Armenia Cannot Conduct Open Policy on Investments Because It's EEU Member

    • Business - 10 July 2016, 10:24
In Armenia it is impossible to conduct an open doors policy for investments because our country is in the EEU space, the economist Vahagn Khachatryan told

In a meeting with entrepreneurs Prime Minister Hovik Abrahamyan announced that Armenia has proclaimed and pursues an open-door policy, not using any restrictions to investments. And despite such statements by the members of government, the volume of foreign investments in Armenia are decreasing year by year. The statistics for the first quarter of this year has already been published. The net inflows of foreign investments in the real sector have decreased by 58, 472,400,000 drams, and foreign investments 20,305,200,000 drams. Both direct investments and FDI net inflows in Armenia decreased in the first quarter.

Vahagn Khachatryan says that a lot has been said about creating a favorable business climate in Armenia but there is no progress so far. “After every such statement by officials I am scared because the more they deal with investments and SMEs, the worse the state of those sectors becomes,” he said. According to Vahagn Khachatryan, investments require a favorable legislative framework and political setting. However, our legislative framework is not predictable because in a country where only during the discussions of the budget they bring in such a legislative package that envisages dozens of changes, it already makes a negative impact on investors.

According to him, investors need to work in a country where long-term planning and prediction is possible. The second is the need for political stability which is not in place in Armenia. The third problem is the issue of rule of law. According to the economist, those who do business and entrepreneurs must be protected by not only the good will of the government but also legislation. “In other words, businesses understand and feel the environment where they work, generate profit, they do not need anyone to tell them,” he says. According to the economist, today Armenia does not conduct a policy of “open doors” because it is within the Eurasian Economic Union and there is a protectionist policy on customs duties in this union.

“We have shifted from free trade policy to protectionist policy. Armenia did this consciously by joining this union. Now an open-door policy is not that my door is open, anyone who wants can come and go. If this is what they mean, this is another issue. Today our country has chosen such an economic system we became a member of which has been conducting a policy for years that is 180 degrees opposite the policy conducted by the Republic of Armenia,” he added.

According to the economist, if Armenia has certain privileges in the EEU, in other words, a group of goods are exempt from customs duties, next year this will be eliminated. “And we will already have a problem with the same investors,” he added.