Tuesday, November 7 2023 18:45

ArmInfo. Emirati investments and collaboration with ANIF serve to spotlight the potential and investment prospects within Armenia. This is stated in the extensive analysis of Armenia's economic opportunities of the Specialeurasia platform (Italy), a significant part of which is dedicated to ANIF's projects and especially to the strategic cooperation with the companies of the UAE.

 According to the source, "Armenia possesses several noteworthy strengths that contribute to  its economic landscape.  The country is endowed with significant  mineral resources, including gold, copper, molybdenum, and zinc.  Additionally, Armenia benefits from comfortable foreign exchange  reserves and a relatively flexible exchange rate for the dram.

It is a member of the Eurasian Economic Union (EAEU) and maintains a  partnership agreement with the European Union (EU), positioning it  strategically in both regional and international trade networks.

Furthermore, Armenia demonstrates a willingness to reform,  particularly in areas concerning corruption, justice, and  competition, reflecting a commitment to strengthening its economic  and legal frameworks.  However, Armenia grapples with certain  challenges that warrant consideration. The nation exhibits a  significant dependence on mineral exports, which constitute 40% of  its total exports and account for 8% of its GDP, despite ongoing  efforts to diversify its economic base.

Additionally, Armenia's reliance on Russia is pronounced, spanning  aspects of security, trade, expatriate remittances, and foreign  direct investment. The banking system remains heavily dollarised, and  a substantial portion of the public debt is denominated in foreign  currencies, amounting to 75%.

Moreover, Armenia contends with high and persistent levels of  poverty, affecting approximately 30% of its population, along with an  unemployment rate of 17%. These factors underscore the need for  concerted efforts to address these economic challenges in pursuiting  sustained growth and development in Armenia.

Below, we summarised some of the main positive aspects of the  Armenian economy and business market:

Armenia's geographical position and fiscal system have transformed  the country into an interesting market where foreign investors might  direct their interests. Indeed, the Armenian government welcomes FIDs  and strives to realise and implement economic and fiscal reforms that  support local and foreign business activities and enhance the  investment climate;

The country boasts robust human capital, with a highly educated  population, positioning itself as an attractive technology market  with a competitive labour force;

Armenia is a member of the Eurasian Economic Union (EAEU), a  Moscow-led economic organisation that promotes trade and business and  allows the Caucasian republic to get access to a market of over 182  million customers. Armenia has also signed bilateral treaties on  reciprocal promotion and protection of investments with 43 countries  and has free-trade agreements with Georgia and most of the CIS  countries. Following the Ukrainian conflict, many Russian citizens  emigrated to the country, which resulted in Armenia's economic  growth;

Relations between Yerevan and Brussels are based on the EU-Armenia  Comprehensive and Enhanced Partnership Agreement. EU interests in  Armenia, because of its strategic position and sociocultural and  historical connection with several European countries, confirms the  Caucasian republic's potential to become a Eurasian `bridge' capable  of linking Europe and Asia. Indeed, the European Union is the second  largest Armenian trade partner.

Investor might benefit from Yerevan's establishment of four Free  Economic Zones:

1.The Alliance Free Economic Zone, established in 2012, operates at  two strategic locations - RAO Mars and the Yerevan Computer R&D  Institute. This zone is dedicated to the production and export of  cutting-edge technologies, encompassing electronics, precision  engineering, pharmaceuticals, biotechnology, information technology,  alternative energy, industrial design, and telecommunications.

2.The Meridian Free Economic Zone, founded in 2014 at the heart of  Yerevan, specialises in the fields of jewellery, diamond cutting, and  watchmaking. It serves as a highly effective platform for businesses  in these sectors, particularly for non-residents, be they individuals  or legal entities. Furthermore, the FEZ offers a distinct advantage  with duty-free importation of raw materials, as well as the import of  goods into Eurasian Economic Union (EAEU) countries bearing a "Made  in Armenia" certificate.

3.The Meghri Free Economic Zone, established in 2017, is  strategically situated on the border with Iran in the Meghri region.  Yerevan tailored this area to attract both non-resident and resident  companies engaged in agricultural, trade, transport, processing, and  tourism endeavours. With the broadest industry coverage among  Armenia's free economic zones, Meghri serves as a pivotal trade  bridge connecting Armenia with Iran, EU countries, and the Eurasian  Economic Union.

4.The ECOS Free Economic Zone in Hrazdan, located 50 kilometres from  Yerevan in the Kotayk region, is is geared towards innovation and the  development of high technology, with the requisite infrastructure in  place to support ICT companies, including those engaged in blockchain  technology. This zone embodies Armenia's commitment to technological  advancement and innovation in the global business landscape.

Conclusion

Armenia presents an interesting opportunity for companies and  investors seeking to tap into a market with significant potential in  a strategic region as the Caucasus.

The Armenian National Interests Fund (ANIF) emerges as a crucial  interlocutor for those interested in this Caucasian republic, given  its mandate to consolidate and effectively manage state-owned  enterprises, promote export growth, and facilitate co-financing in  large- scale projects.

Despite ongoing geopolitical tensions that have affected the region,  Armenia's strengths are evident. The country's significant mineral  resources, comfortable foreign exchange reserves, and membership in  the Eurasian Economic Union (EAEU) and partnership with the European  Union (EU) all contribute to a resilient economic foundation.  In  this context, the increasing involvement of Emirati companies in  Armenia presents an intriguing development. Unlike in Central Asia,  where Islam played a significant role in interactions, Abu Dhabi's  engagement in Armenia stems from a different context.  Emirati  investments and collaboration with ANIF serve to spotlight the  potential and investment prospects within Armenia.  European  companies, cognisant of Armenia's strategic geographical location,  would be wise to carefully consider and assess these opportunities.

While concerns about tensions with neighbouring Azerbaijan and Turkey  may give pause to potential investors, it is noteworthy that recent  events in Nagorno-Karabakh have spurred heightened attention and  interest in Armenia from European countries, particularly France.

This dynamic underscores a shifting perception of Armenia's strategic  significance and the potential rewards for those willing to navigate  the developing landscape."