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Investment Opportunities in Armenia
BISNIS Armenia Update
12 August 2004
Contents:
1. Now on the BISNIS web site - CCG FY05 and Customs Report
2. New BISNIS SFP lead from Armenia
3. News - Armenian Economy Continues to Top Growth Expectations
4. New EBRD project in Armenia
Now Available on the BISNIS web site!
Country Commercial Guide for Armenia FY05 -
http://bisnis.doc.gov/bisnis/bisdoc/0408ccg_am.htm
Customs Clearance Process in Armenia, part of BISNIS Survey on Logistics
of Exporting to Eurasia -
http://www.bisnis.doc.gov/bisnis/bisdoc/cr_ARMENIA.htm
BISNIS Search for Partners lead
Yerevan, Armenia
Industry: Construction Materials
Company: Comfort R&V
Comfort R&V was established in 1993 as a private company. The company is
the distributor of a number leading European and American producers of
building materials. The company plans to establish a large trade center
specializing in the wholesale and retail distribution of building
materials. The total project cost is $4 million. The company seeks a
U.S. partner that would co-invest in the project. Comfort R&V will
finance 50% of the total project cost.
Web site: www.comfort-rv.am
Source: BISNIS Representative in Armenia
LeadLink, http://bisnis.doc.gov/bisnis/lead.cfm?1343
From ARMENIA THIS WEEK
Monday, August 2, 2004
Visit http://www.aaainc.org/ArTW/archive.php to read Armenia This Week
issues since 1997.
ARMENIAN ECONOMY CONTINUES TO TOP GROWTH EXPECTATIONS
Armenia's Gross Domestic Product (GDP) grew by more than nine percent in the
first half of 2004, the National Statistics Service reported this week.
While below the record-high 2002-2003 growth of 12 and 14 percent
respectively, the increase was well above the six to seven percent
anticipated by the government and international financial institutions
earlier this year.
Significantly, this year's robust growth comes after completion of
infrastructure projects funded by the U.S.-based Lincy Foundation, as well
as an 11 percent decrease in diamond-processing and jewelry production,
which had been one of the fastest growing sectors in recent years.
Industrial output was up 4.5 percent, driven by growth in generation of
energy (up 17 percent) and mining and metallurgy (up 46 percent). Textiles
production was up 2.2 times, with garment / leather and rubber / plastics
up 1.4 times each. Investments in construction increased by 12 percent, with
agricultural production up 8.5 percent.
In January-June 2004, the volume of Armenian exports grew by over 7 percent
to $340 million and imports by 4 percent to $625 million. Dependence on
outside supplies of energy and fuel, and raw materials imported for
processing in Armenia, kept the trade deficit large. The list of main export
destinations for Armenian goods continued to be topped by Belgium (19
percent of all goods), Israel (12), Russia (11), the United States (10),
Germany (9) and Switzerland (6). Most imports arrived from Russia (18
percent), Belgium (11), the United States (8), Israel (7) and Great
Britain (6).
The Armenian government also reported to be on track with a projected
increase in revenue collection to reach $450 million this year. Combined tax
and customs revenue in the first half of 2004 reached $211 million, up 17
percent year-on-year. Nevertheless, the State Taxation Service chief
estimated that the so-called shadow sector continued to account for 30
percent of economic activity, with an equivalent portion of profits and
incomes remaining officially untaxed. At the end of June 2004 the average
private sector monthly salary was estimated at $100, up 28 percent
year-on-year, while average public sector wages stood at a meager $50,
despite a 46 percent increase. The unemployment rate remained largely
unchanged at 9.3 percent of the adult population. (Sources: Armenia This
Week 2-6, 4-30; Arminfo 7-31, 8-2; Golos Armenii 7-31)
European Bank for Reconstruction and Development (www.ebrd.com)
Project name: Armenian Economy Development Bank Equity Investment
Country: Armenia
Project Approval Date: 20.07.04
Funds Approved: 0.79 million Euro
Project Type: Purchase of 25% plus one share of capital and voting rights
Project number: 27309
Business sector: Financial Institutions: Bank equity/Bank lending
State/Private: Private sector
Project description and objectives: The proposed project envisages an
equity investment in Armeconombank. The project will strengthen
Armeconombank's capital base to be used for anticipated growth in
lending and development of its infrastructure. Management guidance and
institution building is envisaged through technical assistance and
EBRD's seat on the bank's Supervisory Board.
Transition impact: This project will be the first equity participation
in an Armenian-owned financial institution. The combination of
additional capital and institution building through technical assistance
is expected to support strengthening of a key player in the Armenian
banking sector. By promoting competition and consolidation in the sector
the project will contribute significantly to the development of the
banking sector in Armenia. The project is also expected to provide a
demonstration to other market players of the benefits of having an
international institutional investor as a shareholder.
The client: Armeconombank is one of the largest banks in Armenia at 31
December 2003 with total assets of US$ 33.4 million. The bank is based
in Yerevan and has a network of 24 branches. The bank offers all major
services currently available on the market.
EBRD finance: Equity investment of AMD (Armenian Dram) 566,670,000 (EURO
equivalent of 789K at 1 June 2004).
Total project cost: AMD 566,670,000
Environmental impact: Armeconombank will carry out its operations in
accordance with the EBRD's Environmental Procedures for Financial
Intermediaries, which provide for the integration of environmental due
diligence into Armeconombank's credit appraisal processes and a
requirement that the bank complies, at a minimum, with national and
local health, safety and environmental regulations and standards and
public consultation requirements. Armeconombank will submit annual
environmental reports to the EBRD.
Technical cooperation: The bank has benefited from access to a
Japanese-funded credit advisor tied to a loan under the Multi-bank
facility for Armenian banks. This has assisted in all aspects of
screening, approving and monitoring of potential borrowers and sub-loans.
It is proposed that this equity investment be made together with
technical assistance for institutional development. Funding is expected
to be provided under the 2002 Action Program for the EU-EBRD Investment
Preparation Facility. EBRD approval will be sought in 3q2004.
For consultant opportunities for projects financed by technical
cooperation funds, visit procurement of consultants.
Company contact: Armeconombank OJSC
23/1 Amiryan Street
Yerevan 375002
Armenia
Contact: Edward Marutyan, Deputy CEO
Phone: (3741) 534 801
Fax: (3741) 538 904
Email: [email protected], [email protected]
Web : www.aeb.am
Business opportunities: For business opportunities or procurement,
contact the client company.
General enquiries: EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: [email protected]
********** Forwarded by: ***************************
Ellen S. House, BISNIS Trade Specialist for Armenia
U.S. Department of Commerce
Tel: 202/482-2284, Fax: 202/482-2293
www.bisnis.doc.gov
Additional information on Armenia is available via BISNIS Online at
www.bisnis.doc.gov/armenia
BISNIS Armenia Update
12 August 2004
Contents:
1. Now on the BISNIS web site - CCG FY05 and Customs Report
2. New BISNIS SFP lead from Armenia
3. News - Armenian Economy Continues to Top Growth Expectations
4. New EBRD project in Armenia
Now Available on the BISNIS web site!
Country Commercial Guide for Armenia FY05 -
http://bisnis.doc.gov/bisnis/bisdoc/0408ccg_am.htm
Customs Clearance Process in Armenia, part of BISNIS Survey on Logistics
of Exporting to Eurasia -
http://www.bisnis.doc.gov/bisnis/bisdoc/cr_ARMENIA.htm
BISNIS Search for Partners lead
Yerevan, Armenia
Industry: Construction Materials
Company: Comfort R&V
Comfort R&V was established in 1993 as a private company. The company is
the distributor of a number leading European and American producers of
building materials. The company plans to establish a large trade center
specializing in the wholesale and retail distribution of building
materials. The total project cost is $4 million. The company seeks a
U.S. partner that would co-invest in the project. Comfort R&V will
finance 50% of the total project cost.
Web site: www.comfort-rv.am
Source: BISNIS Representative in Armenia
LeadLink, http://bisnis.doc.gov/bisnis/lead.cfm?1343
From ARMENIA THIS WEEK
Monday, August 2, 2004
Visit http://www.aaainc.org/ArTW/archive.php to read Armenia This Week
issues since 1997.
ARMENIAN ECONOMY CONTINUES TO TOP GROWTH EXPECTATIONS
Armenia's Gross Domestic Product (GDP) grew by more than nine percent in the
first half of 2004, the National Statistics Service reported this week.
While below the record-high 2002-2003 growth of 12 and 14 percent
respectively, the increase was well above the six to seven percent
anticipated by the government and international financial institutions
earlier this year.
Significantly, this year's robust growth comes after completion of
infrastructure projects funded by the U.S.-based Lincy Foundation, as well
as an 11 percent decrease in diamond-processing and jewelry production,
which had been one of the fastest growing sectors in recent years.
Industrial output was up 4.5 percent, driven by growth in generation of
energy (up 17 percent) and mining and metallurgy (up 46 percent). Textiles
production was up 2.2 times, with garment / leather and rubber / plastics
up 1.4 times each. Investments in construction increased by 12 percent, with
agricultural production up 8.5 percent.
In January-June 2004, the volume of Armenian exports grew by over 7 percent
to $340 million and imports by 4 percent to $625 million. Dependence on
outside supplies of energy and fuel, and raw materials imported for
processing in Armenia, kept the trade deficit large. The list of main export
destinations for Armenian goods continued to be topped by Belgium (19
percent of all goods), Israel (12), Russia (11), the United States (10),
Germany (9) and Switzerland (6). Most imports arrived from Russia (18
percent), Belgium (11), the United States (8), Israel (7) and Great
Britain (6).
The Armenian government also reported to be on track with a projected
increase in revenue collection to reach $450 million this year. Combined tax
and customs revenue in the first half of 2004 reached $211 million, up 17
percent year-on-year. Nevertheless, the State Taxation Service chief
estimated that the so-called shadow sector continued to account for 30
percent of economic activity, with an equivalent portion of profits and
incomes remaining officially untaxed. At the end of June 2004 the average
private sector monthly salary was estimated at $100, up 28 percent
year-on-year, while average public sector wages stood at a meager $50,
despite a 46 percent increase. The unemployment rate remained largely
unchanged at 9.3 percent of the adult population. (Sources: Armenia This
Week 2-6, 4-30; Arminfo 7-31, 8-2; Golos Armenii 7-31)
European Bank for Reconstruction and Development (www.ebrd.com)
Project name: Armenian Economy Development Bank Equity Investment
Country: Armenia
Project Approval Date: 20.07.04
Funds Approved: 0.79 million Euro
Project Type: Purchase of 25% plus one share of capital and voting rights
Project number: 27309
Business sector: Financial Institutions: Bank equity/Bank lending
State/Private: Private sector
Project description and objectives: The proposed project envisages an
equity investment in Armeconombank. The project will strengthen
Armeconombank's capital base to be used for anticipated growth in
lending and development of its infrastructure. Management guidance and
institution building is envisaged through technical assistance and
EBRD's seat on the bank's Supervisory Board.
Transition impact: This project will be the first equity participation
in an Armenian-owned financial institution. The combination of
additional capital and institution building through technical assistance
is expected to support strengthening of a key player in the Armenian
banking sector. By promoting competition and consolidation in the sector
the project will contribute significantly to the development of the
banking sector in Armenia. The project is also expected to provide a
demonstration to other market players of the benefits of having an
international institutional investor as a shareholder.
The client: Armeconombank is one of the largest banks in Armenia at 31
December 2003 with total assets of US$ 33.4 million. The bank is based
in Yerevan and has a network of 24 branches. The bank offers all major
services currently available on the market.
EBRD finance: Equity investment of AMD (Armenian Dram) 566,670,000 (EURO
equivalent of 789K at 1 June 2004).
Total project cost: AMD 566,670,000
Environmental impact: Armeconombank will carry out its operations in
accordance with the EBRD's Environmental Procedures for Financial
Intermediaries, which provide for the integration of environmental due
diligence into Armeconombank's credit appraisal processes and a
requirement that the bank complies, at a minimum, with national and
local health, safety and environmental regulations and standards and
public consultation requirements. Armeconombank will submit annual
environmental reports to the EBRD.
Technical cooperation: The bank has benefited from access to a
Japanese-funded credit advisor tied to a loan under the Multi-bank
facility for Armenian banks. This has assisted in all aspects of
screening, approving and monitoring of potential borrowers and sub-loans.
It is proposed that this equity investment be made together with
technical assistance for institutional development. Funding is expected
to be provided under the 2002 Action Program for the EU-EBRD Investment
Preparation Facility. EBRD approval will be sought in 3q2004.
For consultant opportunities for projects financed by technical
cooperation funds, visit procurement of consultants.
Company contact: Armeconombank OJSC
23/1 Amiryan Street
Yerevan 375002
Armenia
Contact: Edward Marutyan, Deputy CEO
Phone: (3741) 534 801
Fax: (3741) 538 904
Email: [email protected], [email protected]
Web : www.aeb.am
Business opportunities: For business opportunities or procurement,
contact the client company.
General enquiries: EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: [email protected]
********** Forwarded by: ***************************
Ellen S. House, BISNIS Trade Specialist for Armenia
U.S. Department of Commerce
Tel: 202/482-2284, Fax: 202/482-2293
www.bisnis.doc.gov
Additional information on Armenia is available via BISNIS Online at
www.bisnis.doc.gov/armenia