "Republic of Armenia: Accumulation, Competition and

                  "Barriers to competition exist in different sectors partly because of
                  the characteristics of government contracts, discriminatory rules and
                  inadequate regulations, and particular aspects of market structure,"
                  says Ulrich Bartsch, the World Bank senior country economist and
                  co-author of the report.

                  According to the World Bank report, Armenia has a larger share of
                  monopolies than other countries in the region, with 60% of markets
                  exhibiting "an oligopolistic or monopolistic market structure".

                  Problem sectors include air transport, gas, electricity, railways and
                  professional services, as well as retail. "Insufficient competition
                  affects regulated sectors such as utilities and natural monopolies,
                  and certain markets with a small number of firms, such as petroleum,
                  sugar, wheat, and cut flowers," says the report. "Competition is
                  limited because of barriers to entry, ownership concentration, market
                  dominance, and vertical and horizontal integration."

                  A study by the Yerevan-based Hrayr Maroukhian Foundation, with support
                  from the Friedrich-Ebert-Stiftung foundation, published earlier in
                  2013 agrees that certain sectors are "highly monopolized", which "has
                  led to abuse of market power, market distortions, lack of economic
                  competition for goods and services they provide, and persistent market
                  entry barriers."

                  Progress was made in some areas during 2013, most notably in the air
                  transport sector. Armavia, which dominated the sector until early 2013,
                  declared it was filing for bankruptcy in April. This paved the way
                  for an opening up of the sector, with the government drawing up an
                  "open skies" strategy after consultancy McKinsey & Company completed
                  a study of the sector. Any airline meeting technical standards can
                  now operate on routes between Armenia and Russia, and connections to
                  other destinations such as Dubai have also been opened up, resulting
                  in a sharp fall in prices.

                  Bartsch tells bne that the bank was "very pleased" with developments
                  in Armenia's aviation sector since the report was compiled. "Following
                  Armavia's exit, and the declaration of "open skies" by the Armenian
                  government, we have seen a number of indications that competition
                  in the sector is improving, and foreign operators are improving the
                  connectivity of Armenia with the rest of the world," Bartsch says.

                  Armenia's National Competitiveness Foundation forecasts that the cost
                  of air tickets - previously around 60% higher than in neighbouring
                  countries - will drop by between 10% and 50%, resulting in a 20-25%
                  increase in passenger numbers.

                  However, the opening up of the air transport sector has not been
                  matched by progress in other parts of the economy. In the retail
                  sector, there is still no firm date for Carrefour's launch, while
                  monopolisation increased in the gas sector in 2013. As Yerevan moved
                  closer to Russia in the second half of the year, the government agreed
                  to sell the 20% of ArmRusGazprom still controlled by the state to
                  Gazprom, which already owns 80% of the company.

                  bne-Clare Nuttall
                  Hayastan or Bust.


                  • Re: Armenia's Economic Pulse

                    [updated]Tablet made in Armenia – the next big thing?

                    "The joint-venture initially said assembly would take place in Hong Kong and the US but it subsequently received approval from Armenia’s authorities and the products will both be assembled at the free economic zone in Yerevan."

                    [This post has been updated to show that the products will be assembled in Armenia.]

                    Last edited by Mher; 01-25-2014, 12:43 AM.
                    <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


                    • Re: Armenia's Economic Pulse


                      Jan 29 2014

                      YEREVAN Thu Jan 30, 2014 12:20am IST

                      YEREVAN Jan 29 (Reuters) - U.S. power company ContourGlobal said it
                      will acquire three hydroelectric power plants in Armenia in a $250
                      million deal.

                      The company said it had bought the Vorotan Hydro plants for $180
                      million and planned to invest an additional $70 million, making it
                      the largest single U.S. private investment in the Caucasus country
                      of 3.8 million.

                      The deal may decrease Armenia's dependence on Russia, Yerevan's main
                      trading partner and biggest foreign investor which is due to boost
                      its control over the country's natural gas infrastructure.

                      The Vorotan Hydro Cascade complex is a series of three hydroelectric
                      power plants totalling 405 megawatts on the Vorotan river in southern

                      It accounts for about 15 percent of Armenia's power capacity and
                      provides energy for 250,000 homes.

                      A long-term power purchase agreement was signed on Wednesday between
                      ContourGlobal and the Armenian government.

                      The agreement says the company will invest $70 million over the next
                      six years in a refurbishment programme to modernise the plants and
                      improve their performance and safety.

                      Armenia plans to join a customs union led by its former Soviet
                      master Russia and has approved a deal under which the Russian state
                      gas export monopoly Gazprom will take over full ownership of its
                      subsidiary ArmRosgazprom, by acquiring the remaining 20 percent of
                      shares from Armenia.

                      Russia has invested $3 billion in the country with a GDP of $9.9
                      billion in 2012, according to the World Bank. (Reporting by Hasmik
                      Mkrtchyan; Writing by Margarita Antidze; Editing by David Evans)
                      Hayastan or Bust.