Armenia`s Ministry of Economy submits investments bill to public 

ArmInfo. The Ministry of Economy of Armenia has submitted a draft law "On Investments" to the public. The relevant initiative has been posted on the unified portal of legal acts. As stated in the explanatory note to the document, the investment policy is currently implemented on the basis of outdated and partially applied legal acts, in particular, the Law "On Foreign Investments" adopted in 1994, and does not ensure full regulation of the investment process in accordance with modern requirements. 

The current system does not guarantee predictability, proportionality of incentives, transparency and stability of the regimes applied to investments. There is also an imperfection in the institutional framework of the investment policy, as a result of which state support for investment programs is not comprehensive and coordinated. At the same time, international experience shows that the modernization of investment legislation and the regulatory framework for encouraging investment can make a significant contribution to the  growth of attracting direct investment.

In particular, when developing the Law , the  experience of a number of countries was studied, including Georgia, Estonia, Lithuania, Kazakhstan, Bulgaria, Serbia, Bosnia and Herzegovina, Austria, Hungary, Finland, Iceland, Spain, China. Of the 13 countries examined, 9 have laws on investments (foreign investments), of which only 3 (Serbia, Lithuania, Georgia) apply them to both local and foreign investments, and even if they apply to local investments, the scope of regulation varies greatly depending on the country.

Of the countries examined, in Georgia, Bulgaria, Serbia and Iceland the names of the responsible bodies are clearly indicated in the relevant laws, and in Serbia there are three: the Economic Development Council, the Ministry authorized for economic relations, and the Development Agency of Serbia. Unlike these countries, in China and Lithuania it is simply stated that the government can create the necessary structural bodies for the effective implementation of functions related to investments. The functions of encouraging and supporting investments in Armenia are carried out by the Enterprise Armenia Investment Support Center Foundation, but it  was not created on the basis of a regulatory legal act.

A study of international experience also shows that in the countries under consideration, the rights of investors and the provisions on the guarantees provided to them are applied in the most liberal manner, which helps ensure the attractiveness of the investment environment. It is noted that promoting investments and improving the investment environment are among the most important components of the economic development strategy of the Armenian government.

The goal of the project is to create a clear, transparent and  predictable legal framework that meets modern requirements of investment relations, ensure the protection of investors' rights, freedom of investment and their encouragement for both local and foreign investors. The adoption of the draft law will create a clear and predictable legal environment for investment, which will allow Armenia to improve its international investment rating and competitiveness, investment attractiveness, and will also contribute to sustainable and inclusive economic growth.

Thus, the draft law: 1. Defines investment guarantees and investor protection taking into account modern internationally recognized standards. In particular, the draft defines: a non-discrimination guarantee with its two well-known components: national treatment (NT) and most favored nation (MFN);

a guarantee of protection against expropriation. At the same time, the draft defines the concept of indirect expropriation, which is clearly prohibited, and also defines the criteria under which direct expropriation can take place. In the provisions of this guarantee, taking into account the specifics of financial markets/organizations, it is also proposed for the first time to establish that the regime for the nationalization of financial organizations within the framework of rehabilitation procedures is determined by law;

guarantees of legal and physical protection, transparency and  stability of the legal framework for investments. In this regard, for example, the draft provides that investments enjoying guarantees established by law will continue to be protected by guarantees established by law, regardless of changes in the scope of guarantees or their cancellation, for five years after such change or cancellation;

guarantees such as free movement and transfer of capital and  property, property rights and other property rights to land,  guarantees for the employment of workers, dispute resolution  mechanisms, etc. 2. Types of investment benefits (privileges), their purpose, essence, legal basis and mechanisms of application 3. The draft law also defines the institutional foundations of investment activities: the powers of the Government of the Republic of Armenia in this area (the necessary authorizing norms), the powers of the  authorized body, and also lays the foundations for the legal status of the Investment Promotion Center.

When developing the draft, the provisions of international investment agreements, the best practices of investment law of the United Nations Conference on Trade and Development (UNCTAD), as well as the recommendations of international financial organizations were taken into account.

According to the data of the RA Statistical Committee, indicated as a net flow, meaning the difference between attracted and repaid foreign investments, the net flow of total foreign investments in the real sector of the Armenian economy decreased in 2024 to negative $285.6 million (113.3 billion drams) from positive $479.3 million (194.3 billion drams), or 2.6 times year-on-year. The net flow of foreign direct investment (FDI) also turned out to be negative, having dropped by 2.2 times over the year - from positive $624.1 million (253 billion drams) to negative $112.9 million (44.8 billion drams).