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BLACK SEA ECONOMIC FORUM THESSALONIKI 23 FEBRUARY 2012 ARMENIA 1 REPUBLIC OF ARMENIA YEREVAN The capital of Armenia • Total Area - 29.800 sq/km • Population - 3,231,900 • Currency – Armenian Dram BORDER COUNTRIES / Border length in km 1. Azerbaijan - 566 km 2. Georgia - 164 km 3. Iran - 35 km 4. Turkey - 268 km MACROECONOMIC INDICATORS GDP by years (percent of growth) 2006 2007 2008 14% 2005 13.4% 13.8% 2009 2010 2011 Jan-Jun 6.8% -14% 2.6% 4.6% … STRUCTURAL CHANGE Real estate development Exploitation of raw materials Chemical processing Extractive industries Soviet Era Modernization of industrial processes Infrastructure deployment Transition Period Education, science and technology Services and E-services Complex engineering E-government and technoparks The Next Decade MACROECONOMIC INDICATORS INFLATION RATES by years (percent) 2008 6.7% 2007 5.2% 2009 2010 6.5% 9.4% * estimated 2011* 5% ARMENIAN EXPORTS Major Export Items for Armenia are: • Software • Nonferrous metals, • Unwrought copper, • Diamonds, • Mineral products • Food products ARMENIAN EXPORTS 2011 Russia 15.9% Netherlands 9.7 % China 3.1% Germany 13.1% United States 8.2 % Iran 5.2 No export duty Bulgaria 15.5% % IMPORTS BY COUNTRY 2010 Georgia UAE Israel 1% 1% 0% Switzerland 4% Russia Belaruss USA 4% Ukraine Turkmenistan Iran 6% Germany Russia 29% Italy Bulgaria France Turkey 6% Rumania Belgium Austria Gr. Britain Greece China 10% Belaruss 1% Spain 1% Holland 1% Finland 1% Greece 1% Gr. Britain 1% Ukraine 7% Finland Holland Spain China Turkey Austria 2% Belgium 2% Italy 4% Rumania France Bulgaria 3% 3% 3% Germany 6% Turkmenistan 1% Iran Switzerland USA Georgia 8 ARMENIAN EXPORTS BY COUNTRY 2010 UAE 1% Georgia 7% USA 8% Russia Belaruss Ukraine Russia 14% Belaruss 0% Ukraine 3% Turkenistan 0% Iran 4% Switzerland 9% Turkenistan Χώρες ΕΕ Germany Italy Bulgaria France Rumania Belgium Austria Germany 18% Greece Finland Turkey 0% Holland Spain Spain 3% China 0% Gr. Britain Holland 15% Finland Gr. Britain 0% 1% Italy 3% Bulgaria Belgium France 0% 13% Rumania 0% 0% Austria Greece 0% 0% Λοιπές χώρες China Turkey Iran Switzerland USA 9 Trade over relation by GNP 10 Armenian exports to Greece 11 Greece’s exports to Armenia 12 MACROECONOMIC INDICATORS Foreign Direct Investments (million USD) 305 2007 2006 670 2008 2009 1257.6 840.7 2010 693.4 FDI INFLOWS Russia 43.7% USA 4.6 % France 12.4% Argentina 5.5 % Greece 6.4% Germany 6.5% FDI – MAIN SECTORS Telecommunication Energy Transport Mining sector IT sector Production of food and beverages other 32% Transport 8% Telecom 39% Energy 21% FOREIGN INVESTORS’ PROTECTION AND INCENTIVES Location giving access to Middle East and CIS countries Free trade agreements with CIS countries, which gives duty free access to 250 million consumers Favorable Investment Legislation “Grand father clause” for 5 years Free Repatriation of Profit Talented workforce No Restrictions on Foreign Investor Ownership WTO membership FOREIGN INVESTORS’ PROTECTION AND INCENTIVES 100% ownership permitted for foreign companies Foreign companies, registered in Armenia have the right to buy land 0 VAT applies for goods and services exported under ”Free Turnover” and “Re-exportation” customs regimes No restrictions on exchange of currencies No restrictions on staff recruitment No restrictions on remittances On-line company registration TRADE MARKETS GATEWAY • MFN regime with 150 countries (WTO full membership) • FTA regime with CIS countries (tariff free access to 250 million consumers market) • GSP regime with EU, USA, Canada, Japan • GSP+ with the EU INDEX OF ECONOMIC FREEDOM The Wall Street Journal and The Heritage Foundation 2008 2009 2010 2011 28 31 38 36 The Index covers 10 freedoms – from property rights to entrepreneurship – in 183 countries TAXATION VAT– 20 % PROFIT TAX – 20% INCOME TAX – max.20% Rates No export duty import tariffs 0% Or 10% Simplified taxation for Small and Medium Entreprises CUSTOMS REGULATIONS OF ARMENIA • All Exports from Armenia are Duty Free • The Import Tariff Rates are 0% or 10 % • Armenia is a Member of World Trade Organization (WTO) • Armenia Uses the Harmonized Code System (HS) for Tariff Classification • Full list of products with corresponding tariffs – www.customs.am FREE ECONOMIC ZONES In the nearest future two free economic zones will be established in Armenia. 1.Agriculture and food processing oriented FEZ - on the territory adjacent to Zvartnots international airport 2.High tech oriented FEZ – on the base of the plant “Mars” The Law of the Republic of Armenia on Free Economic Zones defines a number of incentives for companies in FEZ: The operators of free zones are granted profit tax, income tax, value added tax, property tax, and customs duty payment privileges. EDUCATION More than 100 Research & Development Centers More than 60 Universities and Higher educational Institutes, 8 foreign universities: • • • • 5 Russian Universities American University in Armenia French University European University. Approximately 80.000 students PREVIOUS RAPID DEVELOPMENT… 2006 Size Growth rate USD Millions Percent, 2002-2006 Food industry 455 Metals 265 6,1 10,3 Goods Mining Construction materials Machinery 252 70 11,4 280.0 Health care 65.3 IT services 71.0 Financial services 70.4 Tourism 21,7 38 Communications Services 5,8 48.2 25,3 25,2 15,1 47,8 17,4 TARGETED SECTORS Information Technology Agriculture Bio Tourism Energy Chemical Industry Armenian IT sector is dominated by foreign investors • The annual growth of IT companies’ establishment – 20-25% • Export of 63% of IT output goes to over 20 countries (USA, Europe and the CIS) • Support of Government of Armenia through its declaration of IT as a priority sector and by being itself a lead user of IT • Existence of Skillful and Creative Cost-Efficient Labor Force. Monthly salary of experienced software developer in Armenia is 900USD • More than 6800 IT related Students Innovative, ready for licensing out products in: • Animal health • Agriculture • Advanced technology for polyacrylamide hydrogels production • Innovative drugs for treatment of oncology, cardiovascular and CNS diseases in different development phases • Innovative new strains of bacteria effective in diary production with long shelf life and better properties ARMENIA: Economy Overview Amines & Derivatives Amino Acids & Derivatives Peptides Heterocycles Furan, Pyran and its derivatives Esters Bioactive & Natural Compounds Physiological Active Compounds Polyhedric Systems Quinozolines Screening,Synthesis of Biologically Active Compounds Proteins & Ferments Agrochemicals Speciality Chemicals Inorganic & Organic Reagents Electrophoresis Reagents Molecular Biology Reagents Miscellaneous Oils Pharmaceutical Forms Pharmaceutical Substances Fine Chemicals More then 5.000 chemical and pharmaceutical substances are produced in Armenia The energy sector is one of the most developed sectors of the Armenian economy Nuclear, thermal, hydro power production Renewable and alternative energy, including wind energy and biofuels – covers almost 25% of demand of Armenia, and is planned to reach 30% or more by 2030. Unique business opportunity for investors. * according to the law the Electric Networks of Armenian buys green energy from suppliers for the period of 15 years, thus securing the market for the producers for that period. Jewelry and diamond processing are considered a very attractive field for investment in Armenia based on the existence of skillful diamond cutters, modern equipment and tax privileges in Armenia. Diamond processing is a predominant part of this sector's activities. Nevertheless, jewelry, including gold accessories, golden wristwatches, jewelry articles and processing of semi-precious stones has an old tradition in Armenia. Today, 27 companies with 5000 employees (2500 in diamond processing) are operating in this sector, excluding individual jewelers. Agriculture •Agriculture plays important role in the economy of Armenia – constitutes 20 % of GDP Total volume of production in 2009 was 555,7 bln AMD (around 1,6 bln USD) • Tourism and tourism infrastructure development are among the priorities of the Government of the Republic of Armenia • Annual growth of the number of incoming tourists in Armenia is 15-20% in average •Armenia is the first country to adopt Christianity as a state religion in 301 AD – more then 5000 historical monuments spread around the country, Some included in World Heritage • The longest ropeway in the World “Wings of Tatev” – 5.7 km • Ski resorts – Tsakhkadzor with modern 6 lifts rope-way (926-1388m) with carrying capacity up to 1200 persons •Mineral Spa resports – Jermuk, Bjni, Dilijan, Arzni, POLICY TRANSFORMATION Macroeconomic Stability: Spend and Balance 230% 250 209% 200 150 110% 124% 141% 156% 178% 184% 100 50 GDP Growth Rate 2000=100% 0 2001 2002 2003 2004 2005 2006 2007 2008 VEHICLES FOR INVESTMENT Equity and debt financing through public-private investment funds Venture funds capitalizing high potential opportunities Project-based investments leveraging core assets MAJOR INVESTORS BLACK SEA ECONOMIC FORUM THESSALONIKI 23 FEBRUARY 2012 Thank you for your attention contact info : [email protected] 37