|                                                                                                                                                                          |  | ARMENIA ATTRACTS INVESTMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsCustomsCornerPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | August - September 1998by Kristine GyulbudagyanAlthough Armenia was one of the first countries of the NIS to start the privatization
process, it has been slow to attract the attention of foreign investors. The decade-long
Nagorno-Karabakh conflict with neighbor Azerbaijan raised political and security issues
which deterred many investors. Other concerns focused on low domestic savings and
investment levels.  However, with a lasting cease-fire (1994), declining inflation, and
economic growth, albeit small, Armenia is entering a period of relative economic and
regional stability, which is attracting foreign business activity.International Attention
Armenia has already captured the efforts of some private investors and foreign
corporations. A number of multinational companies, including Coca-Cola, IBM, Bristol
Myers Squibb, and Huntsman, have taken the lead in pursuing local opportunities.  Ethnic
Armenian entrepreneurs, mainly from the United States, have also been investing heavily in
Armenia in recent years. Billionaire Kirk Kerkorian (MGM) has recently funded an $85
million road construction project that will connect the Black Sea and the Persian Gulf via
Armenia. Other investment projects by international entities include a $100 million
investment in luxury housing units, estimated to create 20,000 new jobs, and production of
digital telecommunications equipment.Recently, international lenders, such as the International Monetary Fund (IMF), 
World Bank, the Overseas Private Investment Corporation (OPIC), Eurasia
Foundation, and the European Bank for Reconstruction and Development (EBRD),
have stepped up their programs in Armenia, although not without hitches.  Many of these
programs have targeted specific industries, ranging from construction services to high-tech
hardware and software development.As of January 1998, EBRD had approved three public sector sovereign-guaranteed
projects, for the Hrasdan power plant, the Zvartnots Air Cargo Terminal, and the
Yerevan Wholesale Market. The three projects have encountered delays, but EBRD
continues to consider projects in Armenia. This summer EBRD decided to purchase a 10
percent stake in the recently privatized telecommunications company ArmenTel.Commercial Environment
Among the Armenian Government's top priorities in recent years has been focusing on attracting
foreign investment. "The Foreign Investment Law" of 1994 provides foreign investors a five-year
guarantee that government legislation will not be adversely changed.  Furthermore, "The Pledge
Collateral Law" of 1995 provides guarantees against liabilities in business for both domestic and
foreign entities.  According to the law, the lender has a priority right to be paid from the value for the
pledged assets if the borrower cannot pay the liabilities guaranteed by pledge collateral.Former Prime Minister and recently-elected President Robert Kocharian has been a proponent
of commercial legislation designed to stimulate foreign investment. The newly formulated "Industrial
Development and Restructuring Plan" and the State Council to Protect and Stimulate Investment aim
to strengthen industrial output by facilitating the process of foreign investment and reforming
Armenia's legal and tax codes.Opportunities
High technology, telecommunications, apparel, food processing, and construction
services all represent opportunities for foreign investment in Armenia. Trade with the United
States grew more than 8 percent in 1997, and while charitable donations, primarily of
pharmaceuticals and medical supplies, and cereal grains accounted for a large portion of
U.S. exports to the country last year, dairy products and machinery also played a role.For more information on Armenia, see BISNIS Online at
www.mac.doc.gov/bisnis/country/caucasus.htm.Kristine Gyulbudagyan works with BISNIS in Washington, DC.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)