Business Environment

Business Environment Improvement

One of the most important conditions for economic development of the Republic of Armenia is the improvement of business and investment environment. To achieve this goal, the Government of the Republic of Armenia aims to create a simple, transparent and less costly environment of state regulations, services and administrative procedures, equal competitive conditions, a business support developed market infrastructure, as well as to implement a balanced tax and customs policy for the businesses. In this direction for business environment improvement the Government of the Republic of Armenia has adopted 3 programs (decision No. 775, 2008, decision No. 97-N, 2010, decision N 1768, 2010, decision N 1930, 2011, decision N 240, 2013). Above mentioned initiatives have been implemented in the following directions:

1. Paying Taxes

The frequency of tax reporting and tax payments has been reduced

2. Trading across borders

Reforms have been implemented in trade related technical control fields (required product certification, metrology control, veterinary control, phytosanitary control, certificates of origin and country of issuance). The electronic customs declaration and customs clearance systems were implemented.

3. Starting a business

The procedure for registration of companies and entry into a list of individual entrepreneurs through the web-site (www.e-register.am) of the Agency of the State Register of Legal Entities of the RA Ministry of Justice is approved, The currently active types of activities subject to licensing have been reduced from 169 to 96, 12 of which are types of simple licensed activities, whereas 84 – are types of complicated, as well as an electronic system for obtaining a license is introduced (www.e-gov.am). The binding requirement for having a seal by legal entities is abolished.

The state registration of organizations became free of charge, in the result of which previously charged 17,000 AMD required for registration is not paid any more.

The requirement of sealing documents submitted by economic operators is eliminated.

4. Dealing with construction permits

Elimination and simplification of Construction permitting procedures, particularly the approval of technical conditions (water, electricity, etc.) are obtaining by the Municipalities and provided to applicant together with architectural-constructional assignment (APZ).

5. Enforcing contracts

DataLex public information system created within the framework of Judicial Reform Project is designed to provide a number of online judicial services, particularly the “e-auction” by which a forced electronic auction is performed, ensure the highest transparency of the procedure and no one can control its process, which inevitably reduces the corruption risks.

6. Getting credit

The Central bank of the Republic of Armenia has adopted a number of legal acts which are aimed to ensure the confidentiality of credit information at providing to credit bureaus, licensing of credit bureaus, the credit information becomes more accessible and the process of acquiring loans gets quicker.

Starting from January 1, 2012, lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus. Lenders use credit scores to determine who is qualified for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system (more about credit score are available on http://acra.am/en/score_report.html).

7. Protecting investors

On May 25, 2011, the RA National Assembly adopted and the RA President ratified the RA Law “On making amendments and supplements to the RA Law on Joint Stock Companies”, which improves the mechanisms of detecting transactions executed with interests in company transactions (economic activity) and expands the responsibility of directors. On 30 Dec. 2010 the RA Government adopted Decree “On approving the code of corporate governance of the Republic of Armenia” N 1769-A, the Code approved by the Annex of which is elaborated with the assistance of EBRD in compliance with the international best practice and OECD principles. The Code defines the criteria based on international best practice of corporate governance taking into account the current practice and environment in Armenia. The Governmental decree of the Republic of Armenia “On the list of 50 percent and more state owned enterprises and Corporate Governance Code’s Implementation schedule” N 881 was adopted on 23 June, 2011. In assistance with EBRD the Corporate governance compliance statement was drafted.

8. Registration of a property

In the sector of property state registration acceleration coefficients/factors of a registration have been implemented.

The Government Decree #1441-N of September 29, 2011 defined that State registration of previously measured property is carried out with no additional measurement and payments.

According to the Order #361-L of the head of the Real Estate Cadastre State Committee, adopted on December 19, 2011:

♦Since January 1, 2012, applications on state registration of the right of ownership to the real estate or on provision of information may be submitted to any cadastre service office, regardless of the real estate location.

♦The Government defined sample contracts, which make it possible to conclude real estate transactions without notary ratification. (Government Decree #1851-N of December 22, 2011). The RA Government Decree N165-N of February 9, 2012, defined the procedures to submit online applications and documents for the state registration of the rights of ownership and restrictions to the property. This made it possible to submit applications on state registration of the right of ownership to the property and attached documents online (http://www.e-cadastre.am/en).The RA SCREC official website also provides online consultancy on state registration of property rights (http://www.e-cadastre.am/en)

♦From April 2012 invested the Electronic Payment System (www.e-payments.am), which gives the opportunity to make online payments charged for the state fees, local duties, the administrative penalties or services provided by state and local self-government bodies. Payments can be made via ArCa or Master credit cards, as well as via ArCa virtual card)

9. Closing a business

Time for the companies’ liquidation process was reduced.

10. Employment relations

According to RA Government Decree, business support hotlines, as well as the Revenue Committee's / Head of State Revenue Committee / Board of the inter-agency appeal has been set up. The reforms are continuing and aimed at transforming Armenia into one a country with a favorable business climate. In this regard, RA Government has adopted a Decree N 240-A on approving the program of business environment improvement of the Republic of Armenia, where a number of initiatives on legislative and administrative reforms are included.

Department of Business Environment Improvement and SME development of the RA Ministry of Economy is responsible for the business environment improvement related activities and the activities towards the SME development policy in the Republic of Armenia. Tel: (+374 11) 59-71-30

Regulatory Management

In the main directions of economic development one of the problems is introduction of the regulatory impact assessment (hereinafter referred to as RIA) instrument in legal acts development process.

The legal basis for RIA in Armenia was laid in 2008 by introducing corresponding amendments in the Law of the Republic of Armenia on Legal Acts and establishing a mandatory requirement for conducting regulatory impact assessment of the draft legal acts. This provision legally came into force on January 1, 2011.

Currently in Armenia RIA is conducted in 7 sectors by 6 ministries:

  1. Ministry of Economy carries out impact assessment on SME according to Governmental decree N1159 dated 15.10.2009 and impact assessment on competitiveness according to Governmental decree N1237 dated 29.10.2009.
  2. Ministry of Justice carries out impact assessment on anticorruption according to Governmental decree N1205 dated 22.10.2009.
  3. Ministry of Labor and Social Affairs carries out impact assessment on social protection according to Governmental decree N18 dated 14.01.2010.
  4. Ministry of Finance carries out impact assessment on budget according to Governmental decree N1021 dated 10.09.2009.
  5. Ministry of Health Care carries out impact assessment on healthcare according to Governmental decree N1104 dated 23.09.2009.
  6. Ministry of Nature Protection carries out impact assessment on nature protection according to Governmental decree N921 dated 13.08.2009.

Implementation of regulatory impact assessment process in Armenia is supported by the “Support to the RA Ministry of Economy: Regulatory Management/Standard Cost Model” EU Twinning Project contract that was signed within the framework of European Union-Republic of Armenia cooperation. Project beneficiary is the Ministry of Economy of Armenia. Technical assistance of the project implementation is provided by HAUS Finnish Institute of Public Management. (http://www.haus.fi/en/)

In the process of introducing RIA in Armenia Government of Armenia approved the “Concept paper on improving the Regulatory Impact Assessment of legal acts in Armenia” in 29.12.2012. This will give an opportunity to provide more effective regulations.

As a result of introduction of RIA system in Armenia the following targets expected to be achieved.

  1. Increase of the economy competitiveness.
  2. Provide transparency of making decisions in the lawmaking process and increase involvement of publicity and stakeholders in decision making processes.
  3. Increase the effectiveness of reviewing legal acts that will strengthen trust and confidence of the publicity and business environment towards law drafting and adaptation process.
  4. Adoption of Standard Cost Model as a tool on administrative cost calculation.
  5. Develop regulatory impact assessment criteria. As a result decision making process will be more justified.

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