No matter how much the RA premier Tigran Sargsyan advises not to speak about the international crisis in order not to open its access to Armenia, our country, however, even now has some serious economic issues.
The crisis first of all affected the mining sector. The sector of exported mining resources is fully paralyzed because the prices of minerals are dropping in the whole world. The producers of Armenia already feel the influence of the crisis. Yesterday we tried to check from businessmen-MPs whether the international crisis affects their exportation rates much. We also tried to check what expectations the domestic businessmen have from the government to help them settle these issues. NA MPs Hakob Hakobyan, owner of Kilikia brewery, Tigran Arzakantsyan, owner of Great Valley and Areg Ghukasyan, owner of Salt Plant of Avan presented their opinions about the issue. Owner of Vedi Alco and owner of Jermuk Group Ashot Arsenyan refused to comment on the issue. According to Hakob Hakobyan, “the international crisis impacted the whole world and it does affect Armenia as well. I think we will be feeling this influence very soon some time in spring, March. We have already exported the winter portion of the beer to Russia. Now we have a problem of receiving this money because the crisis affects Russia as well. They are having a hard time transferring the money and soon we will appear in a difficult financial state. The producers in Armenia have seen even worse days. Let us remember the blockade of 93-94. We survived back at that time and I am sure we will make it now. All we need is a correct program between the entrepreneurs and the government. Of course the government must show good will to improve the situation.”
-Do you think it is possible that you cease your production due to the crisis and the reduction of exportation?
-This is the worst case scenario. Everything is possible but we will try to avoid that. But if things get real bad we will have to cease our business however I hope it doesn’t happen. When summer comes we will see as beer is a seasonal consumption good. But it’s not only beer. If the other enterprises cease their operation we won’t be able to pay salaries and produce more stuff. If families don’t have money they will not only refuse to buy beer but also lemonade and juice.
-What expectations do you have from the government to relieve the influence of the crisis on the domestic producers and exporters?
-There was a meeting with the premier. I see that the prime minister and the president are hopeful about overcoming the crisis. I don’t know what the outcome is going to be. One thing is to say another to do. There are both objective and subjective reasons for the fulfillment of preventative methods. It is wrong to only accuse the entrepreneurs or the government. There are certain issues that don’t depend on them either.
-Have you presented your own recommendations to the government on preventing the crisis? Have you submitted recommendations, which wouldn’t harm the state budget or the entrepreneurs?
-Of course, we have. For example we offered them to free the importers of raw material and devices used during production from the VAT tax. The shipping fees of the raw material are very expensive and we would benefit if we imported wholesale amount of raw material for 6 months or a year. We agree with foreign companies on good conditions of payment and we pay them part by part. But once we reach our border we immediately pay the VAT tax. Now I see a problem here. It would be good if they didn’t levy tax for the raw material and devices on the border. We take loans and purchase expensive devices for the production. It takes about 6 months until these devices are built and nearly 1.5-2 months until they reach us. It takes about a month until these devices are installed in the factory. Here we lose 8-9 months and pay interest rates for the loan. I think that the VAT tax must be curtailed for the importation of devices if these are not imported for re-sale purposes. Now we are building a grain food (atsik) factory in Gyumri, which will open numerous workplaces for the rural communities of Armenia. We should store 20-25 tons of grain. This is immense work and there should be certain exceptions in these cases. I think that the raw material must not be taxed either because the VAT is paid anyway when the raw material is sold as a product.
In the opinion of Areg Ghukasyan the international crisis doesn’t have a very big influence on Armenia yet. “It didn’t affect our factory either.”
-Why? Because salt is always consumable?
-It may have had some influence if we had credit programs. At present we don’t have large loans.
-There are opinions that the Armenian economy will seriously feel the influence of the crisis in spring. Do you agree with that and do you think your business will suffer as a result?
-We have undertaken prophylactic measures in order to be able to smoothly go through the winter. It should be OK if certain cataclysm doesn’t occur in terms of the increase of the propane gas price. As a result of that we will have to increase the price of our product.
-What expectations do you have from the government to overcome the crisis?
-At present the government is inclined to protect the private sector. At present this process is in a discussion phase and it’s encouraged that these discussions are held with the Businessmen’s Union. I think that the interest rates of the customs fees must be revised, which are currently not high than 10%. We are a member of the World Trade Organization and we are allowed to have up to 15% custom tax. I think that certain goods should be taxed a little more than 10% on the border. The fees for the importers must be slightly increased so that the domestic producers don’t have too hard time. This should especially relate to the importation of goods, which are already produced by the domestic producers in the country. The NA will discuss the draft law on the revision of the excise law. And the recommendation of the MPs is to increase the fees for the importation of alcoholic beverages. I think this is another method to protect the domestic producers. There are many means and I think the government will understand those and implement in the near future.
Tigran Arzakantsyan has another opinion, “the international crisis has very negatively affected our business. The distributors are not able to receive finances for the goods they have sold. So they are not able to pay us. We have distributors in 22 countries and the situation is especially bad in Russia. They have great debts and we are waiting for their acquittal so that we will be able to export more portions of our goods. The exportation of our brandy was cut by 14 million USD, which makes 38% of the total exportation. I am negotiating with large banks of various countries so that they help my partners with loans so that the latter will be able to pay for the brandy. I don’t expect anything from the government of Armenia because our issues are mainly abroad.”