Jump to content


Photo

Forbes Magazine: Armenia Most Attractive For Investment In Cis


  • Please log in to reply
15 replies to this topic

#1 MosJan

MosJan

    Էլի ԼաՎա

  • Admin
  • PipPipPipPipPip
  • 31,196 posts
  • Gender:Male
  • Location:My Little Armenia

Posted 22 February 2006 - 03:09 AM

Forbes Magazine: Armenia Most Attractive for Investment in CIS
21.02.2006 19:57 GMT+04:00 Print version Send to mail In Russian In Armenian
/PanARMENIAN.Net/ Forbes American magazine has published a new, third annual rating of most dangerous countries in the world. Russia appears among these for the first time. The Forbes rating is based on data of iJet Intelligent Risk Systems US consulting company and Control Risks London firm, engaged in assessing risks at visiting various countries in the world by businessmen and tourists. Experts assessed the situation in each country according to a 5-point scale (the lower the figure, the more the security level) by analyzing the degree of threat of terrorism, crime level in that country, the overall political situation, security measures and effectiveness of power institutions. 14 countries were in the list of the most dangerous ones in 2006. Nine out of these had the maximal scores. These are six states of the African continent – Somalia, Sudan, Zimbabwe, Cote d’Ivoire, Congo and Liberia, as well as Afghanistan, Iraq and Haiti. These countries are characterized with “despotic rule, low education level and low life value.” Belarus is named most “inhospitable” country for foreign investment in the CIS. Georgia was among moderate dangerous countries. According to Forbes, Armenia is the best from the point of view of investment attraction. It is followed by Moldova, Georgia, Kazakhstan.

#2 DominO

DominO

    Veteran

  • Members
  • PipPipPipPipPip
  • 7,455 posts
  • Gender:Male

Posted 22 February 2006 - 07:29 PM

QUOTE(MosJan @ Feb 22 2006, 04:09 AM) View Post
Forbes Magazine: Armenia Most Attractive for Investment in CIS
21.02.2006 19:57 GMT+04:00 Print version Send to mail In Russian In Armenian
/PanARMENIAN.Net/ Forbes American magazine has published a new, third annual rating of most dangerous countries in the world. Russia appears among these for the first time. The Forbes rating is based on data of iJet Intelligent Risk Systems US consulting company and Control Risks London firm, engaged in assessing risks at visiting various countries in the world by businessmen and tourists. Experts assessed the situation in each country according to a 5-point scale (the lower the figure, the more the security level) by analyzing the degree of threat of terrorism, crime level in that country, the overall political situation, security measures and effectiveness of power institutions. 14 countries were in the list of the most dangerous ones in 2006. Nine out of these had the maximal scores. These are six states of the African continent – Somalia, Sudan, Zimbabwe, Cote d’Ivoire, Congo and Liberia, as well as Afghanistan, Iraq and Haiti. These countries are characterized with “despotic rule, low education level and low life value.” Belarus is named most “inhospitable” country for foreign investment in the CIS. Georgia was among moderate dangerous countries. According to Forbes, Armenia is the best from the point of view of investment attraction. It is followed by Moldova, Georgia, Kazakhstan.


Have anyone read this from the magazine and could confirm this? This is a very surprising information. huh.gif

#3 Aaron

Aaron

    Member

  • Members
  • PipPipPip
  • 183 posts
  • Location:Canada
  • Interests:traveling, reading, science

Posted 24 February 2006 - 02:17 PM

Here is a link and the related article

http://www.168.am/en/articles/1679


Southern Caucasus: Great Armenia
February 23, 2006


The main factors of economic rise in this country are not brandy, cement or foreign investments, but rather Armenians themselves. As I was making my business trip to Armenia, I was asking myself a question which may offend the people: “Is there any life in Armenia?” I don’t see any nationalism there. The Republic of Armenia, which was once a part of the former Soviet Union, has gone through so many hardships throughout the past 18 years that no other great power in the world could have survived.

The 8 point earthquake that struck in December 1988 demolished Spitak, left the city of Kirovakan (also known as Vanadzor) and Leninakan in ruins. Nearly 50,000 people died and another 500,000 people were left homeless. Reconstruction of the earthquake zone (which makes up 40% of the country) still goes on. As a result of the earthquake, Armenia’s economy declined by a quarter during the years of 1988-1991. The collpase of the Soviet Union was another blow to Armenian economy due to the fact that 90% of the nation’s industry was part of the Soviet Union. For example, Armenia’s lamp factory was the third in the entire Soviet Union.

“We received the materials in wagons from Ghrim. We produced sand and lamp and the ready made products could be delivered to Ural,” says the new owner of the factory and representative of “Grand Holding” Arman Vaneskekhyan. “We don’t have that market anymore, but production rates are so high that we can provide Armenia with a one year income in just three working days.”

The Karabagh conflict put an end to economic destruction. The Autonomous Region of Soviet Azerbaijan (ARSA) with a large Armenian population freed itself from Azerbaijan after the 1988-1994 war (to this day, Karabagh is not internationally recognized). Armenia was not officially involved in the war with Azerbaijan, but it supported the volunteer soldiers. In response to this, Azerbaijan cut off all transportation ties that Armenia had with Russia, including car and bus roads.

Then the long nightmare began-no jobs, no money, no electricity.

“I practically raised my children without water and electricity. We were forced to heat our house with some heater called “Burzhuyka”. People used to cut trees off the corner of the street,” says Arman Vaneskekhyan. The energy providing service of Armenia had cut off 40% of electricity even after the Spitak earthquake (electricity was back in 1996). Gas was through Georgia, however, the gas pipelines located in the regions where Azerbaijanis were living were exploding from time to time. As a result, as of 1993, agriculture made up 51% of Armenia’s GDP, when 90% of the country is located 1000 meters above sea level. There have not been and there aren’t any large companies in this field-we are talking about land ownership. In order take care of the citizens, in 1991, the Armenian authorities not only got rid of collective farming, but they also allowed free circulation of agricultural fields (450 thousand hectares), vineyards and wheat fields. There are nearly 350,000 farming economies in Armenia to this day. The most produced foreign product is cognac. Now do you understand why I asked myself if there is any life in Armenia?

GDP doubled

I got the answer to my question as soon as I made my way from the “Zvartnots” airport to my hotel. I saw casinos everywhere. It is forbidden by law to build casinos in the capital, but the citizens living in the capital want to play and win money. That is why the casinos had to be built outside the capital. During the past 5 years, Armenia’s GDP has doubled-from 1.9 billion dollars to 4.5 billion in 2005 (preliminary statistics). This is not bad; Azerbaijan has the same amount.

Yerevan is not too big, nice and clean. There are wide alleys and narrow trade streets. Signs on stores are in Armenian, English and Russian. In general, people here talk in Russian without any difficulty. You can dine in a café for 4000 drams (about 10 dollars and less than 300 rubles) and at the same time eavesdrop on the discussions about the statue of Arno Babajanyan. This statue has a story. This statue was sculpted by Davit Bejenyan and was installed in front of the Opera House in 2002. Many people complained about the statue. They said that it didn’t look anything like Arno-the statue of Arno had short feet, an enormous nose and long hands. After a month, the statue went through reforms. Now citizens can see the “crazy Arno” statue in front of the Opera-he has no feet at all, his hands are pointing to the sky, but the nose is just fine. There are still a lot of complaints.

Another topic for discussion is real estate prices. Prices have increased tenfold during the past ten years. Whereas you could buy a 3 bedroom house for 5,000 dollars in Yerevan in the mid-1990s, now you can buy only a 5 square meter of the house with that much money. There is a construction boom in the city and there many skyscrapers in the heart of Yerevan. What is the secret to success?
“Armenians survive better in hard conditions. Armenia has always been a small country with not enough resources, without a sea and without transit roads. This land has always been invaded by others. Armenians have always been forced to work and find ways of survival. That is why they are more successul in medium business and other fields which don’t require many resources, such as diamond production, construction, service, trade, etc. These are the fields which have helped increase the country’s level of economy,” said director of the “Troyka Dialog” Russian company Ruben Vartanyan during an interview with “Forbes”.

Of course, foreign investments have also helped. The Yerevan Brandy Factory was purchased by the French alcohol company Perno-Ricar. The French signed a long-term contract with 4,500 farmers and currently buy two-thirds of the grapes grown in Armenia. Last year, the company produced 4.4 million liters of brandy worth 50 million dollars. The company has no problem in selling the brandy and 80% of Russians have bought the brandy.

The Strongest

Owner of the “Multi Group” compan Gagik Tsarukyan loves animals. He has a zoo in his villa in one of Yerevan’s districts where he keeps bears, deers, a tiger and a lion, which is the symbol for “Multi Group”. Tsarukyan has a good physical appearance. He has six children. He has graduated the Institute of Physical Education of Yerevan in 1989 and has worked as a wrestling trainer. In 1996, he has been declared a world champion in arm-wrestling. In 2004, after the Armenian team came back empty-handed from the Olympics in Athens (none of the 18 members received medals), Tsarukyan became head of the National Olympics Committee. Besides all this, Tsarukyan is simply your typical, Armenian businessman. He is an MP and does any profitable business. His “Multi Group” includes a milk factory and the “Kotayk” beer factory, the “MEK” network of furniture stores, “Ararat-Cement”, which is the largest cement factory in Armenia, the “Aviaservice” food factory, the “Multi-Leon” gas station chain and, of course, brandy production. The Yerevan Brandy-Wine-Vodka factory belongs to Tsarukyan and the factory produced approximately 1 million liters of “Noy” brandy just last year. The Yerevan Brandy Factory, located in front of Tsarukyan’s factory and owned by the French Perno-Ricar factory, produced five times more brandy. It appears that the brandy produced by the French company is sold more, but the owner of “Multi Group” is not disappointed in that. “Multi Group” makes 150 million dollars a year and Tsarukyan is one of the top five businessmen of Armenia.

The Most Genius

Owner of “Mika Limited” Mikhail Baghdasarov was born in Moscow. He has studied in St. Petersburg and has worked in Russia. First, Baghdasarov served for the Internal Forces of the Ministry of Internal Affairs and has made his way up to a general, after which he has started to get involved in the trade of oil products.

“In 1997, the Armenian authorities invited me to regulate the field of benzene and aviation kerosene. At the time, Armenia was in a blockade and I was making arrangements with the “LUKOIL” branches in Rumania and Ukraine. I was bringing the benzene and kersosene to the Poti harbor in Georgia and then transporting it to Armenia,” says Baghdasarov.

To this day, “Mika Limited” controls one third of the oil field of Armenia. Business made a turn for Baghdasarov in the end of 1990s. He owns the “Armavia” airlines ( he got that last year from “Sibir” airlines), the cement factory, and 30% of ArmEconoBank (one of the largest banks in Armeni with more than 100 branches). He sold his share-holding packet to the Russian “Vneshtorgbank” last year. “I had to have well-known colleagues in order to move forward,” says Baghdasarov. Baghdasarov says that he gets 200 million dollars yearly. As a hobby, Baghdasarov has a soccer team called “Mika” which places second in the Armenian championship and is even included in the UEFA championship cup.

“To tell you the truth, the last season was not too good. We were playing with the Germans in Frankfurt. The stadium there is huge and the world soccer championship will take place there. The boys didn’t like the playing field and lost four goals,” says Baghdasarov. Currently, Baghdasarov is construcing a new stadium in Yerevan worth 20 million dollars.

The Most Experienced

Khachatur Sukiasyan has started his business career at the age of 24 when the Soviet Union had just adopted the law on corporations. In the beginning, Sukiasyan had two jobs. He was the head of a shoe company and a company producing automobile parts for “Jiguli” cars; at the same time he was the owner of the “Sirius” computer company based in the city of Abovyan. In the mid-1990s, Sukiasyan created the first pizza restaurant chain in Yerevan (“Pizza di Roma”) and built the “Sil Plaza” complex. He was the first in Armenia to provide trade spots for rent and became the exclusive distributor for “Phillip Morris” and “L’Oreal” in Armenia.

“I have always been the first in everything. I remember how people were amazed to see glass walls with signs on them and that everything could be seen from those walls. When we announced that we are giving trade spots for rent, many thought that I was leaving the country and I am selling everything rapidly,” says Sukiasyan.

Then Sukiasyan purchased the “Bjni” mineral water factory, the Yerevan furniture factory, and took “ArmEconomBank” under his control. He also has office buildings measuring 60,000 square meters in surface. The yearly income of all the companies of “SIL” (Sukiasyan International Limited) makes up nearly 100 million dollars in total. However, Sukiasyan is still the electric repairman that he is.

“I have modernized the current mineral water factory. I will make everything electronic there, there will be cameras and electronic chips. Information will be provided by telepathic waves and I can control the process. I like doing that,” says the businessman with a smile.

#4 alpha

alpha

    Member

  • Members
  • PipPipPip
  • 254 posts

Posted 03 August 2006 - 11:55 AM

I was just working on a deal at work and a weird thought crossed my mind. There is a lot of lending activity in Armenia, however everything pretty much resembles an asset based lending. How about securitization of these loans, pooling them together and selling back to public or other investor organization. It would free up a lot of cash and generate lots more lending activity.

Just a thought.

#5 Boghos

Boghos

    -= Mr Nobility =-

  • Members
  • PipPipPipPipPip
  • 1,755 posts
  • Gender:Male
  • Location:Europe
  • Interests:literature, cinema, chess, history

Posted 03 August 2006 - 03:12 PM

That´s a very good idea, but for this to take place you need to have fiduciary agents to process the pools, efficient collection procedures and the rule of law, among other things.

#6 alpha

alpha

    Member

  • Members
  • PipPipPip
  • 254 posts

Posted 01 November 2006 - 10:49 AM

Estonia is the best model for growth that Armenia should follow. They don’t get institutional investors from Western Europe investing there. They have implemented corporate governance systems that are in par with European countries. I just came across this article about hedge funds operating in Armenia. How many private equity funds or hedge funds do you know in Armenia? To my knowledge there are none. In order for the country to prosper the financial sector of the economy should have more leverage on overall development. The money transfers from diaspora should not be in the form of donations or active investments, but can be in the form of institutional investments. Remember when Israel was found the government issued Israeli bonds (I am not sure about the name), to finance the operations of the country. There are a lot of Armenians in investment banks in US who hold high positions (one of the top guys in CSFB private equity is an Armenian from Yerevan, also the head of sec lending group in Dresdner bank is also an Armenian, the list is pretty long). The Armenians in these institutions should promote the investment opportunities to their clients.

Here is the article about Estonia.

Estonian hedge fund manager LHV Financial Advisory Services becomes GILD Bankers
10/31/2006 12:34:39 PM - Nordic News

The Estonian LHV Financial Advisory Services, a former subsidiary of the LHV Group, has become an independent investment bank under the name GILD Bankers. The investment bank will retain an institutional focus and have a significant focus on alternatives, including hedge fund management.

The Estonian LHV Financial Advisory Services, a former subsidiary of the LHV Group, has become an independent investment bank under the name GILD Bankers. The investment bank will be targeting institutional investors and have a significant focus on alternatives, including hedge fund management.

The company sees its new corporate structure and identity as a logical result of expansion: “Our independent teams in the Baltics and Ukraine have grown to the point where more differentiation was needed,” said Rain Tamm, managing partner at GILD.

GILD offers a broad range of advisory, capital raising and alternative asset management services. The investment bank is run as a partnership by one of the most prominent corporate finance and investment management teams in the Baltics.

GILD manages two hedge funds, LHV Arbitrage and LHV Global Opportunity, and a venture capital fund New Economy Ventures, the latter being closed for new investments. Also, in the area of alternatives, the company co-manages the real estate fund Eastern Europe Real Estate Investment Trust.



LHV Arbitrage (LHVA) is a Baltic market-neutral hedge fund, which tries to exploit inefficiencies found in these markets. The fund is the biggest retail option market maker on Baltic equities. These positions together with underlying make up around 10% of the portfolio. Approximately half of the portfolio has been invested in tailored, structured fixed income deals, including buyout financing, mezzanine, bridge loans, convertible loans and contractual agreements. LHVA earns on average 20-30% p.a. fixed return on such investments and participates in the potential upside. To a lesser extent, LHVA also makes private equity-like investments. LHVA has exposure to real property market, agriculture, consumer financing, production, entertainment and wholesale businesses. The fund has an annualized net return of 25% since its launch in 2001, with an annualized volatility of 8%.

LHV Global Opportunity (LHV GO) is a multi strategy hedge fund, which invests a part of its portfolio in other global hedge funds, therefore being partly a fund of hedge funds.The majority of the fund’s portfolio is, however, made up by Baltic direct investments, mostly asset based loans and convertibles issued by local real property and pre-IPO companies. LHV GO targets annual return above long-term stock market returns, but with lower volatility and infrequent negative monthly returns.

NEV has made some of the landmark venture capital investments in the region. These include CVO Group – the leading integrated recruitment and HR outsourcing company in CEE and ONE Ltd – the leading Baltic social network.

“Although the market size is limited, there are plenty of lucrative opportunities that GILD hedge funds can exploit” as concluded by Mihkel Oja, one of the fund managers at GILD.

#7 alpha

alpha

    Member

  • Members
  • PipPipPip
  • 254 posts

Posted 01 November 2006 - 12:42 PM

There was an interesting article in today's Wall Street Journal about sending remittances by migrant workers. This applies to Armenia as well.

Direct Deposits: Migrants' Money Is Imperfect Cure For Poor Nations --- Earnings Sent Home From U.S. Fuel Increased Spending But Not Much Investment --- Thugs Extort Cash by Phone
By Bob Davis
2471 words
1 November 2006
The Wall Street Journal
A1
English
(Copyright © 2006, Dow Jones & Company, Inc.)

CIUDAD BARRIOS, El Salvador -- This lively mountain town survives on money sent from its sons and daughters living in the U.S. On days payments arrive, lines at the local credit union can reach 150 deep. The crowds then hail motorcycle taxis and head for the town's open-air market to stock up on food and clothing, or browse tiny appliance stores stuffed with blaring televisions and stereos.

It's the sort of scene that many development economists believe could transform some of the world's most impoverished regions, by putting cash directly in the pockets of the poor. With tens of millions of migrants around the globe sending remittances home, the flood of money has grown immense -- $167 billion last year, according to the World Bank.

But Ciudad Barrios also demonstrates why reliance on remittances may turn out to be the latest development fad that fails to live up to its hype. The downside: a cycle of continued poverty, as dependence on remittances turns the town into a kind of ward of the U.S. Those with entrepreneurial ambition head north, emptying out the town of its talent. Only a tiny fraction of the money they send home is invested in industry or agriculture that could produce jobs. And with the breadwinners away, organized thugs pounce on a place where money pours in from outside. All of that leaves little opportunity for the next generation except to follow their predecessors north, if they can.

"As soon as people go home and see what their salaries are [there], they come back to the U.S. again," says Israel Hernandez, 38 years old, who left Ciudad Barrios in 1998 and has been cleaning houses in Washington, D.C. He has sent enough cash home to his grandmother for her to buy a house. She misses him, she says, but urges him to stay up north.

For countries to reduce poverty on a sustained basis and to create a middle class, they need to grow rapidly over years. Though remittances fuel some spending, there isn't much evidence they have added to sustained growth. Instead, the infusions of outside cash often distort the local economy and may diminish the long-term prospects for gains.

The flood of money from abroad can raise the value of local currencies, making it harder for exporters to compete because the effective price of their goods goes up. Meanwhile, about 85% of the money goes to pay the daily bills of the people left behind, with little left over for savings and investment. Migrants eventually return to retire in their home nations, not to help build their economies.

"Remittances are a band-aid on fundamental development problems," says Dean Yang, a public-policy professor at the University of Michigan. "Labor export and remittances won't turn El Salvador, the Philippines and other poor countries into the next development tigers." Even the World Bank, which has pushed the development potential of remittances, is having second thoughts. In a report on Latin America released yesterday, the bank says that remittances are "neither 'manna from heaven,' nor a substitute for sound development policies."

Remittances have received increasingly widespread attention in recent years as a way to boost aid without spending government money, as other formulas for growth have failed to produce widespread gains. In the 1970s and early 1980s, many nations tried closing their borders to protect their local industries from competition, which boosted growth for a while but led to high prices and monopoly control. Then they tried the opposite approach, free trade and market liberalization, with limited effect so far except in Asia. Meanwhile, foreign aid has been too small and inefficient to make much of a difference, while private investment has been targeted at a limited number of countries and industries.

Remittances do directly help many poor families feed themselves and educate their children. Money sent home from abroad accounts for about 60% of the income of the poorest households in Guatemala, and has helped reduce the number of people living in poverty by 11 percentage points in Uganda and six percentage points in Bangladesh, according to World Bank studies.

Nevertheless, a look at El Salvador shows the ways in which the cash also can hinder impoverished nations. The nation of seven million has revamped its economy since the civil war ended in 1992 in a so-far elusive effort to spur rapid growth. El Salvador abolished price controls, privatized industries, slashed tariffs that were as high as 290% and adopted the dollar as its currency in 2001 to limit inflation. Earlier this year, it joined a regional free-trade bloc with the U.S.

Salvadorans started to flee the country in great numbers in the 1980s as the civil war there intensified. Now one in six Salvadorans -- 1.5 million people -- live abroad, many of them illegally in the U.S. They send home nearly $3 billion annually, equal to about 16% of the country's gross domestic product.

Ciudad Barrios, a remote town 100 miles east of San Salvador, ping-ponged between guerrilla and government control during the civil war. Jose Edgardo Diaz Cordero worked in the town's hospital pharmacy in 1990 when guerrillas demanded that he give them medicines to treat their wounded. Then, he says, he received an anonymous message from a right-wing death squad accusing him of being a guerrilla ally and warning him to leave the country.

Mr. Diaz made his way to the Washington, D.C., area where many others from his town had settled, attracted by a booming construction industry. He started sending home several hundred dollars a month to his wife to care for their five children. He has been home just once, for about a year in 1995, but wages were too low to make a go of it, says Mr. Diaz, who is now 54. He returned to the U.S. and was later joined by two sons who became his partners in a flooring business. Another burst of Ciudad Barrios natives, who worked in the region's coffee fields, headed for the U.S. starting in 2000 when coffee prices plummeted.

Francisco Membreno, once a Ciudad Barrios coffee farmer, left his pregnant wife in 2000, worried that he wouldn't be able to support his newborn. He hasn't ever been back to meet their son, Ronald, who's now 6 years old. Mr. Membreno works two jobs cleaning offices in Washington, D.C., making $575 on a good week, and sharing an apartment with another Salvadoran.

Each month he sends home about $300 to his wife, Ernestina Argueta, who moved with Ronald to her parents' sweltering concrete house lit by a single light bulb. The money goes for food and medicine mostly, says Ms. Argueta, with a little left over to save to expand a tiny plot of land her husband purchased and hopes someday to cultivate. Though her elderly mother dreams of a new sewing machine, Ms. Argueta says, "For now, we're not buying anything, until he comes back."

About one-third of the 40,000 residents of Ciudad Barrios and surrounding hamlets receive remittances, estimates Claudia Rodriguez-Alas, an American University researcher who has studied the town. Salvadorans abroad typically share apartments, keep each other current on job openings and lend relatives at home the $5,000 or so necessary to pay "coyotes" to guide them illicitly across Mexico to the U.S.

In Ciudad Barrios, monthly remittances average about $157 a household, according to Ms. Rodriguez-Alas. That's slightly more than the government calculates is enough to feed a family of four. But it often doesn't pull families above the official poverty line of $275 a month. Essentially, remittances are sufficient to push families out of extreme poverty, but not much higher.

The extra cash does have beneficial effects. It gives even the most destitute families the means to pay for food at the town's markets, and is extra disposable income for those who work. Salvadoran families that receive remittances are more likely to keep their children in school than other families, according to a study by two economists, Alejandra Cox of California State University, Long Beach, and Manuelita Ureta of Texas A&M.

Better-off Salvadorans abroad often send two checks a month -- one for their family's daily expenses, and another to save up to buy small homes with luxuries such as glass windows, electricity in every room, steel gratings on the doors and windows, and tile floors.

A small consumption boom fed by the checks has doubled the number of businesses registered with the Ciudad Barrios City Hall to 220 since 2000, and even helped prompt the opening of a "cyber cafe." Around the town's central square are five financial institutions that handle remittances, including Western Union, which also advertises on highway overpasses on the way to town.

One hardware store, Agro Ferreteria Rivera, has carved out an unusual niche: The couple that owns the store travels monthly to Maryland to take orders for homes sketched out by migrants, who wire payments to their families. A separate appliance store takes orders by cellphone from abroad, while a city council member sells solar panels for homes built in fields that lack electricity hook-ups. Some of the new homeowners also get their fences electrified for extra security.

The gains in consumption financed from abroad could fuel the economy. But paradoxically, the easy money from remittances leads to a fall, rather than a rise, in domestic savings as a percentage of gross domestic product. The investment rate as a percentage of GDP stagnates as well.

The result: The country makes little progress. Between 1999 and 2005, remittances doubled to $2.8 billion, but the country limped along at an annual growth rate of just 2.4% -- far too low for a poor country to advance much. The tide of money from abroad boosted the value of its currency compared with that of its neighbors by nearly 50% between 1992 and 2001, which damaged exports. El Salvador has since adopted the dollar as its currency, but competition from China has intensified and other Central American nations have kept their currencies undervalued, so Salvadoran exporters haven't recovered.

Soaring remittances have boosted real-estate prices to levels that locals without outside help can't afford, while reducing the incentive of remittance recipients to work at home -- since wages are a pittance compared with what their relatives make in the U.S. In Ciudad Barrios, the coffee-growing cooperative recruits Nicaraguans and Hondurans to work the fields, because they can't find enough Salvadorans to fill jobs that pay between $5.50 and $8 a day.

Elsewhere, the same pattern occurs. Examining Mexican labor data, economists Catalina Amuedo-Dorantes of San Diego State University and Susan Pozo of Western Michigan University say that a boost in remittances prompts men to cut back their hours at salaried jobs and fill in with informal work.

Groups of Salvadorans abroad do form associations to help finance municipal improvements back home. In Chinameca, a town near Ciudad Barrios, for instance, migrants have helped to pay for the town's water tower and for the roof on a local church. But the efforts have fallen well far short of the need.

Economists say that El Salvador and other remittance-receiving nations must figure out ways to route money from abroad into domestic investments. The Salvadoran government, for instance, wants to create investment vehicles for Salvadorans abroad to bankroll domestic projects or industries.

In that vein, Salvadoran developers are holding fairs around the U.S. to try to make it easier for migrants to buy real estate. A Washington, D.C., financial company, Microfinance International Corp., is starting to offer Salvadorans transnational loans, which they can use to make investments in El Salvador and make payments in the U.S. -- and avoid having to pay fees on money wired home. Since many Salvadorans don't use banks or credit cards, the company's customers can use their remittance history to prove their creditworthiness.

In Ciudad Barrios, Lorena Romero, the acting manager of a local credit union, says only a tiny percentage of remittance receivers take out business loans. Even those often use the proceeds to pay coyotes to take them to the U.S. instead of opening businesses locally. Another credit union called AMC, which does business throughout eastern El Salvador in conjunction with Microfinance International, says just 1% of its remittance customers take out loans for businesses.

Wilson Salmeron, AMC's general manager, says many migrants don't invest in El Salvador because they're afraid their families will become targets of gang violence. One of the reasons that many nations have come to depend so heavily on remittances -- Haiti, Bosnia, Serbia, Honduras, Nicaragua -- is because people were frightened away by war, and their nations are still torn by violence.

In Ciudad Barrios, many remittance recipients try to avoid calling attention to themselves. Some pick up their cash in neighboring towns where they aren't known. Others pace their purchases of appliances, so their neighbors don't notice. The latest gang tactic is to call remittance receivers on their cellphones and extort cash instead of doing it in person. Some in Ciudad Barrios won't answer calls from numbers they don't know.

The fear damps local investment, too. Mr. Salmeron says his credit managers are afraid to travel into the countryside where gang influence is strong. A number of migrants say they wouldn't start a business in Ciudad Barrios for fear they'll draw unwanted attention. "You'll be robbed," says Dora Ruiz, a cook at a Washington, D.C., McDonald's restaurant, who wires $200 a month to care for her four children who live with her sister-in-law. "People will come in through the windows if need be."

At Ciudad Barrios' sole high school, students recognize one important benefit of remittances: They aren't forced to drop out of school to work, as their parents were. The senior class this year is triple the size of a decade ago, says the school's assistant principal, Lex Marvin. But some now leave early to join parents abroad, and few see much opportunity in El Salvador after graduation. Jose Ines Aguilar Osorio is a shy, slender senior whose father works as a mason in the U.S. "If I don't find work here," he says, "I'm leaving."

---

John Lyons in Mexico City contributed to this article.

#8 Boghos

Boghos

    -= Mr Nobility =-

  • Members
  • PipPipPipPipPip
  • 1,755 posts
  • Gender:Male
  • Location:Europe
  • Interests:literature, cinema, chess, history

Posted 01 November 2006 - 01:01 PM

Dear Alpha,

There are actually not that many Armenians in investment banking and Wall Street in general. Less than I expected to see when I started in this business, actually. At any rate the problem is not in the "demand" side but rather "supply". It is Armenia that has to create the right institutional conditions for investors to come. Look at the Najarians...who would have any hope of collecting debts through Armenian courts being a foreigner?
Estonia actually has a lot of Scandinavian capital. Mostly Swedish. It is part of the EU. It has had historical ties with Sweden, Finland and Germany. There is even a helicopter shuttle from Helsinki to Tallin. Armenia is a very different animal. But don´t expect the few people that have any chance of even looking at investments in Armenia doing so if Armenia proper doesn´t help. Look that CBA should have been selling Dram treasury bills to the diaspora instead of only to locals. Rates would be lower but still attractive and every serious Armenian in the diaspora wouldn´t mind having a few bonds. They are still too inward looking and/or too corrupt. What can we expect from an apparatchik from Karabagh?

Edited by Boghos, 01 November 2006 - 01:50 PM.


#9 gamavor

gamavor

    -= Nobility =-

  • Nobility
  • 5,049 posts
  • Location:Houston, TX

Posted 01 November 2006 - 08:17 PM

The banking sector (electronic banking) is extremely important for Armenia. Significant part of Estonia's success is due to high-tech industry. The first step in this direction is free unlimited and high-speed internet. For a landlocked country like Armenia, with poor infrastructure and large Diaspora, this is just a MUST HAVE!

Being small is a serious setback for any serious investment. In my experience I have been convinced that it is much easier to find an investment banker ready to invest 200 million dollars in a given project than 5 million dollars. However, there are opportunities for regional development that could attract large investments.

I think one of very lucrative and traditional for Armenia since Soviet time’s industries that should and could be rejuvenated is the special (military) production. A lot can be done in the field of scientific laboratories that are present in Armenia. The food industry is also very promising.

#10 Anileve

Anileve

    Epicure Maximus

  • Members
  • PipPipPipPipPip
  • 2,201 posts
  • Gender:Female
  • Location:NYC
  • Interests:Running around at dawn and poking innocent bystanders with pipe cleaners.

Posted 02 November 2006 - 11:43 AM

QUOTE(gamavor @ Nov 1 2006, 09:17 PM) View Post
The food industry is also very promising.

What exactly?

#11 Aaron

Aaron

    Member

  • Members
  • PipPipPip
  • 183 posts
  • Location:Canada
  • Interests:traveling, reading, science

Posted 02 November 2006 - 01:12 PM

Dear Boghos

I agree with most of your message and suggestions, and I do appreciate your constructive criticism. But the last sentence slightly puzzled me:

QUOTE
What can we expect from an apparatchik from Karabagh?


The "apparatchik" part, I understand. He may still have remains of the former regime in his thought process, especially that he is a former communist party member (although everyone back then was).

What I don't get from that quote is the purpose of mentioning the president's home region. Perhaps you are implying that you don't expect much from people living in Karabakh because you think they are not capable of achieving much. Perhaps, Like some other "real armenians" (most of them politicians of course), you think that only a decent "yerevantsi" could be expected to do a good job. I will not even bother explaining the flaws of this theory!

But I prefer to think that you simply didn't use the right terms to show your disappointment with the current administration and what you really meant to say was, in its most basic form, something like: "Kocharian's government is not doing a good job, but this has nothing to do with the fact that he's from Karabakh. Moreover, I don't agree with categorizing individuals with their place of birth since this is irrelevant and potentially dangerous for national unity, especially for a nation like the Armenians!"

A.

Edited by Aaron, 02 November 2006 - 01:13 PM.


#12 Boghos

Boghos

    -= Mr Nobility =-

  • Members
  • PipPipPipPipPip
  • 1,755 posts
  • Gender:Male
  • Location:Europe
  • Interests:literature, cinema, chess, history

Posted 02 November 2006 - 04:26 PM

Dear Aaron,

I have nothing against Karabagh, actually quite the contrary. It was just to illustrate the fact that he was a bureaucrat from the sticks and hence less likely to understand the subtleties of modern capitalism among other things. It is power politics more than anything else instead of illustrated leadership.

#13 alpha

alpha

    Member

  • Members
  • PipPipPip
  • 254 posts

Posted 02 November 2006 - 05:47 PM

In order for a poor country to develop there needs to be a break in a cycle of “low savings rate -> low investments -> low productivity”. Armenia has a great resource, it’s Diaspora. Diaspora should not only provide money for subsistence or building infrastructure, but should play a vital role in getting some institutional investments to Armenia. Higher investments will lead to higher productivity which will turn to higher disposable income and higher savings rate among population. One might ask, how can we get institutional money to Armenia? Whoever has worked in the financial services industry knows that connections play a vital role in the decision making process. The connections established by Armenian professionals can be very helpful. Armenia got a B2 rating by Moody’s this summer, which puts it in the same category as Turkey, Hungary (?) or Bulgaria. This should help to alleviate some of the risks. The government could work out a mechanism and set up a system to attract talented diasporans to help Armenia in various capacities. One way to do this is to invite some talented Wall Street experienced Armenians to run the Central Bank. I am sure they’ll do a better job at it then Tigran Sargsyan. Another level is telecommunications. Armenia is behind in development, due to mismanagement in the system. Who heads the system, notorious corrupt official, Andranik Manukyan. I come across Armenians that work in Wall Street and have pretty good connections all over the financial world. These people can be very helpful. I was at a conference organized by Goldman Sachs in New York a few weeks ago and bumped into couple of Armenians. All of them showed an enthusiasm in putting their skills in use for the good of Armenia. I believe there is a way out of this if the country is managed properly.

#14 gamavor

gamavor

    -= Nobility =-

  • Nobility
  • 5,049 posts
  • Location:Houston, TX

Posted 02 November 2006 - 09:39 PM

QUOTE(Anileve @ Nov 2 2006, 05:43 PM) View Post
What exactly?


Canned foods, mineral water and natural juices. "Jermuk" is sold in more countries than the Armenian cognac. There are countries in the Middle East where water is more expensive than petrol. Armenia is relatively not ecologically polluted (especially after the collapse of the Soviet industry) and that fact itself creates favorable conditions for growth of organic foods.

Edited by gamavor, 02 November 2006 - 09:41 PM.


#15 MosJan

MosJan

    Էլի ԼաՎա

  • Admin
  • PipPipPipPipPip
  • 31,196 posts
  • Gender:Male
  • Location:My Little Armenia

Posted 27 December 2006 - 01:48 AM

Pro-Kocharian Tycoon A 'Hero To Many Armenians'

*

article's photo
Gagik Tsarukian, a government-connected millionaire businessman, is the most popular and revered individual in modern-day Armenia, according to a new U.S.-funded opinion poll released this month. The findings of the poll commissioned by the U.S. Agency for International Development are the latest indication of the former arm-wrestler’s growing populist appeal that should make his Prosperous Armenia a major contender in next spring’s parliamentary elections. The survey was designed by the U.S. Gallup Organization and conducted by the Armenian Sociological Association across the country from November 10-19, with 1,200 randomly chosen people asked to answer a long list of questions relating to domestic politics, foreign affairs and the unresolved Nagorno-Karabakh conflict. One of the questions read, “Of the prominent Armenian people and characters in Armenian history and folk culture, who is most suitable to be a national hero or leader in the present?” The late Prime Minister Vazgen Sarkisian was the most frequently named figure, with 15 percent of those polled describing him as a national hero. He was followed by two military leaders of the early 20th century and Karen Demirchian, Soviet Armenia’s former leader who was assassinated along with Sarkisian in the October 1999 terrorist attack on the Armenian parliament. Of all the living Armenians mentioned by respondents, Tsarukian had by far the highest rating: 8 percent. Trailing him were opposition leaders Artashes Geghamian (3 percent) and Artur Baghdasarian (2 percent) as well as President Robert Kocharian (2 percent). Tsarukian had 4 percent support in the previous USAID-funded study that was conducted in August. The apparent rise in his popularity may well be the result of the recent upsurge in his ambitious party’s election-related activities promoted by the Tsarukian-controlled Kentron television and other channels loyal to Kocharian. Tsarukian also emerged as the winner of a separate survey that was carried out by another Armenian polling group, Vox Populi, among about 600 residents of Yerevan last week. Vox Populi said 13.5 percent of them rated him “man of the year.” Prosperous Armenia now claims to be by far the largest political party, boasting at least 240,000 members and over 400 offices in a country of three million. Its publicity stunts have included provision of large-scale agricultural aid, free-of-charge medical assistance and other public services to low-income people across the country. Critics, among them some leaders of Armenia’s two main governing parties, regard this as a massive vote buying operation. Parliament speaker Tigran Torosian, a leading member of the ruling Republican Party, complained to a visiting Western ambassador last month about the emergence of new parties led by “apolitical figures.” In an apparent reference to Prosperous Armenia, he said their electoral success would deal a “blow to the multi-party system.” For his part, Vahan Hovannisian, a leader of the Armenian Revolutionary Federation, suggested on November 24 that many Armenians are now ready to sell their votes to the highest bidder. “If a voter, who has lived in independent Armenia for 15 years, knows everyone, has seen every politician on TV for umpteenth times, read party programs … but has still not made up their mind, then they are expecting money,” he said. Critics also point to a huge disparity between millions of dollars spent on Prosperous Armenia’s election campaign and modest earnings posted by Tsarukian-owned businesses. The largest of them is only 76th in the government rankings of Armenia’s 300 leading corporate taxpayers, giving more weight to allegations that the tycoon is grossly evading taxes. Tsarukian, who is close to Kocharian, rounded on his detractors at a meeting with thousands of Prosperous Armenia activists in Yerevan’s Ajapnyak district late last week. “I would love to know what they have contributed from their personal accounts,” he said in a speech broadcast by several TV stations over the weekend. “Have they personally financed any good thing? Let them talk about that, instead of hurting the people and slamming things done by others.” Kocharian publicly defended his reputed protégé on December 15, saying that it is wrong to attribute Prosperous Armenia’s expansion to Tsarukian’s “benevolent actions.” "There is demand in our society for a new political force that comes up with a very understandable slogan, ‘We think about the people,’" he said. (Photolur photo: Gagik Tsarukian.)
* By Emil Danielyan

#16 Azat

Azat

    Veteran

  • Members
  • PipPipPipPipPip
  • 8,969 posts
  • Gender:Male
  • Location:Los Angeles, CA
  • Interests:wine, beer, food, art, jokes

Posted 23 January 2009 - 04:06 PM

very interesting read
http://www.astoundry.com/offshore.pdf

while i think the comparison is false as Armenia can NEVER compare or compete with India and China its still a place for great outsourcing





0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users