Arsen Bazikyan: In Armenia, the leasing regulation is transferred  from the contractual to the legislative field

ArmInfo. In Armenia, during  implementation of leasing agreements, organizations previously used  different approaches, but from now on, thanks to changes in the Civil  and Tax Codes, a common methodology will be in effect, which will  allow transferring the regulation of the sector from the contractual  to the legislative field. Arsen Bazikyan, Co-Founder & CEO at  Armenian Leasing Company, stated this at a press conference on August  6.

Regarding the changes in terms of improving leasing instruments, he  explained that we are talking about accelerated depreciation and a  number of other advantages, stressing that the basis of all  legislative amendments, by and large, is an approach that primarily  contributes to the development of the economy.

In turn, Izabela Hovhannisyan, Legal Consultant of the Business  Support Office, said that due to the changes in the Civil Code of the  Republic of Armenia, such concepts as "secondary leasing" and "return  leasing" were introduced. She explained: "In a secondary lease, the  leased asset that remains in the ownership of the lessor in the event  of termination or cancellation  of the lease agreement is leased to  another lessee. This was previously a problem for financial  institutions. Leaseback leasing (reverse leasing) concerns cases when  an enterprise has acquired property, but at the same time wants to  save financial resources for purchasing raw materials or solving  other organizational issues. The bank acquires this property, then  provides it to the economic entity through a leasing transaction,  which makes it possible for the latter to preserve property and funds  that can be directed to other necessary purposes. The introduction of  this type will allow diversifying the leasing portfolio>.

In this regard, Arsen Bazikyan noted that the amendments to the Civil  Code will make it possible to form a secondary leasing market, and  open up an opportunity, in cooperation with international leasing  companies, to serve clients wishing to purchase property on lease  abroad. He also drew attention to the fact that these changes in the  Civil Code of the Republic of Armenia will contribute to the  development of the rental market.

Speaking about the changes in the Tax Code, Bazikyan said that  leasing transactions are henceforth exempted from VAT, moreover,  leasing transactions for supplies are also exempted from VAT. "These  very important changes will serve as an incentive for the development  of local suppliers, allowing transactions to be made without VAT and  artificial added value," he stressed.

In her turn, Deputy Minister of Economy of Armenia Naira Margaryan  said that today the total loan portfolio of banks is about 4 trillion  drams, of which 200-300 billion drams are credited for the purchase  of real estate. At the same time, the leasing portfolio is over 30  billion AMD. "This indicates that the demand for leasing is 10 times  higher than the volume of transactions," she said.  Stressing that  Armenia has a high potential for the development of leasing, N.  Margaryan noted that out of 17 existing banks and 32 credit  companies, only 8 provide leasing services, of which only 3 are large  players. In particular, she reported that the latter account for 79%,  15% and 3%, respectively, while 2% were distributed among the other 5  players.

The deputy minister said that the work on the bill had been going on  for a long time, in the development of which both representatives of  the public and private sectors took part. "It is very important that  both sides took a constructive approach, as a result of which we  received mutually beneficial and balanced solutions," she concluded.

According to the Ranking of banks and credit companies of Armenia, as  of June 30, 20, prepared by ArmInfo IC, the total volume of the  leasing portfolio amounted to about 37 billion drams, with a y-o-y  growth of 52%. Moreover, there are 7 banks from banks in leasing  operations, among which ACBA-Credit Agricole Bank (through the  leasing company ACBA-Leasing) is the leader in terms of volume - over  23 billion drams (y-o-y growth of 24%), and Ameriabank is in second  position - over 10 billion drams (2.4 times y-o-y growth). And there  are 4 leasing companies in Armenia, among which ACBA Leasing is the  undisputed leader, Agroleasing occupies the second position with a  significant breakaway in terms of volume, and a new player Armleasing  occupies the third position.