Starting from 2008 there won’t be any privileges for the foreign investors in Armenia any more. The program of investment privileges of 1999-2007 is over now and the government is not going to resume it.
Let’s mention that in the first three years of starting business in Armenia the investors were exempt from paying income taxes in Armenia. After that they pay the income tax only partly till the end of the set period. In accordance to the mentioned program, those companies, the charter capital of which is almost 500 million USD, were exempt from paying income tax for 10 years. According to unofficial data about 60 companies benefited from this opportunity. Of course those were major companies. The head of the investment department of the RA Ministry of Trade and Economic Development, Gnel Mayilyan mentions that in 1999 East European states were offering better investment conditions, which indeed couldn’t help affecting the states of our region. “Certain investors after being introduced to investment privileges of our country hesitate a bit because there are more perspective countries than Armenia to invest in,” says Mayilyan. Besides investment privileges foreign investors are also interested in equal competition despite the fact that foreign investments are protected by international contracts. These investment contracts are bilateral, where all the terms and conditions of the parties are mentioned. Those even regulate arguments between parties. Such arguments are authorized to be solved by the International Dispute Arbitrage of Washington. Only the registration there costs 25.000 USD. Every application may require 1 million USD. “This is the high price of quite fair verdict,” says Mayilyan. He also informed us that the direct investments during the past 8 years amounted to 1.7 billion USD or 3% of the GDP. Who are the investors? This question was researched by the Ministry. They found out that 60% of investors are from the Diaspora, and such investment amounts to 25-30% of the overall investments. However, when we examine the list of 3349 foreign investors or Diaspora representatives of Armenia, we find out many of them or even the majority are local investors. The capital, which was taken out abroad, gradually returns to Armenia. In Armenia 31% are the direct investments of the EU states and 30% of Russia. Europe provides this index in our country mainly at the expense of mining and the Russian capital penetrated almost into all the sectors of economy of our country. It is obvious that besides energy and communication the construction is conducted by the organizations registered in Russia. Griar, Hayiralsibshen, Bamo Armstroy companies and many others are evidently the main providers of the local construction market. NKR also wishes to make investments in the construction sector. Our fellow citizens have tried their means in the auto service points. The interesting thing is that most of the investors from Iran, China, Turkey and other countries are registered as joint businesses. Importers of the Iranian Tage and Aftab are considered foreign investors in our country. And the American capital has adapted in the sector of IT and new technologies. It is very easy to identify the ones, who are investing their capital in their own country – Armenia. Nominally their businesses are registered as offshore enterprises. Fleet Food LTD of NA MP Samvel Alexanyan has an Indian origin. Former NA MP Gurgen Arsenyan’s Ars Oil is registered in Cyprus. Golden Palace Hotel, NA MP Tigran Arzakantsyan’s Great Valley, Mikmetal and other companies also have a Cyprus registration. Armenian-Russian links were even more fortified by Ararat Lada, Haybusak, Meshok Papi, Arminco, Cornett, Mika Armenia Trading, Vallex mining and over a thousand more companies. The Commandos Puma LTD as a Russian investor is occupied in wholesale of colored metal. And Moscow Movie Theater preferred to trust the French capital. Shant TV of Gyumri is registered in Germany. Davitashen Bread Factory of Yerevan is registered on the Virginian Islands. And it is not the only Armenian company registered on those islands. It is accompanied by the Cooper Molybdenum Factory of Agarak and Royal Tobacco, which is in cigarette wholesale business. Bari Samaratsi company is registered in the US. Among the 3349 registered foreign investors of Armenia the most interesting status belongs to Arka agency, which is registered in Azerbaijan. The Armenian government, which has decided not to support the foreign investors any more, is lingering to develop a program for exporters. A certain policy will be developed and implemented in collaboration with Zvartnots Airport, according to which certain privileges will be given during the exportation of certain programs.