Armenia, nestled in the South Caucasus region, has long been celebrated for its rich cultural heritage, ancient history, and breathtaking landscapes. However, in recent years, this nation has been making headlines for a different reason – its remarkable economic growth, increasing attractiveness for investors and emerging regional hub for tech and innovations
WITH a blend of ancient traditions and modern aspirations, today Armenia is positioning itself as a rising destination in the global investment landscape.
For years, Armenia has demonstrated consistent GDP growth rates, typically hovering between 6-7%. Despite the challenges posed by the global health crisis in 2020, Armenia managed to weather the storm relatively well, with a slight economic decrease. However, the resilience of its economy was truly showcased in 2022 when it bounced back with a staggering 12.6% GDP growth rate, being rated as a 4th fastest-growing economy in the world according to the IMF. Building on this momentum, projections for 2023 suggest a continued GDP growth trajectory, with estimates reaching around 9%.
Simultaneously, the country has made significant strides in improving its macroeconomic solidity and business environment in recent years. Diversification of the economy and trade destinations, green transition, as well as, strengthening of the private sector have been key priorities. Structural reforms aimed at promoting fiscal sustainability and fostering a favorable investment climate have been implemented, resulting in increased investor confidence and a conducive business environment.
Liberal Investment Environment
Armenia currently maintains one of the most liberal investment environments among emerging market countries. The government’s commitment to an “open door” policy ensures that there are virtually no restrictions on investment activities, with foreign investors enjoying equal treatment as the locals under the national legislation. Foreign investments in Armenia are fully protected, investors have a number of guarantees and advantages. According to the RA Law “On Foreign Investments”, foreign investors in Armenia are given a national regime, that is, they operate in accordance with general legislation (like local companies), which ensures non-discriminatory treatment towards them.
Foreign investors are also given the most favourable treatment, as well as a number of privileges. This openness and transparency are coupled with low business costs, efficient and business-friendly tax environment and last but not the least availability of skilled and educated human capital. Moreover, the government is committed to further improving the business climate through a range of tax incentives and comprehensive state support programs.
For example, the Armenian Government provides up to a 20% return on capital investments for securing the infrastructure needs of the project, reimburses up to 70% of the monthly wages for newly hired highly qualified foreign specialists, offers up to a 35% reimbursement of capital investments for producing economically complex products, and implements other support programs, showcasing Armenia’s proactive stance in creating an environment conducive to investment and economic growth.
Most of the state support programs are directed towards the increase of economic productivity, introduction of innovations, further diversification of industries and sophistication of production value chains. Driver of the economic growth of Armenia is the tech sector, which has emerged as one of Armenia’s fastest-growing industries, boasting a consistent annual growth rate of 20% and comprising around 5% of the local GDP. Not surprisingly, reputable independent organizations name Armenia a technological hub of the region. This is due to the presence of a large number of globally recognised tech giants, vibrant tech ecosystem, innovative educational initiatives, and active technology transfer. Furthermore, Armenia has become a birthplace for several tech unicorns, underscoring its prowess in the global tech landscape.
Strategic Advantages
Beyond its favourable business environment, Armenia boasts several strategic advantages, including its role as a gateway to major markets. As a member of the Eurasian Economic Union (EAEU), Armenia has access to a vast consumer market comprising 184 million people. The Union has free trade agreements with Singapore, Vietnam, Serbia and Iran. Armenia also maintains free trade agreements with CIS countries and Georgia. Furthermore, GSP regimes with key trading partners such as the United States, Japan, Canada, Switzerland, and Norway provide preferential access for Armenian products, enhancing its competitiveness on the global stage. Hence, Armenian producers benefit from unique access to a consumer market of over 1 billion people with 0% or reduced customs duties.
Nowadays Armenia has emerged as a hub of opportunities in the global investment landscape, with its remarkable economic growth and investor-friendly environment. The country’s promising sectors, including agriculture and food industry, pharmaceuticals, textiles and apparel, winemaking, tourism, and most importantly the information and communication technologies, offer diverse opportunities for investors seeking to capitalize on Armenia’s strengths.
To support investors in that particular endeavour the Armenian Government has established Enterprise Armenia – the National Investment Promotion Agency (https://enterprisearmenia.am). Enterprise Armenia stands ready to provide comprehensive and free-of-charge services to any businessperson interested in pursuing opportunities within Armenia. From facilitating investment opportunities to assisting with business registration and providing market insights, the agency is committed to supporting investors throughout their entire journey.
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