When will Armenia’s business sector show progress?
`A smaller country may easier adapt to new conditions,’ Deputy
Director of Association of Russian Banks analytical department said.
Improvement in business climate may become possible through raising
the level of property rights protection in the country to stimulate
capital inflow and simultaneously reduce its outflow, according to
Sergey Grigoryan, Deputy Director of Association of Russian Banks
analytical department.
July 23, 2011
PanARMENIAN.Net – `Business goes where it feels comfortable. In Russia
as in any post-Soviet country this problem remains urgent and requires
solution,’ Grigoryan told July 20 Yerevan-Moscow TV bridge on Capital
Outflow; Post-Soviet Space.
According to forecasts, capital outflow from Russia will total $ 35
bln this year. The problem of capital outflow is pressing for
neighboring countries as well.
The head of Alternative Armenian analytical center, Doctor of Economic
Sciences, Tatul Manaseryan, in turn, added that if in Russia’s context
billions are concerned, in Armenia even a million worth amount outflow
has an essential impact on economy.
Moreover, if Russia encounters capital outflow, it is partially
compensated by direct foreign investments inflow, whereas in Armenia
the reverse process is ruled out, that is, capital inflow is, in fact,
episodic, which is a problem for ensuring economic security of the
country,’ Manaseryan said.
Tatul Manaseryan and Armenian parliamentarian Manvel Badeyan
forecasted improvement of economic situation in Armenia in the second
half year of 2011 against the same period in 2010.
According to the parliamentarian, the economic growth repotted in
Armenia does not mean much, having no firm foundation, as compared
with the zero-growth of developed countries signifying a stable
development. As Badeyan stressed, investments in human resources must
be made a basis of Armenia’s economic development.
Mr. Manaseryan, in turn, expressed dissatisfaction over Armenia’s
failing to fully use its potential. `It’s shameful that Armenia must
be moving towards development at snail’s pace,’ he stressed.
The independent expert stressed construction, manufacture and services
among problematic sectors in Armenian economy.
A 2,3% growth in economic activity index in Armenia in June 2011 was
reported as compared to the same period in 2010. According to the
National Statistical Service, the economic activity growth was 9,6%
higher in June compared to May 2011. Inflation amounted to 8,5% in
June 2011 compared to the same period in 2010. Consumer prices reduced
by 1,4% in June as compared with May 2011. The national budget
envisages 4,6% GDP growth and 4% (±1,5%) inflation for 2011.
The main factor impeding improvement of business environment for both
Russia and Armenia is political will, which Georgia proved to have
enough, and was able to achieve progress in this field, according to
Sergey Grigoryan.
The Russian expert pointed out existence of bureaucratic delays and
availability of financing among other impeding factors.
Tatul Manaseryan, in turn, emphasized importance of maintaining the
balance between rights and responsibilities on the way to progress.
`When rights are granted, responsibility must be assumed. Georgia
punished those who failed programs,’ Manaseryan said. The analyst
stressed that high-ranking officials, including ministers and
responsible officers must not be dismissed without estimation of their
work results.
It should be noted that aimed at improvement of business environment
Georgia’s authorities provide tax privileges for business. Georgia is
ahead of Armenia and Russia in business registration rate. This allows
stimulating development of both large and medium business.
According to Manaseryan, Armenia has just begun to talk about creation
of free economic zones. `There are no monopolies in Georgia, oligarchs
cannot `swallow’ small and medium business,’ economist said.
Transport blockade is, certainly, an obstacle for development of
business in Armenia and stimulation of investments inflow, according
to Tatul Manaseryan.
However, neighboring countries being members of the World Trade
Organization (WTO) violate rules and apply discrimination approach
towards Armenia, Manaseryan said. It is not a secret that Armenia’s
transportation costs on the territory of Georgia several times exceed
costs for passing similar distances elsewhere. The expert said Turkey
and Georgia signed a range of international conventions envisaging
free outlet for landlocked partner countries.
Armenian banking system successfully managed to adapt to international
standards, according to Sergey Grigoryan. `Based on its regulation,
Armenian banking system is closer to Western standards than Russian
one,’ Grigoryan remarked. In this respect, Grigoryan noted that
adapted International Financial Reporting Standards (IFRS) are already
applied in Armenia, whereas Russia plans to implement them only in
2015. `This is one of visual examples of how a smaller country may
easier adapt to new conditions,’ he said.
Touching upon Armenian-Russian cooperation in the banking sphere, the
representative of Association of Russian Banks underscored that
presently assets of Russian banks in the Armenia’s banking system
total $94 mln.