Tuesday, August 6 2019 14:29

ArmInfo.After the political situation in Armenia stabilized, the country's leadership took active measures to improve the investment attractiveness of the republic and  intensified international contacts with many countries of the world.  This is stated in the report ''Main Trends in Armenia's Integration  Development in 2018'', prepared by the Center for Integration Studies  of the Directorate for Analytical Work of the EDB.

As noted in the report, along with mutual trade and remittances,  foreign direct investment (FDI) is a strategic channel for Armenia's  integration with the EAEU. In 2018, the total volume of accumulated  investments during the independence period (including direct,  portfolio and other investments, including loans, borrowings and  other liabilities) amounted to more than $ 17.8 billion. Of these, $  8.5 billion, or 47.7%, amounted to foreign direct investment. In the  geographic structure, the EAEU member states retain leading  positions. This trend was formed and continues to develop exclusively  thanks to Russia, whose share in total accumulated investments at the  end of 2018 was 36.5%, and in FDI - 48.2%.  According to the data of  Eurasian Economic Commission, the net inflow of foreign direct  investment in Armenia in 2018 amounted to $ 254.3 million ($ 249.8  million in 2017), including $ 161.8 million from Russia. In net FDI  flows that are adjusted for repayment flows during the period, Russia  is also of strategic importance (63.6% in 2018). After a rather long  period of outflow of Russian FDI from Armenia in 2018, this indicator  reached a positive trend, and against the background of a reduction  of net inflow from other countries, the importance of Russia  increased significantly compared to the previous year in the second  half of 2018.

It is noteworthy, experts of the Bank believe that the overall  increase in the net inflow of foreign investment from Russia was  recorded against the backdrop of increased political uncertainty in  Armenia, which generally affected the country's investment  attractiveness. The dynamics of foreign investments from third  countries in the direction of Armenia particularly suffered in the  2nd and 3rd quarters of 2018 as a result of the actual suspension of  the Amulsar program. Long protests, organized after the inspection  bodies discovered violations of environmental standards, impeded the  work of Lydian Armenia. Among other investors, according to the  Committee on Statistics of Armenia, the most significant volume of  foreign direct investment in the Republic of Armenia according to the  results of 2018 was from the island of Jersey (offshore zone of  British possessions), which is considered "tax havens". The net FDI  flow from Jersey to Armenia for the reporting period amounted to $  42.7 million, which is also associated with the Amulsar field.

Significant foreign direct investment flows to Armenia during the  reporting period were also recorded from Germany - $ 32.3 million,  Lebanon - $ 10.1 million, USA - $ 2.9 million, Cyprus - 6.6 million  US dollars, Argentina - 5.4 million US dollars, Great Britain - 1.5  million US dollars.  At the end of 2018, FDI were mainly directed for  the following areas of activity: electricity and gas production - $  99.1 million; related mining industries (exploration, transport and  logistics, etc.) - $ 40.2 million; real estate - $ 28.1 million;  mining and open pit mining - $ 23 million; alkali metal production -  $ 13.9 million; wholesale trade (excluding automobiles) - $ 8.4  million; beverage industry - $ 6.5 million; construction - $ 4.7  million; software development - $ 4.1 million.

Experts note that after Pashinyan confirmed his orientation towards  the development of cooperation, many Russian large investors, in  particular, the Tashir Group concern, announced their intention to  resume investment projects in Armenia.

On issues of attracting investments, Armenia also held a number of  bilateral and multilateral meetings with representatives of the  European Union and other Western partners (in particular, from  Canada). RA offers European investors to invest in priority areas of  the economy, among which are: renewable energy, high technology,  light industry, tourism, agricultural processing, smart (innovative)  agriculture.  Among the important achievements in attracting  investment, the ratification of June 1, 2018 and the partial entry  into force of the " Comprehensive and Enhanced Partnership Agreement  between Armenia, the EU and the European Atomic Energy Community"  should be highlighted. The agreement was signed on November 24, 2017  at the fifth summit of the European Union's Eastern Partnership  program in Brussels.  In the field of nuclear energy, Armenia is also  negotiating with specific international investors from Russia and  China.

It should also be noted that Germany is ready to expand its presence  in the country, in particular in the IT sector. At the same time,  unlike many European partners, Germany, even in conditions of  political uncertainty, continued to increase investments, mainly in  the direction of the mining and metallurgical sector.

Against the backdrop of intensified relations with the EU, it is  symbolic to note the possible implementation of an investment program  (the construction of a new reservoir on the right bank of the Sarsang  and the construction of a new hydroelectric station on the cascade)  in the Nagorno-Karabakh Republic worth $ 100 million.

The policy of the new government of Armenia is also aimed at  enhancing relations with the People's Republic of China and  increasing their effectiveness. This was stated by Acting Deputy  Prime Minister Tigran Avinyan at a meeting with the delegation of  China, headed by the chairman of the branch of the Chinese Commercial  and Industrial Bank (ICBC) Jan Chihan. During the meeting, the  possibilities of attracting Chinese investment in information  technology, industry, agriculture and infrastructures at the expense  of the Chinese fund were discussed. Acting Deputy Prime Minister drew  the attention of the Chinese delegation to the North-South road  construction project, the implementation of which fully fits into the  logic of the One Belt, One Road initiative. Representatives of the  Chinese side are also interested in investments in the mining  industry for the production and further procurement of ore products  from Armenia. During a separate meeting with representatives of the  Chinese company Guoming, included in the One Belt, One Road program,  the issue of investment in the production of aluminum structures for  the furniture industry was discussed.

Among other measures that contribute to enhancing investment  cooperation, the government of Armenia should approve the  Armenian-Japanese intergovernmental agreement on Liberalization,  Promotion and Mutual Protection of Investments. The document defines  the principles of mutual investments, formulates the conditions for  effective investments.

During the business mission of the "Business Armenia" foundation in  September 2018, agreements were reached in Lebanon on attracting new  investments to the Armenian economy. In particular, an agreement was  reached on opening a representative office in Armenia by the Lebanese  insurance company Shedid Capital Holding. Another company, Makitek,  announced its intention to invest $ 250,000 in RA and organize the  production of plastic products and components for industrial  machines. And the company "Mac Agrochemicals", which is engaged in  the production of fertilizers and chemicals, is discussing the issue  of opening its branch in Armenia.

Thus, it can be stated that the Armenian leadership before and after  Pashinyan came to power sought to intensify investment activity in  the country. At the same time, in May - September, a certain  nervousness was observed in the formation of the business climate in  the RA, then the situation became more predictable and stable.