Armenia: Investing

FDI in Figures

Since the Soviet Union broke up in 1991, Armenia has made a great progress towards the liberalization of its economy.  According to the World Bank, Armenia is ranked first amongst CIS (Commonwealth Independent States) countries in terms of FDI appeal. In effect, the government recently established conditions and laws which are favorable to foreign investments, and because of its economic dynamism, the country has earned the nickname of "The Caucasian Tiger". However, due to the crisis, FDI has dropped 30%, going from USD 1.1 billion in 2008 to USD 700 million in 2009.

Russia, France and the Netherlands are the three major investors in Armenia.  The three sectors covered by these investments are energy, telecommunications and air transportation. Significant investments were also made by the Armenian communities living outside the country (nearly 6 million people). From USD 2 billion in 2008, these investments have decreased by one third since the crisis.

The crisis affected the foreign investment flow, but the support of international organizations has allowed investors to maintain their confidence towards the country. Greece and Russia are the biggest investors in Armenia. FDI is mainly concentrated in the telecommunication, energy, hotel industry and metallurgy sectors.

Why You Should Choose to Invest in Armenia

Strong Points

The country's attractiveness is linked to its high economic growth over the last ten years and a series of reforms. We can also name the following factors: 
- Its geographic location, which gives it access to the former Soviet republics;
- A well trained active population, which is relatively cheap to employ;
- A developing economy with sectors requiring foreign investments (e.g. telecommunications);
- A desire to normalize relations with Turkey, pointing to a possible opening of the border.

Weak Points

Armenia has a small domestic market and high transport costs (all goods must transit through Georgia due to the embargo imposed by Turkey and Azerbaijan), a fact which hinders the country's economic development.
Corruption, nepotism and interference by state authorities are also problematic issues. Political instability can also be a negative factor, as well as the risk linked to natural catastrophes (earthquakes).
The country's poverty is also a negative factor, especially during times of crisis, as the social climate and domestic consumption could be jeopardized.

Government Measures to Motivate or Restrict FDI

The Armenian government is conscious of the need to create a more inviting business environment and targeted efforts have been made to the encourage foreign investment, required for the development the growing economy. The law on the reduction of poverty and corruption, as well as other reforms specifically linked to the business environment came into force. In particular, we can name:
- equal treatment for foreigners;
- No limitation on foreign ownership;
- Freedom to repatriate profits;
- Limited State intervention and deregulation.

Procedures Relative to Foreign Investment

Freedom of Establishment

Freedom of establishment is guaranteed.

Acquisition of Holdings

As part of the privatization programme initiated by the government of Armenia, a foreign investor can acquire an interest in a domestic company (both public and private) through purchase of shares or its assets. The properties and companies owned by the State need to be privatized before being acquired by a foreign investor. Privatization process in the country is regulated by the 'Law on Privatization of State Property'.

Obligation to Declare

Foreign investors can make investments in Armenia only through the establishment of fully foreign-owned companies (including representations, affiliates and branches) or the purchase of existing companies and securities or the establishment of joint-ventures. There are no limitations on the volume and type of foreign ownership, the number of foreign employees and access to financial sources.
In addition, a foreign investor is bound to bear the responsibility for any violation of legislation of the Republic of Armenia, as defined by legislation of the Republic of Armenia. Property of a foreign investor, including working capital and property rights may be used by that investor to guarantee any type of obligations.

Competent Organization For the Declaration

Ministry of Finance

Requests For Specific Authorizations

There are no limitations in foreign ownership.

However, foreigners can only lease land and need permission to lease land on a long-term basis.

Investment Opportunities

Investment Aid Agency

Armenian Development Agency
Association for Foreign Investment and Cooperation

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Armenia
Globaltenders, Tenders & Projects from Armenia
DgMarket, Tenders Worldwide

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