Head of UMBA: Light industry in Armenia develops slowly

ArmInfo. Light industry in Armenia is developing slowly, Arsen Ghazaryan, Head of the Union of Manufacturers and Businessmen of Armenia (UMBA), told ArmInfo on the sidelines of an international light industry forum in Yerevan.

He thinks a lot is still to be done to develop the sector. Ghazaryan said that light industry is one of the economy sectors that suffered from the collapse of the USSR economic ties. "At that time, all segments of light industry received big government orders - the textile, clothing, footwear, fur segments operated intensively. However, in the post-Soviet time, the sector was ruined almost completely for almost a quarter of a century. It is for the past five years that some promising dynamics has been observed," he said.

The expert pointed out that full-fledged development of light industry is hindered by the immense competition on the market. In particular, the products of Chinese and Turkish manufacturers have low prime cost. At the same time, he noted that certain dynamics in the sector is due to domestic financial injections, which, in turn, inspire hope for attraction of foreign investments. "In the clothing segment, the Soviet-era machinery is still operating and the school of designers is also partly functioning," Ghazaryan said, stressing that a huge role in development of the sector belongs to the factor that light industry was a priority in the concept of industrial policy development. "This decision became not only a psychological factor for entrepreneurs, but also directed certain public resources there," he said.

One more super-task is to provide the sector with skilled personnel. "After the collapse of the USSR, many plants and factories waited for orders for years. As a result, many specialists left Armenia to find a job in Russia and Belarus," Ghazaryan said. 

He thinks it is not easy to reactivate the sector.  In this context, the EEU membership should become an impetus for the local businessmen in revising their business policies. The expert said that today the tolling schemes are an advantage that allows maintaining the skills and capacities of enterprises. However, he added that tolling does not allow disclosing the entire potential, getting normal profit and modernizing the production. That being said, it is business, not the state that should exert efforts to enter foreign markets.

According to the Armenian Ministry of Economic Development and Investments, light industry sector in Armenia increased significantly over the first 8 months of 2016:  cloth production increased 32%, shoes and leather items - 26%. Textile production fell 6%. At the same time, export in the light industry sector increased 60%, with export of Armenian shoes alone growing 126%.  Nevertheless, the production is exported mostly to Europe, which independent experts explain with the production in line with tolling schemes. In the meantime, the Ministry of says that the export of the Armenian light industry is re-orientating from European to Russian market.