ArmInfo. Attracting several investors to Armenia represented by transnational corporations (TNCs) will allow the country to start playing for high stakes. This opinion was expressed by Minister of Economy Tigran Khachatryan in an interview with ArmInfo's economic columnist.
According to him, to achieve this it is necessary to ensure several important conditions for the economy, among which the development of the capital market must be put in the first place, without which large institutional investors, including portfolio investors, will treat the country with a considerable degree of caution. ''Some say: let's use domestic savings and turn them into investments, and then we will think about the public market capital. I do not agree with this. Internal savings can be directed to the development of SMEs, to ensure self-employment of the population. While foreign investors are important since they think big and play big and their markets are large. That is, we must create such conditions that several large investors organize their own business in Armenia over the next few years,'' the Minister said.
The Minister agreed with the opinion that today it is necessary to set up almost a zero threshold for strategic investors, and especially TNCs, to enter Armenia. He expressed the idea that at the current pace of technological development, Armenia, in fact, has nothing to offer serious foreign partners. The opinion about the possibility of the state reanimating old large "Soviet" enterprises, once privatized and not working today, is not that relevant. This involves big risks, as well as large and unjustified expenses. However these enterprises have although poorly maintained but still ready-made infrastructure, totaling 20-30% of capital investments, which may, under certain conditions, be interesting for foreign investors.
As one of such conditions, the possibility can be considered of involving enterprises on the basis of the principles of public-private partnership (PPP), where the state will take, for example, 20% of the capital costs of establishing enterprises, and the rest will be offered to be covered by the investor. Such a practice, according to the Minister, when the state shares risks with investors, exists in some countries experiencing an urgent need for strategic institutional investors represented by international TNCs. The Minister noted that today there is a very tough competition for institutional investments in the world. To participate in this competition, the state through its institutions must constantly analyze strengths and weaknesses in order to invite investors to certain sectors of the economy on certain preferential terms. To implement such large- scale projects, the state needs to concentrate certain resources - unused territories, funds and other assets useful for business.
Another extremely important condition for inviting TNCs in the country is the availability of appropriate human resources. "Of course, Armenia has a certain personnel potential, but let's face facts - does the level of our education meet these goals?'', Khachatryan wondered. However, at the same time, the Minister believes that there is no need to start from scratch since we genetically took these capabilities from our ancestors, who once worked on building Soviet Armenia, industrialized and technologically advanced country for that time, as well as from our compatriots, who have proven themselves well abroad. Therefore, he believes, everything depends on serious transformations of the educational system. ''If the educational system passes the adaptation period correctly and provides knowledge that meets the requirements of the 21st century, then if not today, then in 5-7 years we will be able to solve the problem of providing the economy with good young staff in certain sectors and thereby help TNCs to make choice in favor of Armenia'', he stressed. Tigran Khachatryan believes that in Armenia there is no need to fully "reanimate" the Law on Foreign Investments, which was in force in the 1990s. ''Our legal regulations in the field of protection of foreign investments, as recognized by international organizations, including UNCTAD, are fully consistent with the best international standards. We do not have any problems with legislative guaranteeing the interests of investors'', the Minister emphasized. There are no restrictions either in matters of currency regulation, or in matters of the formation of share capital, or restrictions on the formation of the governing bodies of foreign companies in terms of citizenship. But from a fundamental point of view, the head of the Ministry of Economy believes, in Armenia such tasks as the lack of a developed capital market, an effective corporate governance system have not yet been resolved, the depreciation policy needs to be reviewed. Ultimately, the problem of the country's economy lies in low productivity compared with the global average.
To recall, Armenia has worsened its position by six points in the World Bank Doing Business ranking, dropping to the 47th place this year from the 41st last year. When asked by RA Prime Minister Nikol Pashinyan to comment on this at a government meeting on October 24 Minister of Economy Tigran Khachatryan noted that the deterioration of positions was mainly due to both a change in the methodology for assessing 10 research areas and the introduction of a new direction related to the rating with the level of development of the stock market, the registration of private companies on the stock exchange and the turnover of shares. ''If these directions were excluded, the republic would improve its position by 1.3 points, and according to this indicator, the republic would be closer to the leading states of the world'', the minister said. In its studies, the WB first applied a new assessment methodology, which is mainly related to the protection of the rights of minority shareholders, including through legislative reforms. The Minister recalled that the country's parliament had introduced the necessary amendments to the law "On Joint Stock Companies", which fully protected the interests of minority shareholders.