Industrial Policy

Industry remains the basis of Armenian Economy; this is evidenced by the fact that realization of the industrial growth active policy plays an important role in the President’s pre-election program as well of RA Government programs.

The RA Government driven by the imperative to increase the competitiveness of the economy and ensure continuous economic growth has adopted the policy of building knowledge-based economy and implementing export-based industrial policy.

The industrial policy is based on the expansion of exportable sectors of economy by contributing to the development of sectors with export potential, emphasizing the development of processing industry. The Ministry of Economy is constantly carrying out activities towards development and implementation of the policy of overall industry as well as of its separate sectors which mainly aims to transform Armenia to industrially developed country with the use of modern management models and competitive technologies, as well as through constant development of human capital.

For the implementation of the above mentioned objectives “The Strategy of Export-Led Industrial Policy of RA” has been developed by the Ministry which has been approved by RA Government on December 15, 2011. The document aims to set out and develop new areas of economic growth together with continuous development of existing exporting sectors and those with export potential.

11 sectors have been indicated in the document as ones with significant export potential; 3 sector specific strategies are being developed (brandy manufacturing, pharmaceuticals and biotechnologies, precision engineering sectors strategies) and are currently in the discussion process with relevant representatives of the sectors and state bodies.

The industrial sector of Armenia is one of economy’s main branches, estimating around 14.9% of GDP in 2010 and 7.3% of total employment (2488 organizations).

Armenia has great potential for branchy industry, where main sectors such as food industry, light industry, mining and metallurgical, chemical and pharmaceutical, biotechnological, engineering and electrical, tool making and electrotechnical industry, jewellery and building materials production are presented. Armenian industrial enterprises succeeded to overcome the global financial crisis, proving their important role in the economy.

Industrial sectors ensuring high growth rates are mining industry, metallurgy, food industry, pharmacy, clothing manufacturing, jewellery etc.

Recent economic decline caused by the global economic crisis has the stressed the necessity of deepening the economic diversification.

In this regard, Ministry of Economy highlights integrated development of industrial sectors and exportable sectors primarily. Investment (including foreign) has impacted the competitive production expansion and new enterprises have been set up representing different sectors, particularly, “Elbat”-production of battery, “Saranist”-production of glass containers, “Shamb Business”-food industry, “Akhtamar”-tourism, “Ucom”-telecommunications, “Arpimed” and “Liqvor”-pharmacy sectors.

State support tools

In order to mitigate the impact of the global financial crisis on the economy, to create favorable conditions for the development of industrial sectors, to promote local production and to create new jobs, the RA Government applies complex tools of state support aimed to increase export and import substitution by creating favorable conditions for new investments.

The RA Law on “Making Amendments in “the RA Law on Value Added Tax””, adopted by the National Assembly of RA in April, 2009 is among the above-mentioned tools. The latter gives opportunity to delay VAT payment terms up to 3 years in the framework of investments projects, exceeding 300 billion AMD and more.

Legislative changes contributed to the large flow of investments, and, as a result of programs’ implementation new productions and new jobs were created. To date, many organizations from various sectors of the economy, have received tax privileges. The total amount of investments anticipated by the projects approved by RA Government is about 74.25 billion AMD (delayed VAT amounts 14.85 billion AMD). Thanks to investments, about 1450 new jobs are already created, and as a result of the above mentioned projects’ implementations, total employment will be up to 1700.

Another effective tool for promoting investment is RA Law “On Amendment of the “RA Customs Code””, developed by the Ministry of Economy of RA and adopted by the National Assembly in December, 2010. The aim of the amendment was to simplify the procedure of terms extension for import of machinery and equipment imported for industrial purposes and provide state support to the implementation of investment projects approved by RA Government.

To ensure Law enactment, the Ministry of Economy has developed a new regulation on extension of terms of goods imported\exported by “Temporary import”/”Temporary export” customs regime which was adopted by RA Government N 1119-N Decree on August 4, 2011. For the implementation of 2009-2011 investment projects, the RA Government, on the proposal of the Ministry of Economy, has already provided tax privileges to a number of organizations.

For increasing access to credit resources for industry sector, and for attracting finance, the Ministry of Economy has developed the regulation of running registration of machine tools, equipments and their component parts subject to inventory in RA. The regulation was approved by RA Government N 407-N Decree, on April 15, 2010.

Source: MFA of the Republic of Armenia