Armenia: Building Opportunity

1. Armenia: Building Opportunity Republic of Armenia

2. Area - Total 29.800 sq. km • Population - 3,231,900 • Currency – Armenian Dram • BORDER COUNTRIES / • Border length in km. • 1. Azerbaijan-566 km, • 2. Georgia - 164 km, • 3. Iran - 35 km, • 4. Turkey - 268 km YEREVAN Armenia The capital of Armenia COUNTRY LOCATION

3. Armenia: Building Opportunity Closing Opportunity Gaps Untapped potential as a vehicle for growth Building Bridges Armenia as a platform for international partnerships

4. Armenia: Building Opportunity • Shared history • Linguistic ties • Cultural linkages • Trading agreements • Active diaspora Building Bridges Armenia as a platform for international partnerships

5. Armenia: Building Opportunity • Highly trained human capital • Unexploited resources • A government ready for partnerships in: • Technology • Education • Life Sciences • Tourism • Energy • and beyond Closing Opportunity Gaps Untapped potential as a vehicle for growth

6. 6.7% MICROECONOMIC INDICATORS INFLATION RATES by years (percent) 2005 2.2% 2006 4.8% * IMF indicates lowest inflation in Armenia in CIS 2007* 2008 2009 6.5% 5.2%

7. 1132.4 MICROECONOMIC INDICATORS Foreign Direct Investmentsby years (mln. USD) 2006 305 2007 670 2008 2009 840.7

8. Political Factors Post- election stable situation Ambitious tax reforms Government Commitment to FDI Attraction Open international relations Armenia is a member of IMF,WTO, MIGA, Council of Europe and etc.As a member of MIGA it is possible to get MIGA guarantees to insure investment againstpolitical risk. Armenia is a member of more than 40 international organizations.

9. The Wall Street Journal and The Heritage Foundationindex of economic freedom 2010 2006 2008 2009 38 27 28 31 ARMENIA ARMENIA ARMENIA ARMENIA RANKING RANKING RANKING RANKING The Index covers 10 freedoms – from property rights to entrepreneurship – in 183 countries.

10. Foreign investors incentives and protection Well Located for Access to CIS and Middle East Markets Cost Effective and Qualified Work Force Free Repatriation of Profit MFA & National Treatment Favorable Investment Legislation Liberal Trade Policy No Restrictions on Foreign Investor Ownership WTO membership

11. Enabling Environment Reach top 10% of Doing Business Index Reform governance • Simplify tax filing • Simplify customs • Simplify licensing • Increase corporate social responsibility • Install E-governance in five years

12. Smart, Wired and Knowledge-Driven Promote knowledge economy Dozens of universities Active academy of science Intellectual excellence, chess championships Build information society Gyumri Technocity Yerevan Technopark Center for Creative Technologies Liberalization telecom New operators, new technologies, new infrastructure

13. Science and technology • More than 60 Universities • and Higher educational Institutes, • 8 foreign universities: • 5 Russian Universities • American University in Armenia • French University • European University. • Approximately • 80.000 students • More than • 100 Research & Development Centers Science Yerevan Physics Institute TechnologyGyumri Technocity

14. FDI Inflows Russia71% United States1.7 % France 8.3% Argentina 8.7 % Lebanon 1.1 % • Germany 2.3%

15. FDI Inflows FDI is mainly concentrated in these sectors • Telecommunication • Energy • Metallurgy sectors • Manufacture of food and beverages

16. Armenian exports Russia17.3% Netherlands13.4 % Israel 2.3% Germany14.5% United States 4.5 % Iran 3.3 % Legislative aspect No Export Duty by Armenian customs legislation • Belgium 8.8%

17. Armenian exports • Major export items for Armenia are: • Software • Nonferrous metals, • Unwrought copper, • Diamonds, • Mineral products • Foodstuff. Rapid export growth of Construction materials and Semi-Precious Stones.

18. TAXATION VALUE ADDED TAX – 20 % PROFIT TAX – 20% benefits NO export duty INCOME TAX – max.20% Favorable import tariffs 0% Or 10% Simplified taxation for Small and Medium Entrepreneurship

19. Ambitions forthe Near Future

20. Armenia's competitive strengths in the software and IT services sector are based on a unique 50 year-old tradition of multi-generational IT skills. The highly qualified workforce is based on a traditionally strong education system and leading research institutions. Armenia was the leading center of computing technologies and regarded as the Silicon Valley of the Former Soviet Union (FSU). The government of Armenia has an ambitious nationalvision for IT and supports the leading role of IT through itsdeclaration of IT as apriority sector.

21. Ready for licensing out agreements • Projects on: • Animal health • Agriculture • Medical device • Innovative drugs for treatment of oncology, cardiovascular, CNS diseases in different development phases

22. During the Soviet period, Armenia acquired the enviable reputation of being a successful, industrial republic with a diversified economy that specialized in technological research especially research related to the military-industrial complex. In particular Armenia’s tradition of scientific and technologicalexcellence means we have great potential in sectors such as Precision Engineering and Electronics. Key players:

23. The energy sector is one of the most developed sectors of the Armenian economy • Nuclear, thermal, hydro power production • Renewable and alternative energy, including wind energy and biofuels • Unique business opportunity for investors. * Government according to the law buys green energy from suppliers for the period of 10 years, thus securing the market for the producers for that period.

24. Nuclear Power Plant II • A Soviet era Nuclear plant that supplies 40% of Armenia’s electricity • It is reaching the end of its lifecycle • The Government has decided to build a new 1,200 Megawatt 5 billion USD reactor • It will generate surplus electricity for sale across borders • A competitive contracting process is now being organized

25. Jewelry and diamond processing are considered a very attractive field for investment in Armenia based on the existence of skillful diamond cutters, modern equipment and tax privileges in Armenia. Diamond processing is a predominant part of this sector's activities. Nevertheless, jewelry, including gold accessories, golden wristwatches, jewelry articles and processing of semi-precious stones are also important and have a long tradition in Armenia. Today, 27 companies with 5000 employees (2500 in diamond processing) are operating in this sector, excluding individual jewelers.

26. Organization of Site Visits – planning and preparation of visits from foreign • investors, arranging appointments with private and public organizations, accompanying investors to meetings, assisting in site selection, providing translation support, identification of business service providers • Brokering Business Partnerships – finding the appropriate partners in Armenia • Follow Up Support – managing post-visit support, preparation of additional • information and documentation, explaining legislation • Investment Project Implementation – assisting with company registration • and staff recruitment (job announcements & holding interviews) • Liaising with Government institutions (ADA) was established by the Government ofArmenia to facilitate foreign direct investment and promote exports. The Prime Minister ofArmenia is the chairman of the board. The ADA acts as a "one-stop shop" agency for investors

27. THANK YOU FOR YOUR ATTENTION INVEST IN ARMENIA