Armenia Building Opportunity Republic of Armenia YEREVAN

Armenia: Building Opportunity Republic of Armenia

YEREVAN The capital of Armenia • • • Area - Total 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 Armenia COUNTRY LOCATION

Armenia: Building Opportunity Building Bridges Closing Opportunity Gaps Armenia as a platform for international partnerships Untapped potential as a vehicle for growth

Armenia: Building Opportunity § Shared history § Linguistic ties § Cultural linkages § Trading agreements § Active diaspora Building Bridges Armenia as a platform for international partnerships

Armenia: Building Opportunity §Highly trained human capital § Unexploited resources § A government ready for partnerships in: Technology Education Life Sciences Tourism Energy and beyond Closing Opportunity Gaps Untapped potential as a vehicle for growth

MICROECONOMIC INDICATORS INFLATION RATES by years (percent) 2006 2. 2% 2005 4. 8% * IMF indicates lowest inflation in Armenia in CIS 2007* 6. 7% 5. 2% 2008 2009 6. 5%

MICROECONOMIC INDICATORS Foreign Direct Investments by years (mln. USD) 2007 305 2006 670 2008 2009 1132. 4 840. 7

Political Factors Post- election stable situation Ambitious tax reforms Government Commitment to FDI Attraction Open international relations Armenia is a member of IMF, WTO, MIGA, Council of Europe and etc. As a member of MIGA it is possible to get MIGA guarantees to insure investment against political risk. Armenia is a member of more than 40 international organizations.

The Wall Street Journal and The Heritage Foundation index of economic freedom 2006 2008 2009 2010 27 28 31 38 NIA ME AR ING NK entrepreneurship – in 183 countries. RA NIA ME AR ING NK RA The Index covers 10 freedoms – from property rights to

Foreign investors incentives and protection Well Located for Access to CIS and Middle East Markets Cost Effective and Qualified Work Force Free Repatriation of Profit MFA & National Treatment Favorable Investment Legislation Liberal Trade Policy No Restrictions on Foreign Investor Ownership WTO membership

Enabling Environment Reach top 10% of Doing Business Index Reform governance § Simplify tax filing § Simplify customs § Simplify licensing § Increase corporate social responsibility § Install E-governance in five years

Smart, Wired and Knowledge-Driven Promote knowledge economy Dozens of universities Active academy of science Intellectual excellence, chess championships Build information society Gyumri Technocity Yerevan Technopark Center for Creative Technologies Liberalization telecom New operators, new technologies, new infrastructure

Science and technology • 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 Science Yerevan Physics Institute Technology Gyumri Technocity

FDI Inflows Russia 71% United States 1. 7 % France 8. 3% Argentina 8. 7 % Lebanon 1. 1 Germany 2. 3% %

FDI Inflows FDI is mainly concentrated in these sectors • • Telecommunication Energy Metallurgy sectors Manufacture of food and beverages

Armenian exports Russia 17. 3% Netherlands 13. 4 % Israel 2. 3% Germany 14. 5% United States 4. 5 % Iran 3. 3 Legislative aspect No Export Duty by Armenian customs legislation Belgium 8. 8% %

Armenian exports Major export items for Armenia are: • Software • Nonferrous metals, • Unwrought copper, • Diamonds, • Mineral products • Foodstuff. Rapid export growth of Construction materials and Semi-Precious Stones.

TAXATION VALUE ADDED TAX – 20 PROFIT TAX – 20% INCOME TAX – max. 20% benefits Simplified taxation for Small and Medium Entrepreneurship NO export duty Favorable import tariffs 0% Or 10% %

Ambitions for the Near Future

Armenia's competitive strengths in the software and IT services sector are based on a unique 50 yearold tradition of multi-generational IT skills. The highly qualified workforce is based on a traditionally strong education system and leading research institutions. Armenia was the leading center of computing technologies and regarded as the Silicon Valley of the Former Soviet Union (FSU). The government of Armenia has an ambitious national vision for IT and supports the leading role of IT through its declaration of IT as a priority sector.

Ready for licensing out agreements Projects on: • Animal health • Agriculture • Medical device • Innovative drugs for treatment of oncology, cardiovascular, CNS diseases in different development phases

During the Soviet period, Armenia acquired the enviable reputation of being a successful, industrial republic with a diversified economy that specialized in technological research especially research related to the militaryindustrial complex. In particular Armenia’s tradition of scientific and technological excellence means we have great potential in sectors such as Precision Engineering and Electronics. Key players:

§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 § Unique business opportunity for investors. * Government according to the law buys green energy from suppliers for the period of 10 years, thus securing the market for the producers for that period.

Nuclear Power Plant II § A Soviet era Nuclear plant that supplies 40% of Armenia’s electricity § It is reaching the end of its lifecycle § The Government has decided to build a new 1, 200 Megawatt 5 billion USD reactor § It will generate surplus electricity for sale across borders § A competitive contracting process is now being organized

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 are also important and have a long tradition in Armenia. Today, 27 companies with 5000 employees (2500 in diamond processing) are operating in this sector, excluding individual jewelers.

(ADA) was established by the Government of Armenia to facilitate foreign direct investment and promote exports. The Prime Minister of Armenia is the chairman of the board. The ADA acts as a "one-stop shop" agency for investors • Organization of Site Visits – planning and preparation of visits from foreign investors, arranging appointments with private and public organizations, accompanying investors to meetings, assisting in site selection, providing translation support, identification of business service providers • Brokering Business Partnerships – finding the appropriate partners in Armenia • Follow Up Support – managing postvisit support, preparation of additional information and documentation, explaining legislation • Investment Project Implementation – assisting with company registration and staff recruitment (job announcements & holding interviews) • Liaising with Government institutions

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