– In the past you were the director of the Union of Manufacturers and Businessmen of Armenia, now you lead the Union of Employers. There are so many such structures in Armenia and their use has little visibility. Thus, people start to view them as state bodies. In this regard, what is the role and importance of the Union of Employers?
– No, this is not a state body and cannot be viewed as such. We are a private structure but the Union was established based on the Armenian legislation on labor and the law on the unions of employers. The goal of our structure is to create a dignified condition for workers and associates. In Armenia we are lacking in business ethics but in the meantime the mission of our structure is to improve this environment, conduct experience exchange with other countries. We are trying to unify the business sector and create a joint, common business environment. We encourage Armenia to become a member of the western partnership and boost economic development because if our authorities don’t undertake necessary steps in the near future Armenia will turn into a labor exporting country for the developing Europe.
– The Union of Manufacturers and Businessmen of Armenia, where you had been an executive director for a long time, was also called to tackle these issues. Why did you leave? Wasn’t it possible to reach these goals by working there?
– I was just not able to bear the environment there anymore. As a matter of fact, this structure was mainly encouraging the development of big businesses and by doing so it was debilitating the small and medium-size businesses. I was mainly against this standpoint, as a result of which they’d oppose me. Believe me, it was really difficult to work in such conditions. It is interesting that many people complain about the Union of Manufacturers and Businessmen by saying that it has turned into some kind of club and has lost its main meaning and mission. The small business is missing in that structure. Even now when we go back we don’t see any work or progress recorded by them.
– The government incessantly speaks about the conducted and future reforms but the representatives of the business sector complain of the current situation. How would you comment on the current reforms and business environment in general?
– The unconstructive work of certain structures really harms the situation. For example, the Armenian government in the beginning of the year was supposed to add the budget by 101 billion AMD. During this discussion 20-25 broad-scale entrepreneurs were invited, who have inaudibly agreed with the principles submitted by the Prime Minister. They gave their consent? At the expense of what could the budget be added by so much money? Why haven’t any of the 20-25 businessmen opposed this idea? They would claim that this money wouldn’t be collected from small businesses. As a result, the customs fees went up and so did the excise stamp. The government often benefits from this and usually invites to such discussions those entrepreneurs, who’d pretty much agree with what the government would have to say. For instance, our structure wasn’t invited to this meeting. If we were there we’d raise these matters. As of the estimation of the business environment, then can’t avoid confessing that certain changes have been taken place. Especially in the conditions of the global crisis the government has taken steps to improve the situation. It has fundamentally changed its policies but today we have such a chaotic situation that these steps cannot be sufficient for actual results. I consider the changes positive but think that our sufficiency level is still quite low. I don’t consider the work of the government insufficient but the problem is in the business environment. Unequal competition, corruption, low efficiency of advice, inspections of supervisory bodies, low productivity of enterprises, their survival, inaccessibility of offered bank loans or high interest rates, the intimidation level of small businesses are certainly insufficient and unsatisfactory for the development of economy. If we review the top-25 of our import and export, we’ll see that it mostly includes the representatives of small and medium businesses. It includes mostly largest businesses and if we subtract this number into the 1000 medium or even small businesses we will see that there is very low progress.
– Can the AMD devaluation be useful for domestic production and exportation?
– Indeed, this is only possible only in the case when the inflation could be restrained. For citizens, who receive foreign remittances will also benefit from USD revaluation but if the prices are growing the sent money is still inefficient. In the whole world the prices for goods were slumping but we were witnessing the opposite scenario in Armenia. It is interesting that in Europe some of the goods have not risen in prices but in Armenia we saw the opposite picture. The businessmen would bring up the reason that the next portion of imported goods should have been bought at a cheaper price which wasn’t realistic. The state should use some restraining mechanisms if it plans to turn the country into a tourist destination.
– Why was there no inflation in the case of gasoline?
– Because in this case, international prices affected the situation. The prices dropped and the price didn’t go up here. Even back then, I have suggested establishing a structure that would predict the prices at least by 50/50 prediction. If the loan is taken with USD during the acquittal period certain problems are created. It means that in the case of USD revaluation by 10% the businessman won’t be able to pay back the credit interest rates.
– To what extent is the banking system involved in the economy? Is it possible to start a business and develop it within current economic conditions?
– The banks avoid working with small businesses. The work and torture is the same as the work with the large business. The large businesses are more predictable and more profitable to work with. Banks provide loans to new businesses with difficulties. The banking system is being credited in a closed cycle and the banks mostly credit the same businesses. The banks also wish to nullify the risks. I am against this approach and think that the banks should share their risks with the entrepreneurs to ensure cooperation. But the banks don’t understand that management requires time. But in the Armenian mentality “waiting” is unacceptable.
– You have mentioned numerous issues. But are there actually branches of economy that function properly and have certain progress? If yes, which are those?
– Indeed, the IT sector, engineering and food production. Those are the important branches, which can seriously boost the economy. Unfortunately, the government doesn’t use it potential to reach better results. It doesn’t discuss the existing issues. In our case, we first do reforms that conduct analysis.
Yelena KARAPETYAN