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PINK FUTURE FOR ARMENIAN BUSINESS TRADITION
Hakob Badalyan, Political Commentator
Business - 23 December 2014, 23:30
Discussions and mental generation on a market of 170 million of
the Eurasian Economic Union are underway in the circles of official
propaganda which are used to describe the pink prospect awaiting the
economies of Armenia and Artsakh in the Eurasian Economic Union.
Meanwhile, there is a high probability that the rose of the Eurasian
Union has thorns and Armenia will get the thorns, not the rose. In
fact, if a so-called market of 170 million opens up for the Armenian
producers, the same market will open up for Russian, Belorussian,
Kazakh producers, so does the Armenian market. Free trade and zero
customs duties will be equally enjoyed by the producers of all the
three countries.
The question is who will be more effective and competitive. And there
are factors which cause concerns about the Armenian producers. The
point is that Russian, Belorussian, Kazakh companies may have larger
capacities and therefore lower prices and be more competitive. Plus
in these countries electricity and gas cost less compared with Armenia.
Of course, competitiveness is also about quality but most Armenian
products are no better otherwise Armenian producers would have faced
markets where quality requirements are higher. Most Armenian producers
therefore announced that they prefer the Russian market because there
the quality requirements are less rigid than in Europe where a market
of 500 million with greater buying capacity would open up if the
Association Agreement had been signed.
It turns out that the competitiveness of Armenian products is a problem
not only in the Belorussian-Kazakh-Russian sector of the market of 170
million but also its Armenian sector because the producers of those
countries may eventually oust Armenian producers from the Armenian
market or reduce the share of Armenian products on the Armenian market.
All the more so if an issue of political influence exists, such as in
the case of Russian producers when the government pipe may be used for
active lobbying. It may also have a negative impact on the situation.
The point is that the government will resist such lobbying (if it ever
resists) only if it harms the business of any high-ranking official
or their friend or relative.
Therefore, the so-called unprotected producers which are operating
in Armenia with great difficulty may appear face to face with other
producers of the Eurasian Union in Armenia. This means that those who
are able to survive without the protection of government will have
to seek protection at the higher levels of government to be protected
from at least the lobbying of "founders" of the Eurasian Union.
In other words, the prospect for free competition in Armenia will be
eliminated, and the oneness of business and government will increase
with the ensuing economic, political and social consequences.
Considering the system established in Armenia, the probability that
the ruling system will offer the local producers other mechanisms of
protection than just protection or transfer of part of shares is high.
http://www.lragir.am/index/eng/0/economy/view/33353#sthash.WCExlZWg.dpuf
Hakob Badalyan, Political Commentator
Business - 23 December 2014, 23:30
Discussions and mental generation on a market of 170 million of
the Eurasian Economic Union are underway in the circles of official
propaganda which are used to describe the pink prospect awaiting the
economies of Armenia and Artsakh in the Eurasian Economic Union.
Meanwhile, there is a high probability that the rose of the Eurasian
Union has thorns and Armenia will get the thorns, not the rose. In
fact, if a so-called market of 170 million opens up for the Armenian
producers, the same market will open up for Russian, Belorussian,
Kazakh producers, so does the Armenian market. Free trade and zero
customs duties will be equally enjoyed by the producers of all the
three countries.
The question is who will be more effective and competitive. And there
are factors which cause concerns about the Armenian producers. The
point is that Russian, Belorussian, Kazakh companies may have larger
capacities and therefore lower prices and be more competitive. Plus
in these countries electricity and gas cost less compared with Armenia.
Of course, competitiveness is also about quality but most Armenian
products are no better otherwise Armenian producers would have faced
markets where quality requirements are higher. Most Armenian producers
therefore announced that they prefer the Russian market because there
the quality requirements are less rigid than in Europe where a market
of 500 million with greater buying capacity would open up if the
Association Agreement had been signed.
It turns out that the competitiveness of Armenian products is a problem
not only in the Belorussian-Kazakh-Russian sector of the market of 170
million but also its Armenian sector because the producers of those
countries may eventually oust Armenian producers from the Armenian
market or reduce the share of Armenian products on the Armenian market.
All the more so if an issue of political influence exists, such as in
the case of Russian producers when the government pipe may be used for
active lobbying. It may also have a negative impact on the situation.
The point is that the government will resist such lobbying (if it ever
resists) only if it harms the business of any high-ranking official
or their friend or relative.
Therefore, the so-called unprotected producers which are operating
in Armenia with great difficulty may appear face to face with other
producers of the Eurasian Union in Armenia. This means that those who
are able to survive without the protection of government will have
to seek protection at the higher levels of government to be protected
from at least the lobbying of "founders" of the Eurasian Union.
In other words, the prospect for free competition in Armenia will be
eliminated, and the oneness of business and government will increase
with the ensuing economic, political and social consequences.
Considering the system established in Armenia, the probability that
the ruling system will offer the local producers other mechanisms of
protection than just protection or transfer of part of shares is high.
http://www.lragir.am/index/eng/0/economy/view/33353#sthash.WCExlZWg.dpuf