“We have started 2020 well, because it is built on the successful foundation of 2019”, Tigran Khachatryan’s final press conference

14 January, 2020

On January 14, 2020, the final press conference of the Minister Tigran Khachatryan on 2019 activities took place at the RA Ministry of Economy.

“We have started a very good year, because it is built on a very good foundation of 2019. According to the data of 11 months of the previous year, the economic activity index is at 7.5%. The growth of industry is especially important. The growth of volume of industrial production in 11 months was 9.3%, while services grew by almost 15%. The domestic trade circulation grew by 9.2%, construction by 4.5%, and exports increased by 9%. This means that, although the annual gross domestic product indicators have not been summarized yet, we can already say that we will have at least 7.5% economic growth.” The Minister Tigran Khachatryan presented the work done by the RA Ministry of Economy in 2019 in the areas of the investment climate improvement, SME development, as well as tourism, agriculture, and other areas.

Activities according to the main functional directions

1) The RA Ministry of Economy developed 5 sectoral strategies for implementation of long-term goals for sustainable economic development:

  • 2020-2024 strategy for development of small and medium-size entrepreneurship
  • 5-year strategy for industry development
  • Strategy for business environment improvement
  • Strategy for sustainable development of agriculture in the Republic of Armenia
  • 2020-2030 strategy for tourism development in Armenia

A strategic plan for modernization of the metrology sector was also prepared.

All the developed documents were submitted for public discussion. The Government has already approved the strategy of the main directions ensuring the economic development of the RA agricultural sector for 2020-2030, by which the following indicators will be achieved in the coming decade.

  • Compared to 2019, the average annual income of a household will increase 4 times.
  • The average annual growth of the agricultural added value compared to 2029 will exceed 7%.
  • The weight of non-cultivated arable lands will not exceed 25%, as opposed to 45.5%.
  • The weight of irrigated arable lands will exceed 40%, as opposed to 26%.
  • The volume of exportation of agricultural products (including processed products) will increase by around 44%.

The SME development strategy for 2020-2024 envisages the following:

  • Increase the accessibility of financial resources,
  • Capacity building and entrepreneurial culture development for SME entities,
  • Ensuring market access for SME entities,
  • Providing a favorable institutional and legal environment for SME development.

2) The official presentation of Armenia’s report on investment policy took place at the UN Conference on Trade and Development (UNCTAD) in Geneva. As a result of the work with the Ministry and relevant study, the experts noted the following:

  • There are no serious gaps in the legislation on investment in Armenia, and in some areas Armenia has a fairly advanced model.
  • It is necessary to ensure the continuity of the reforms that have already started in the works of anti-corruption strategy, competition, justice, institutional strengthening of the tax and customs sectors.
  • There are a number of areas with significant exportation potential (up to $1 billion) which, at the effect of the above-mentioned reforms, may become even more attractive for efficiency-seeking foreign investments. These are the sectors of light industry, tourism, and high technologies.

3)  Following the instruction of the RA Prime Minister, sectoral discussions were initiated with production and exporting organizations in groups representing 12 spheres.

4) The RA Law on “Public-private partnership” was adopted, which entered into force on January 1, 2020. The law defines the legal framework for regulation of the public-private partnership. A number of regulations stipulated by the Law were developed for implementation of public-private partnership programs.

5) Activities are underway to create eRegulations Armenia - the new business support platform, which already describes step by step the 18 most required procedures by investors, thus serving as a guide for entrepreneurs intending to start and expand a business in Armenia.

6) Activities are underway to introduce the culture of corporate governance in the Republic of Armenia. Currently, the RA corporate governance code is being revised, relevant guidelines and evaluation criteria were developed.

State support for agricultural development

In 2019, state support programs for the agricultural sector were launched or amended with necessary changes, which are based on improvement of efficiency of agricultural activities and the level of competitiveness of agricultural products, introduction of modern technologies, and alleviation of the financial burden of business entities.

7) The cattle breeding development program for 2019-2024 was launched and within its framework 304 animals were acquired at a total cost of 391.0 million AMD, whereby the subsidized amount was 9.0 million AMD.

8) The state support program on “Construction or reconstruction of small and medium-size “smart” cattle houses and their technological provisioning” was launched. For coverage within this support program 185 applications were submitted by business entities, 24 contracts were signed, and 104 citizens received certificates on completion of training.

9) The state support program on “Development of sheep breeding and goat breeding for 2019-2023” was launched; 203 animals were purchased; one loan was provided at the value of 78.9 million AMD.

10) In 2020, the “Program on subsidizing the interest rates on loans provided to the agricultural sector” was amended and adjusted with necessary changes. According to the official data of nine months of 2019, 6,443 loans were provided at the total value of 25.2 billion AMD, whereas according to the operative data of eleven months in 2019, about 8,000 loans were provided at the total value of 32 billion AMD. Compared to the same period last year, the number of the program beneficiaries increased by around 73%, and the amount of provided loans increased by around 61%.

11) In 2020, the state support program for “Establishment of vineyards and fruit orchards and berry fields intensively cultivated with modern technologies” was amended. For establishment of fruit orchards on 32.2 hectares 12 loans were provided at the value of 347.8 million AMD, the subsidized amount was 38.8 million AMD, whereby beneficiaries were compensated at the amount of 7.04 million AMD for establishment of a fruit orchard on 1 hectare. Compared to the same period last year, the number of beneficiaries increased 13 times.

12) The “Co-financing program for installation of modern irrigation systems” was also amended. Within the program framework, 16 loans at the value of 328.1 million AMD were provided by subsidizing the loan interest payments, for installation on 185.8 hectares, and the subsidized amount was 38.5 million AMD, whereby 8.3 million AMD were provided to 6 beneficiaries as compensation for installation on 50.14 hectares. Compared to the same period last year, the number of the program beneficiaries increased around 2.3 times, whereas the amount of provided loans increased by around 11.8%.

13) The program on subsidizing the interest payments on loans provided for installation of hail protection nets in the agricultural sector was also amended this year, a loan at the value of 4.6 million AMD was provided.

14) After certain changes in the state support program on financial lending – leasing - of agrofood equipment, 91 applications were approved at the value of 2,372.9 million AMD, whereby the subsidized amount was 36.9 million AMD. Within the program framework alone, during the current year an investment of around 2.9 billion AMD was made in the agrofood sector and 328 units of equipment were purchased.

15) In 2020, the program on “Subsidizing the interest rates on the loans provided to the agro-processing sector for purveyance (procurement) of agricultural raw materials” was amended and adjusted with necessary changes, 89 applications in the amount of 9.9 billion AMD were approved. Within the framework of approved applications, 8,943 contracts were signed with rural households on the buy-out of the harvest, and the subsidized amount made 315.9 million AMD. Compared to the same period last year, the number of the program beneficiaries increased by around 59%, and the amount of provided loans increased by around 70%. The implementation of the program created a competitive environment in terms of payments against purveyance and for the first time in the last decade the cost of fruits and vegetables and grapes was fully paid out to rural households by the end of December.

16) 357 units of agricultural machinery, including 157 tractors, 4 combine harvesters, were provided to 210 beneficiaries within the state support program on “Financial lending - leasing - of agricultural machinery”, the amount of leasing was 1.7 billion AMD, and the subsidized amount was 129.5 million AMD. Compared to the same period last year, the number of both leaseholders and provided agricultural machinery increased around 1.7 times.

17) Within the framework of the project on “Support to promotion of sustainable land management within the framework of the 2nd phase of the Global Land Partnership”, a program document was signed between the RA Ministry of Economy and the UN Food and Agriculture Organization (FAO), which is scheduled to start in 2020.

18) On November 27, 2019, a memorandum of technical cooperation with a value of $279,000 was signed between the RA Ministry of Economy and the UN Food and Agriculture Organization (FAO) on the land market development through formation of a new legal and institutional framework for issues of non-use of lands, as well as development of a land management toolkit through establishment of land banks.

Industry

19) In 2019, 57 programs were approved, the total cost of which is 212 billion AMD, and within this framework exemption privileges for customs duties were granted at the amount of 14.8 billion AMD. It is envisaged to create 3,320 jobs. The value-added tax deferral privileges were also granted to 13 programs, the deferred amounts of VAT constituted 10.1 billion AMD.

20) The participation of Armenian companies in 5 international sectoral exhibitions was ensured in the following areas: home appliances, food processing, shoe production, and jewelry production. As a result, exportation contracts in the amount of around 371.4 million AMD were signed.

21) With a national pavilion, Armenia participated in the 2nd China International Import Expo 2019 in Shanghai, China, presenting the Armenian culture, tourism, the advantages of the Armenian economy, the industrial development perspective, exportation and investment opportunities.

22) In April-October 2019, with a national pavilion, Armenia participated in the International Horticultural Exhibition in Beijing, China, presenting the horticulture and agriculture in Armenia, winemaking, Armenian culture and history, and various videos on Armenia’s tourist attractions were repeatedly shown. The Armenian pavilion won the gold prize at the International Exhibition in Beijing.

23) With a joint national pavilion, 30 Armenian wine-making companies participated in 9 prestigious international exhibitions, whereby 200 preliminary agreements on exportation were achieved.

24) A study of the gene pool of 420 samples of Armenian grape varieties was carried out, as well as discovery of new varieties and registration of 171 varieties in the Armenian Vitis Database.

Support to the small and medium-size entrepreneurship

25) Legislative amendments were introduced in the RA National Assembly, as a result of which it is envisaged to decriminalize the violations of sale or rules of labeling of unlabeled or non-relabeled goods.

26) An online information and consulting platform for business planning, launching, management, and expansion was set up at www.isc.am, where entrepreneurs can find business-related training materials and videos, as well as industry-related business guides, which will give them an insight on main actions related to service provision or goods production in a given sector, the need for financial resources necessary for establishment and operation, market entry, positioning, and pricing policy.

27) 364 beginner entrepreneurs participated in the “Successful start” courses, of which 238 developed realistic business plans, and 159 were submitted for financial support. As a result of the program, 82 new SME entities were established in 2019.

28) As a result of negotiations with partnering financial organizations in 2019, a new mechanism for provision of loan guarantees to start-up entrepreneurs was agreed and developed, which will lead to a dramatic increase of the number of potential beneficiaries for the assistance provided by the Investment Support Center (ISC) in this area, as well as the threshold of 5 million AMD of the provided loan guarantees will increase to 7 million AMD.

29) The total amount of insurance sums of the certificates signed by the “Export Insurance Agency of Armenia" in 2019 equaled 11,584,358,543 AMD (1.48 times increase over the whole of 2018), and the total amount of the collected insurance premiums equaled 112,543,619 AMD (1.49 times increase over the whole of 2018).

30) In 2019, the Intellectual Property Agency of the RA Ministry of Economy received 145 applications for inventions and utility models, 37 applications for industrial designs, 2,582 applications for trademarks, which is 28% increase compared to the previous year.

Foreign trade, international cooperation

31) For the purposes of exporting under the European Union’s GSP+ regime, 135 companies were registered in the REX system, of which 100 companies registered during this year (product types: canned food, alcoholic beverages, textile goods, precious stones and jewelry, natural and carbonated water, honey, dried fruits and vegetables, etc.). A video guide was developed on how to register in the system, which is posted on the Ministry's website and eRegulations platform.

32) With the assistance of the European Union and EBRD, the first private equity investment fund was launched in Armenia, which will be managed by the international investment company “Amber Capital”. The fund will raise a total of 70 million EUR to invest in small and medium-size enterprises in Armenia to improve the competitiveness of beneficiary SMEs, including also through upgrade of corporate governance and transparency, thus promoting the internationalization of SMEs.

33) In October 2019, the second session of the Armenia-EU Trade Partnership Committee and the first session of the Armenia-EU Geographical Indications Sub-Committee took place in Brussels. The implementation of the roadmaps with reference to the trade and trade-related issues of the Comprehensive and Extended Partnership Agreement, a number of issues related to the Armenia-EU trade and economic cooperation, as well as other issues related to the legislation on geographical indications were discussed.

34) The Free Trade Agreement between Singapore and the Eurasian Economic Union was signed, pursuant to which Singapore has the obligation to exempt customs duties for importation of all goods originating in the EEU member states. The Agreement on the “Services trade and investments between the Republic of Armenia and the Republic of Singapore” was also signed, which liberalizes the realization processes on services trade and investments between the two countries and promotes discovery of new markets.

35) The Agreement on the trade and economic cooperation between the EEU and China also entered into force on October 25, 2019, which allows to reduce the market entry barriers for the business entities of the EEU member states and China, as well as increase the regulatory transparency. The EEU-Iran interim agreement, which envisages reduction of Iran’s tariff obligations by up to 75% of the existing customs duties, came into force in October 2019.

36) On October 25, 2019, within the framework of the Eurasian Intergovernmental Council, the Agreement on the free trade zone between the EEU member states and Serbia was signed, the main purpose of which is to create new trade opportunities, as well as provide a preferential access to the markets of the member states of the Agreement.

37) On October 25, 2019, at the effect of activities of the Armenian side, a relevant agreement was signed on avoiding the double hallmarking of jewelry.

Tourism

38) In order to raise the awareness and recognizability of Armenia, in 2019 the Tourism Committee of the RA Ministry of Economy invited more than 50 media representatives and bloggers from different target markets to visit Armenia, in particular, from Russia, Germany, Italy, Switzerland, USA, Poland, and Israel. As a result of these visits, there were more than 5 million views about Armenia and more than 50 articles were published.

39) With the support of the Tourism Committee of the RA Ministry of Economy, the presence of the official pavilion of Armenia at the following 4 prestigious international exhibitions was ensured.

40) In order to improve the tourism statistics with the help of the Border Management Information System (BMIS), an appropriate software is developed, which will allow to ensure maximum accuracy in collecting data on the number of tourists visiting Armenia, including their citizenship, age, sex, border crossing points, as well as detecting the number of repeated visits within the number of total visits.

41) With the support of the Tourism Committee, 5 traditional festivals were organized in the regions of the Republic of Armenia, whereby each of these festivals was actively attended by the local population and that of the neighboring communities, domestic and incoming tourists.

42) Within the framework of the World Bank’s “Local Economy and Infrastructure Development” Project, repair works of roads leading to the main tourist destinations or infrastructure adjacent to the tourist attraction sites were approved and are under implementation in 6 Marzes of Armenia. The construction works of roads leading to the tourist attraction hubs of the “Symphony of stones” in Garni, the Dendropark in Stepanavan, Kumayru Street in Gyumri, and the monastery complex of Tatev are finalized. In 2020, large-scale construction will begin for improvement of tourist sites.

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