**IT’S A GOOD TIME TO LOOK ATARMENIA**

 

By Sonia Medzadourian Crow

 

Armenia’s transition to a market economy remains a work inprogress, but this is a good time for the U.S. business community tolook at Armenia. Armenia has built an exceptional track record on reform, whichhas brought considerable macroeconomic gains and helped establish a suitableframework for a private-sector friendly environment. 

 

Positive developments in Armeniainclude: 

Ø*  MacroeconomicStability***.**Cumulative inflationby the end of 1996 was 5.7 percent, the lowest in the NIS; for the first sevenmonths of 1999, it was 0.9 percent. After years of collapse, GDP grew by 5.4percent in 1994 and has continued in the positive range of 5-7 percent forsubsequent years. The fiscal deficit declined to 8.4 percent of GDP by 1996,down from 48 percent in 1993.****

Ø*  AdvancedLegal Framework***.** With thepassage of the new Civil Code in 1998 that includes fundamental commerciallegislation and with other laws on contracts, bankruptcy, and real property,Armenia has “one of the very best legal frameworks in the region,” according to        theWorld Bank.

Ø***Privatization***.** Almost 100 percent of arable land is privately owned, as is 80percent of the housing stock. Nearly 5,000 small businesses and over 1,100medium and large enterprises have been privatized to date.

Ø* **Banking***.** Modern laws (covering the Central Bank, banking, and bankinsolvency) have been adopted. Loan-loss provisioning has been introduced andenforced strongly. Movement of funds is unrestricted.

** **

The core of the government’s reform program has been thestimulation of the private sector (75 percent of GDP growth for 1998 came fromthe private sector) and the removal of barriers to foreign investment.  Armenian President Robert Kocharianstated recently that “today capital knows no borders. At this important momentin Armenia’s history, the role of foreign investment cannot be overestimated.” 

 

Armenia offers attractive investment opportunities in suchareas as computer software engineering (the country has an inexpensive, highlyskilled labor pool); high-tech electronics, engineering, and assembly;chemical/biochemical production (40 percent of the entire Soviet Union’schemical and electrical engineering output came from Armenia); consumer goodsand light manufacturing (textiles, shoes, household goods); pharmaceuticalsproduction; and agribusiness.

** **

Today, Armenia continues to serve its historic function as acrossroad linking Europe, Asia, and the Middle East, which offers investorsentry into regional markets well beyond the size of this small republic. Anotable example of Armenia’s attractions: In July 1999, **General Motors** announced plans to build an assembly plant inArmenia.  

 

The USABIA

The United States–Armenia Business and Investment Association(usabia), a nonprofit tradeorganization established in 1998, works to promote business, trade, andinvestment ties between the United States and Armenia. With offices inWashington, D.C., and Yerevan, usabia facilitateseconomic development, networking, matchmaking, information exchange, trademissions, and cooperation between U.S. and Armenian businesses and governmentalentities—including advocacy in Washington and Yerevan on issues of importanceto U.S. businesses. 

 

usabia has aformal agreement of cooperation with the Armenian Government through theArmenian Development Agency (ADA), which was established in 1998 to promote aninvestment climate that attracts foreign capital and supports the ArmenianGovernment’s open door trade and investment policy. 

 

In June 1999, usabia launcheda website that features information designed to facilitate commercial relationsbetween the United States and Armenian business and investment communities byproviding “guides” on doing business in Armenia, investment opportunities,economic data and analysis, travel tips, and links to pertinent resources.

 

In July 1999, usabia andthe Armenian Engineers and Scientists of America, Inc. (aesa) announced the signing of a memorandum of understandingto work together cooperatively with the aim of promoting critically neededeconomic development in Armenia. The formal agreement outlines a range ofactivities for mutual cooperation, including trade missions, business forums,investment seminars, and the provision of technical assistance for purposessuch as sector analyses, trade links, and matchmaking between Armenian and U.S.entrepreneurs.

* *

*Formore information about the activities and services of USABIA, call (202)342-2582, email [email protected], or visit www.usabia.org.  *

 

*SoniaMedzadourian Crow is Executive Director of the **U.S.–Armenia Business and Investment Association** (usabia).*

* *