Investing in Armenia

[Guest]

In my view, this is a long overdue and significant development.

_____________________________________________

American Investments To Increase In Armenia

 

WASHINGTON (Noyan Tapan)The Overseas Private Investment

 

Corporation is considering financing four American private investment projects in Armenia worth a total $300,000,000 within the next 2-3 years. Projects will be implemented in the energy, finance, agricultural and construction spheres, OPIC Director of Communications Lawrence

Spinelli said.

 

The OPIC is a US Federal Agency which provides investments, as well as insurance against political risks to small, medium, and large American companies.

 

Spinelli said that OPIC is considering the possibility of providing insurance against political risks to 13 private American investment projects worth a total of $300,000,000 that concern the energy, oil, gas, communications, tourism, production and mining industry.

 

Spinelli also said that within the next 2-3 months, a final agreement will be made on OPIC allocating a $18,000,000 credit to the American AK Development business group, which is the owner of the Armenia hotel in Yerevan. The credit is the first investment to be made by the OPIC in Armenia.

[Guest]

Armenia's top officials discuss airport management with Argentine entrepreneur

 

Snark

13 Nov 00

 

Yerevan, 13th November: Yerevan's international airport Zvartnots

might be handed over to the management under power of attorney of

the well-known Argentine entrepreneur Eduardo Eurnekyan.

 

According to Snark news agency information, preliminary talks with

the Armenian authorities on this started on 11th November, after

Eurnekyan's arrival in Yerevan. Foreign Minister Vardan Oskanyan

met the businessman at the airport, and on 12th November Armenian

President Robert Kocharyan met the entrepreneur.

 

Eduardo Eurnekyan is a well-known Argentine entrepreneur and

philanthropist of Armenian origin. He owns over three dozen

international airports in various corners of the world.

[Guest]

MJ, why would anyone invest in Armenia? Considering the history of bad investments, low purchasing power of local population, the political risks, corruption and inadequate regulations to protect investors makes Armenia less desirable for investment. The company that I work for invests in emerging markets, and I just closed a deal that has a lot of investments in CIS, but none in Armenia. Why? Because it has a high risk and low return profile. The country needs a direction, and the current government is only preoccupied with meeting the current budget crisis. The current account balance of Armenian economy is widening, and as we all know for the emerging market country that’s a big no-no. The only way Armenia can prosper is if it can have some direction that will utilize its resources and give it a competitive advantage. The only competitive advantages I can currently spot are in information systems and chemical industries. As the past decade has shown Armenian Diaspora cannot be counted on as a major investor, so we can’t follow the Israeli model of development, where most of the investments are made through diasporan connections. But what Armenia can do is follow the model of development of Asian tigers. The government chooses an industry, gives it special privileges, sponsors it, and then lets it become a multinational corporation, which has a majority of national exports. The bottom line is, a country with no clear path of development and without adequate legal field cannot expect a lot of foreign investments.

[Guest]

Alpha, I share all of your concerns and share your vision. I am just glad that OPIC is finally considering to provide the potential investors in Armenia with insurance. They have been doing this is Azerbaijan and other former Soviet Republics for few years, now. This is a good sign, if it materializes, of coarse.

 

I have no arguments with you.

[Guest]

Wow MJ, I guess we have common views on political and economic development of Armenia. The article below provides an interesting insight about diasporan investments.

 

Armenian President Meets Diaspora Businesmen

 

President Robert Kocharian and Armenian Foreign Minister Vartan

Oskanian met on 11 November with some 100 Armenian businessmen from

diaspora, who have been working in Armenia for several years. This is

the first meeting at such a level with Armenan businessmen from the

diaspora.

 

There are some 1000 Armenian families from the diaspora who are

engaged in business in Armenia. Although some of them, such as the

Hovnanian family, or the owners of "Ani" or "Armenia" hotels, are well

known in Armenian society, there are no clear statistics that show how

much the diaspora has invested in Armenia during the 10 years since

independence.

 

Addressing the guests at the ministry of foreign affairs, President

Kocharian stated that there some positive conditions exist for

supporting business and investments in Armenia. "I am ready to do

everything possible to support you in your business," the President

said.

 

But Sarkis Hacpanian, one of the businessmen present, who has lived in

Armenia for 10 years, told RFE/RL that conditions for doing business

in Armenia have become worse. "The laws which are supposed to support

business and investment do not work, they exist only on

paper. Sometimes even court decisions in favour of the investor do not

work," Hacpanian said. He dismissed the Armenian authorities'

assurances as "just words."

[Guest]

Nothing wrong with having similar views, right?

 

I know about this meeting. Had seen it before.(:

[Guest]

ARMENIAN TRADE AND INDUSTRY MINISTER OPTIMISTIC ABOUT EXPECTED VOLUME OF INVESTMENTS IN 2001-2003

YEREVAN, NOVEMBER 17, ARMENPRESS:

Armenia's trade and industry minister Karen Chshmaritian was very optimistic regarding the volume of expected investments in the Armenian economy in the next three years.

 

Speaking to Armenpress, the minister said about $260 million are expected to enter the country in 2001-2003. The biggest portion of investments, $103 million, is expected to come from Lincy Foundation. The Armenian-Russian joint venture Armenal will get $50 million from Russia's giant Sibirskiy Aluminum, the US APG Labs will bring another $20 million to boost high technologies development.

 

Thirty-five millions are expected in hotel business, up to $40 million will be invested in Yerevan Physics Institute, $15 million in Shoghakn diamond processing plant. The minister said the new draft law on investments will be sent to parliament's consideration next month.

 

PRIVATIZATION OF BIG ENTERPRISES OPPOSED, SAYS STATE PROPERTY MINISTER

YEREVAN, NOVEMBER 17, ARMENPRESS:

According to state property minister David Vardanian, the government will face serious problems while trying to sell around 2,500 small and medium enterprises that have failed so far to find buyers. The minister also complained that the lack of appropriate information about these enterprises prolongs the process of their privatization. "There are four approaches towards evaluating their real prices, but all of them have shortcomings. However, the biggest problem is the absence of demand," he said.

 

Referring to the privatization program for 2001-2003, the minister said it is divided into three parts, the first one includs enterprises that were not involved in previous programs, the second includes enterprises with more than 50% of shares. The rest of shares are proposed to be sold off.

 

The third includes enterprises, chiefly building companies and hotels, the privatization of which is opposed by ministries, favoring for their remaining under state control. The program has to be yet approved by the government.

 

The private sector currently accounts for more than 75 percent of Armenia's GDP. Official figures show that 76 percent (1533) of large and medium-sized enterprises and 83 percent (6829) of small ones have been privatized over the past decade.

[Guest]

Armenian copper smelter escapes stoppage

 

YEREVAN, Nov 16 (Reuters) - Copper concentrate suppliers to

Armenia's sole copper smelter agreed to increase deliveries,

preventing an outright stoppage at the plant, its CEO Valery

Medzhlumyan said on Thursday.

 

The Manes and Vallex smelter will receive the 2,200 tonnes this

month it needs to maintain operations.

 

Medzhlumyan said the deal guaranteed production at the plant for

now.

 

"Now we have an agreement, which will help to alleviate the

situation," Medzhlumyan told Reuters.

 

"But the threat (of a stoppage) still remains due to our imperfect

legislation," he said, blaming the smelter's financial problems on

Armenia's tax legislation, which he said discriminated against

domestic industry.

 

Failure to pay for supplies has meant that over the past two months

the smelter has received only 500 tonnes of concentrate monthly.

 

Artsrun Avetisyan, deputy director of Zangezur Copper and

Molybdenum Combine, the smelter's main supplier, told Reuters that

the firm had agreed to supply the Manes and Vallex works with an

additional 1,700 tonnes of concentrate this month.

 

"They will get another 2,200 tonnes in December if they pay for

them," Avetisyan said.

 

Armenian national companies must pay a 20 percent value added tax

on raw materials that in theory should be offset when the finished

product is exported.

 

However, the state is frequently late in paying out VAT rebates,

and this has undermined the smelter's ability to pay suppliers,

Medzhlumyan said.

 

Foreign companies, he said, were exempt from VAT and export duties

when they export raw materials from Armenia, giving them a

competitive advantage.

 

The Armenian smelter has had a chequered history.

 

In 1989, when operating under the name Alaverdi, the smelter was

closed for causing serious environmental pollution.

 

But it won a new lease of life in 1997 when it was bought by

Lichtenstein firm Vallex F.M. Establishment and Armenian Manes.

 

In 1998 Manes sold its 46.3 percent stake in the smelter to Swiss

firm Elecom.

 

The plant, which was registered in Armenia, resumed work in January

1998 but supply problems again forced it to suspend production from

March 1999 until early 2000.

 

It plans to produce 4,700 tonnes of blister copper this year.

 

Currently Manes and Vallex can process 3,500 tonnes of concentrate

per month.

 

The works produce blister copper for export to Germany, Austria and

Italy,

 

14:56 11-16-00

[MJ]

"ARMENIA IS OUR FLAGSHIP PRODUCT IN CAUCASUS," WORLD BANK'S REPRESENTATIVE

SAYS

 

YEREVAN, May 14. /Mediamax/. "Armenia is our flagship product in the

Caucasus." This words belong to Owaise Saadat, World Bank's Representative in

Armenia are quoted by Financial Times paper, in an article on "Armenia

Investor" business-forum held in New York on May 9-12.

The paper says that the World Bank and other international agencies believe

Armenia's progress in both political and economic reform can be an example

for the rest of the region.

President Kocharian said in an interview to Financial Times that there was a

mutual recognition that direct investment into the private sector could push

the country forward.

"We need investment like we need air," says Finance and Economics Minister of

Armenia Vardan Khachatrian in his interview to the newspaper.

[MJ]

Foreign Businessmen To Arrive In Armenia To Study Economic Situation

 

YEREVAN (Noyan Tapan)--Foreign businessmen who attended the recent Armenia

Investors Forum held in New York were mainly interested in Armenia's

information technologies and mining industry.

The forum, held May 9-11, was sponsored by the World Bank and its affiliate,

the International Finance Corporation (IFC), with additional support from the

US Trade and Development Agency (USTDA).

At a press conference on Tuesday, Minister of Industry and Trade Karen

Chshmaritian announced that the first group of foreign businessmen will arrive

in Yerevan this week to study the economic situation in Armenia and to hold

business negotiations. A second group will arrive in June.

Twenty-five business plans were submitted at the forum which was attended by

130 representatives of Armenian enterprises and organizations, 130 Armenians

from the Diaspora and 100 foreign businessmen. According to Chshmaritian, nine

of these proposals refer to industry and the food industry, five to tourism,

three to energy and three to information technologies. Other business plans

concern the development of the transport sphere and the production of building

materials.

The government itself submitted only two programs for development and

investment possibilities in the mining industry and energy sector. The other

programs were submitted by the country's private sector and international

organizations.

Chshmaritian stated that before the forum there were some concerns regarding

the presentation of Armenia's investment sector. However, the World Bank and

the IFC considered the material presented by the Armenian side as good as

those

of leading foreign companies.

According to the minister, both the Armenian government and private

entrepreneurs consider the available conditions for free competition and free

trade with CIS countries to be positive factors for investments. Among the

obstacles to economic development are high transportation rates and red tape.

An Armenian-Russian business forum will be held in September to stimulate

investments in various spheres of the Armenian economy.