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BLACK SEA ECONOMIC FORUM thessaloniki 23 FEBRUARY 2012

ARMENIA. BLACK SEA ECONOMIC FORUM thessaloniki 23 FEBRUARY 2012. Republic of Armenia. Total Area  -  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

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BLACK SEA ECONOMIC FORUM thessaloniki 23 FEBRUARY 2012

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  1. ARMENIA BLACK SEA ECONOMIC FORUMthessaloniki23 FEBRUARY 2012

  2. Republic of Armenia • Total Area - 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 The capital of Armenia

  3. -14% 2.6% MACROECONOMIC INDICATORS GDPby years (percent of growth) 2005 14% 2006 13.4% 2007 13.8% 2011 Jan-Jun 2010 2009 2008 6.8% 4.6%

  4. …Structural Change Education, science and technology Services and E-services Complex engineering E-government and technoparks Real estate development Modernization of industrial processes Infrastructure deployment Exploitation of raw materials Chemical processing Extractive industries Soviet Era Transition Period The Next Decade

  5. 6.5% MACROECONOMIC INDICATORS INFLATION RATES by years (percent) 2007 6.7% 2008 5.2% 2009 2010 2011* 9.4% 5% * estimated

  6. Armenian exports • Major Export Items for Armenia are: • Software • Nonferrous metals, • Unwrought copper, • Diamonds, • Mineral products • Food products

  7. Armenian exports 2011 Russia15.9% Netherlands9.7 % China 3.1% Germany13.1% United States 8.2 % Iran 5.2 % No export duty • Bulgaria 15.5%

  8. IMPORTS BY COUNTRY

  9. ARMENIAN EXPORTS BY COUNTRY 2010

  10. Trade over relation by GNP

  11. Armenian exports to Greece

  12. Greece’s exports to Armenia

  13. 1257.6 MACROECONOMIC INDICATORS Foreign Direct Investments(million USD) 2006 2007 305 670 2008 2009 2010 840.7 693.4

  14. FDI INFLOWS Russia 43.7% USA 4.6 % France 12.4% Argentina 5.5 % Greece 6.4% • Germany 6.5%

  15. Telecommunication Energy Transport Mining sector IT sector Production of food and beverages FDI – main sectors

  16. Foreign Investors’ protection and incentives • Location giving access to Middle East and CIS countries • Free trade agreements with CIS countries, which gives duty free access to 250 million consumers • Favorable Investment Legislation • “Grand father clause” for 5 years • Free Repatriation of Profit • Talented workforce • No Restrictions on Foreign Investor Ownership • WTO membership

  17. Foreign Investors’ protection and incentives • 100% ownership permitted for foreign companies • Foreign companies, registered in Armenia have the right to buy land • 0 VAT applies for goods and services exported under ”Free Turnover” and “Re-exportation” customs regimes • No restrictions on exchange of currencies • No restrictions on staff recruitment • No restrictions on remittances • On-line company registration

  18. Trade Markets Gateway • MFN regime with 150 countries (WTO full membership) • FTA regime with CIS countries (tariff free access to 250 million consumers market) • GSP regime with EU, USA, Canada, Japan • GSP+ with the EU

  19. Index of Economic Freedom TheWallStreetJournalandTheHeritageFoundation 2011 2008 2009 2010 36 28 31 38 Armenia Armenia Armenia Armenia Rating Rating Rating Rating The Index covers 10 freedoms – from property rights to entrepreneurship – in 183 countries

  20. TAXATION VAT– 20 % PROFIT TAX – 20% Rates No export duty INCOME TAX – max.20% import tariffs 0% Or 10% Simplified taxation for Small and Medium Entreprises

  21. Customs Regulations of Armenia • All Exports from Armenia are Duty Free • The Import Tariff Rates are 0% or 10 % • Armenia is a Member of World Trade Organization (WTO) • Armenia Uses the Harmonized Code System (HS) for Tariff Classification • Full list of products with corresponding tariffs – www.customs.am

  22. Free Economic Zones In the nearest future two free economic zones will be established in Armenia. Agriculture and food processing oriented FEZ - on the territory adjacent to Zvartnots international airport High tech oriented FEZ – on the base of the plant “Mars” The Law of the Republic of Armenia on Free Economic Zones defines a number of incentives for companies in FEZ: The operators of free zones are granted profit tax, income tax,  value added tax, property tax, and customs duty payment privileges.

  23. Education • 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

  24. Growth rate Percent, 2002-2006 2006 Size USD Millions Previous Rapid Development… Food industry 455 6,1 Metals 265 10,3 Goods Mining 252 5,8 Construction materials 21,7 Machinery 11,4 Communications 280.0 25,3 Health care 65.3 25,2 IT services 71.0 15,1 Services Financial services 70.4 47,8 Tourism 48.2 17,4

  25. TARGETED SECTORS Information Technology Agriculture Bio Tourism Energy Chemical Industry

  26. Armenian IT sector is dominated by foreign investors • The annual growth of IT companies’ establishment – 20-25% • • Export of 63% of IT output goes to over 20 countries (USA, Europe and the CIS) • • Support of Government of Armenia through its declaration of IT as a • priority sector and by being itself a lead user of IT • • Existence of Skillful and Creative Cost-Efficient Labor Force. Monthly • salary of experienced software developer in Armenia is 900USD • • More than 6800 IT related Students

  27. Innovative, ready for licensing out products in: • Animal health • Agriculture • Advanced technology for polyacrylamide hydrogels production • Innovative drugs for treatment of oncology, cardiovascular and CNS • diseases in different development phases • Innovative new strains of bacteria effective in diary production with long shelf life and better properties

  28. ARMENIA: Economy Overview More then 5.000 chemical and pharmaceutical substances are produced in Armenia

  29. 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 – covers almost 25% of demand of Armenia, and is planned to reach 30% or more by 2030. • Unique business opportunity for investors. * according to the law the Electric Networks of Armenian buys green energy from suppliers for the period of 15 years, thus securing the market for the producers for that period.

  30. 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 has an old tradition in Armenia. Today, 27 companieswith5000 employees (2500 indiamondprocessing) areoperatinginthissector, excludingindividualjewelers.

  31. Agriculture • Agriculture plays important role in the economy of Armenia – constitutes 20 % of GDPTotal volume of production in 2009 was555,7 bln AMD (around 1,6bln USD)

  32. Tourism and tourism infrastructure development are among the priorities of the Government of the Republic of Armenia • Annual growth of the number of incoming tourists in Armenia is 15-20% in average • Armenia is the first country to adopt Christianity as a state religion in 301 AD – more then 5000 historical monuments spread around the country, Some included in World Heritage • The longest ropeway in the World “Wings of Tatev” – 5.7 km • Ski resorts – Tsakhkadzor with modern 6 lifts rope-way (926-1388m) with carrying capacity up to 1200 persons • Mineral Spa resports – Jermuk, Bjni, Dilijan, Arzni,

  33. Policy Transformation Macroeconomic Stability: Spend and Balance

  34. Vehicles for Investment Equity and debt financingthrough public-private investment funds Venture fundscapitalizing high potential opportunities Project-based investmentsleveraging core assets

  35. MAJOR INVESTORS

  36. Thank you for your attention contact info : ecocom-yerevan@mfa.gr BLACK SEA ECONOMIC FORUMthessaloniki23 FEBRUARY 2012

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