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Armenia - An Emerging Opportunity
By Jason White
linkedin.com - 30/10/2014
For a British businessman living and currently working in Yerevan, Armenia,
it has become a prelude to an interesting conversation.
"Where is Armenia actually?" Sadly one of those who actually asked that
question was in fact a British International Sales Director. What this
determines, besides a certain ignorance of Armenia by the British business
community and general British public, is Armenia's lack of marketing
towards the UK (and other countries), whether it being for business,
tourism or general awareness of Armenia's Christian history, culture and
heritage. To put it politely - what a shame, to be more specific it is, to
say the least, a missed opportunity that seems sadly to be continuing. The
land that Noah discovered has indelibly become the Shadow lands.
I believe that the climate and time is now right for business and economic
opportunity in Armenia. There is potential for closer ties to UK businesses
that could bring positive benefits to both the economy here and the
development of overall products and services in the UK.
Armenia has previously been held back partly due to its recent communistic
history but also to its political and oligarchy regime monopolizing its
major industries and limiting economic options.
However there is now a genuine and committed campaign to affect a positive
change that is gaining momentum and moving forward by the new generation of
entrepreneurs, leading creatives, community builders, investors,
policymakers, developers, young leaders and many others - all collaborating
toward a more successful Armenia.
You can now taste the appetite for a change that had seen huge amounts of
charitable initiatives from Armenia's historic diaspora (11 Million
Armenian expats live in other countries, USA, Russia, France, Syria
Australia to name a few) to a move towards sustainable investment whereby
the mission is to support and ultimately sustain Armenia's long term
future. To cut to the chase what Armenia lacks in natural resources it more
than makes up with its intellectual ability- its highly educated and
innovative population is its greatest asset bringing together a mixture of
skills, perspectives and resources with the result an opportunity for
innovation and entrepreneurship to the benefit of joint venture
partnerships with potential overseas companies and Investors. In Yerevan
salaries are very low, not far behind China, commercial office and
residential rents are also comparatively low as is understandably the cost
of living. The average salary here is £280 per month. The opportunity for
cost savings on salaries and general expenses of Key Executive staff are
huge for potential overseas companies willing to engage here.
Key Reasons To Consider Armenia
Armenia has a history of a high educated population. It is strong in
professionals trained in Information Technology, medical, engineering
(architecture, construction) and education. Allied to that the IT and
Telecom Industry is the most productive industry in the Armenian economy.
The Government has declared the IT sector as a priority and is supporting
it through various support institutions, such as IT Development and Support
Council chaired by PM, Enterprise Incubator Foundation backed by the World
Bank funding. The industry already attracted global brands such as
Synopsis, which located considerable part of its development functions in
Armenia. Most of the foreign owned companies are involved in offshore
programming, serving foreign headquarters. A number of different business
models, business plan competitions mark the dynamism of the industry. A
major boost to the sector is expected to come from a $24 million World Bank
funded project on e-society development and innovation support through
"Computers for all" program, digital ID cards, venture fund creation and
matching funds. Armenia for many years has been the economy with the
fastest GDP rate in the Caucasus region (beside oil rich countries).
The European Union is Armenia's main trading partner, accounting for around
30% of Armenia's total trade. EU imports from Armenia chiefly consist of
manufactured goods, crude materials, miscellaneous manufactured articles,
machinery and transport equipment.
EU exports to Armenia are dominated by machinery and transport equipment,
miscellaneous manufactured articles, chemicals, and foodstuffs.
The current Partnership and Cooperation Agreement does not include tariff
preferences, but prohibits quantitative trade restrictions and also
envisages progressive regulatory approximation of Armenia's legislation and
procedures to the most important EU and international trade related laws
and standards, which in turn aims at facilitating the access of Armenian
products to the EU market.
Under the EU Generalised Scheme of Preferences, Armenia has been benefiting
from the special incentive arrangement for sustainable development and good
governance, the so-called Generalised Scheme of Preferences Plus (GSP+),
since July 2005. This arrangement offers Armenian exports advantageous
access to the EU market since it provides for a zero duty rate for about
6400 tariff lines.
The total value of preferential Generalised Scheme of Preferences (GSP)
imports from Armenia into the EU is steadily increasing, from EURO 61
million in 2009 to EURO 109 million in 2011. Armenia's GSP utilisation rate
is high: around 90%.
The country has recently signed an agreement to join the newly formed
Eurasian Economic Union (Market size 171 Million people) including Russia,
Kazakhstan and Belarus. This faced stiff resistance from the opposition
parties and younger entrepreunerial commentators and business owners,
however strong the relationship has been and will continue with Russia
there is still good economic relations with America who also have a strong
influence here in Armenia where there is a willingness to continue to
develop business relationships that have been ongoing over the last few
years through the various aid groups. Also in addition those gained by
European Commission representation in the country and the policing of their
aid to improve the various infrastructure, legal, health, agriculture and
women's rights projects that will continue. Even with the signing of closer
ties to Russia, Armenia can offer an additional route into Russia's and
other ex CIS economies that many Foreign companies may want to explore
given the current climate of sanctions that the western governments have
ordered.
Research and Development Opportunities
Given this current climate and associated detailed advantages in Armenia
consideration could be given to the benefits of relocating and resourcing
certain company functions. None more so than R and D centres, comparative
advantages would be:
Availability of highly qualified, technical and innovative workforce.
Multi language skilled personnel in Armenian, English, Russian and French.
Low cost of living and therefore low salary base. Average salary £280 per
month (UK £2051) Good work/life balance.
3.1Milion Country population Yerevan 1.1Million.
Low office, residential, utility, transport and operational costs.
Emergence of excellent projects and Investment in Education.
Government priority, IT Incubator, international technical assistance
programmes.
Ongoing International company presence and onward future development in
Armenia of other prespective International blue chip companies in the
technology industry.
Potential for developing business in the newly formed EEA Markets.
This is a brief document describing the potential advantages of outsourcing
Research and Development centres to Armenia, more detailed information can
be gained by contacting the below mentioned who will be happy to engage in
communicating more specific information governing the economy and the legal
process of setting up business here.
* According to the Doing Business Report 2014, released by the World Bank
and the International Financial Corporation, Armenia climbed 3 points this
year, ranked 37 on the list of 189 countries. Armenia appears between
Belgium (36) and France (38), but ahead of such countries as Cyprus (39),
Poland (45), Spain (52), Luxemburg (60) and Italy (128). Armenia is also
well ahead of its immediate neighbors Turkey, Azerbaijan and Iran that are
ranked 69, 70 and 152 (Georgia is ranked 8).