– The producers and especially the experts are alerting that they are approaching the margin, after which it ill be impossible to work. Mr. Ghazaryan, which is the margin of the AMD revaluation, after which our businessmen won’t be able to work?
– It doesn’t matter whether the USD is 200 or 1 AMD. Businessmen won’t feel great impact on them. But in the conditions when the year starts with 450 USD and ends with 360USD no matter how professional the economists are, they won’t be able to initiate much.
If the Budget was planned with 357 USD per AMD and if by the end of the year it’s 347 it’s bearable. But if the USD becomes 280-300 AMD we’ll have the same picture of the last year. All our sectors which have fixed rates benefit from this situation. The producers are suffering though but to a low degree.
– CB president Tigran Sargsyan was offering the producers to raise productivity and competitiveness in order not to damage themselves from AMD revaluation.
– I agree with Sargsyan, who offers to raise productivity and competitiveness but no matter how hard we try to develop those two parameters, who won’t be able to provide 70-80 percent profitability. Our food production successfully competes in three great markets – US, Russian and European. Under these circumstances our exporters do a good job by transporting their products to those countries and providing competitiveness. Many serious companies are ready to sign contracts with them.
– You mentioned that the Armenian economy is quite liberal. Do you think there is healthy competition?
– Let me mention that in the CIS region our market is one of the most liberal ones, even compared to Georgia. We have artificial monopolists, who were formed in the conditions of a wild competition and occupy a leading role. This mainly relates to the importation of certain products. Estimation about this was made by the Economic competition Protection Commission. I am sure that the economic reforms of our country will be able to improve the situation regarding the fake monopolies. But believe me if a serious competition starts in those spheres negative things will happen as well. The price will shift up. Let me tell why. Let’s take the sugar importation. The prices of 100.000 tons of sugar compared to the prices of 5000 tons of sugar strongly differ from each other during the deal. We have sugar price in Armenia, which is not the same in the neighboring markets. And it’s hard to definitely say whether during active marketing the prices will stay the same or not.
– But those artificial monopolists have fully occupied the economic sectors. Don’t you think that it contradicts the liberalization of the economy?
– I won’t see anything bad in there if they legally work in the open tax sector and out of shade. Very often the development of the business brings to monopolization and the whole world is concerned about that. Our market is small and even the few monopolists alert us. This is dangerous and may bring to unfair competition as the monopolists may offer their own prices, which might jeopardize even the national security of the country.
– Do you think that the monopolies created in our economy conduced to healthy competition?
– I can’t say whether those are a consequence of a healthy competition or not. But that’s our reality. The state must be extremely careful to the monopolies and not let them exceed their powers. The objective of the state is to control the situation and tax the entrepreneurs.
– It’s known that local businessmen are working in the conditions of expensive and limited transportation and you always mention that. Especially 2006 was a very difficult year for them. You also head the cargo transfer company, named “Apaven”. Are your means enough to provide the demand of the cargo transfers?
– The communications are not enough for cargo transfers. Let’s remember that years ago we started to speak about the “Port-Caucasus-Poti” ship, which was frozen for awhile. This is approaching its logical end. This ship was our dream to connect us with Russia.
– Who was the project realized by? The state or the private sector? Our cargo companies were always complaining that the state is never supporting them.
– That’s the issue of the private sector. The state did its best but the private sector solved that problem. The state signed an agreement with the ports of Russia and Georgia. Also Russia-Ukraine contracts were signed.
– Who are the exploiters? Is there anyone from the Armenian side?
– The exploiters are private sector international organizations, who were able to build a cargo ship with great technical data, which can enter that 3-metet deep sea side and provide profitable cargo transfer. It’s not important whether the private sector or the state resolved this issue. The important thing is that the ship functions and it brings incomes. Up to now we didn’t have any cargo ship, which could even load 50 wagons. The new ship takes 55 wagons. It has recently been built and in close future we will present the schedule of transfers of the company. This is international business and time will come you will know everything. The important thing is that our ship is quite enough for trade circulation with Russia.
– Russia seems to be trying to recover its air connections with Georgia. The land routes may also be opened – upper Lars passage. In that case do you think the ship will stop operating?
– No. One doesn’t oppose the other one. Some of the cargo, which doesn’t require excise stamps are transported by car. This costs pretty expensive. Lars wouldn’t hinder the operation of the ship.
– You are also co-chairman of the Armenian-Turkish committee. Recently this topic has become very popular. What perspectives the opening of the border will bring to Armenians?
– The border opening will of course have a quite serious influence on the countries of the region. Of course the experts are arguing to what extent Turkey and Armenia would benefit from border opening. In my opinion both Armenia and Turkey will equally benefit from this border opening. Armenia will become a transit country and will benefit from customs money. The joint businesses, like cement production, would bring great incomes to both of the countries. There are sectors, where Armenia would benefit a lot because it would immediately acquire a 70-million population market. This would bring to price decrease and improve competitiveness. The whole region would benefit from this because harmony economic integration will be recovered. Armenia will finally be able to recover its economic historic crossroads positions. The markets of Jordan, Syria, Saudi Arabia markets will be re-opened for us. Many industry branches would develop. And finally we will have an opportunity to be connected with the outer world. We won’t rely only on one ship or one route. We should open our alternatives. I don’t understand some of my colleagues, who fear that after border opening there will be Turkish expansion in Armenia. No there will be bilateral competition and both sides would benefit, especially us.
– Because the border opening is more important for us?
– No, because we are more active, more educated and prepared. Armenia was able to compete with the Turkish products during 13 years. And border opening will bring to wide-spread price deduction.
– The construction of Kars-Akhalkalak-Baku railroad is becoming more realistic. In the event of opening the border, wouldn’t this reduce our opportunities?
– Once this railroad is built we will enter into a competition. Thus the two roads will work. We should just be able to explain the exporters that the Armenian railroad is more effective, more cost-effective. The newly built railroad is going to pass though lots of mountainous places and thus will create certain seasonal difficulties. In the international viewpoint the construction of the Kars-Akhalkala-Baku is called deliberate isolation of Armenia because it’s not fair to do this to a country, which doesn’t have a sea. But if they have resouces let them built. Only our railroad will decrease its value by 50%.