Interview with Ambassador Andranik Hovhannisyan in Le Monde Économique

Ambassador of Armenia to Switzerland, Andranik Hovhannisyan, gave an in-depth interview to the Swiss publication Le Monde Économique. In the interview, he discussed the state of Armenian-Swiss relations, trade and economic cooperation, and joint business ventures between the two countries. Ambassador Hovhannisyan highlighted Armenia's investment climate and the various business opportunities available. He outlined Armenia's collaboration with international organizations based in Geneva and the joint initiatives developed with them in investment, innovation, intellectual property, and other key areas. The full interview is available on the publication's website.

https://www.monde-economique.ch/entretien-avec-son-excellence-lambassadeur-andranik-hovhannissyan-pour-le-monde-economique/

INTERVIEW WITH HIS EXCELLENCY AMBASSADOR ANDRANIK HOVHANNISSYAN FOR LE MONDE ECONOMIQUE

The Geneva Chamber of Commerce has hosted the Swiss Armenian Market Focus Forum in May 2024. The forum offered a platform for the Armenian government officials to present to the Swiss entrepreneurs the current economic situation in Armenia and explore investment opportunities. In this context, we interviewed the Permanent Representative of Armenia to the United Nations Office in Geneva and the Ambassador of Armenia to Switzerland, His Excellency Ambassador Andranik Hovhannissyan, to learn more about the investment prospects and economic developments in the Republic of Armenia.

1. Your Excellency, thank you for accepting our interview invitation and agreeing to answer our questions. You are the Permanent Representative of the Republic of Armenia to the United Nations Office in Geneva and the Ambassador of Armenia to Switzerland. How is the Republic of Armenia represented in Switzerland?

Allow me at the outset to thank you for giving me this opportunity to share the views with the Le Monde Economique and its readers. It is a great pleasure indeed. Armenia and Switzerland established diplomatic relations in 1992 and since then our two countries have been enjoying thriving cooperation in a number of areas. We have solid political dialogue, regular high-level meetings, robust people to people contacts, cultural exchanges, strong legal framework. One of the true anchors of our ties is the activities of the Swiss Development and Cooperation Agency, which for many years has been contributing to the development of projects in Armenia, especially in such fields as agriculture, tourism, environment, good governance. Hence, there is a strong basis of cooperation which needs to be further explored and enhanced but the solid foundations are already there.

The Armenian diplomatic mission in Switzerland is located in Geneva. It combines both the bilateral Embassy of Armenia to Switzerland and the Permanent Mission to the United Nations Office and other International Organizations in Geneva.

1. Which international organizations with economic and investment focus do you work with, and how is this collaboration organized?

Geneva hosts a number of international organizations that deal with the economic issues. Armenia tries to be actively engaged in the global cooperation in these frameworks. One of the most important structures in this regard is the World Trade Organization (WTO), which deals with the rules of trade between nations. The Republic of Armenia has been a member of WTO since 2003. Another one is the United Nations Conference on Trade and Development (UNCTAD), which published an extensive "Investment Policy Review for Armenia" in 2019. Another important review was published in 2023 by the United Nations Economic Commission for Europe (UNECE) and was entitled "Innovation for Sustainable Development Review of Armenia". The World Intellectual Property Organization (WIPO) helped Armenia in elaborating our national IP strategy, which is currently under the consideration of the Government. There are many other benchmarks. With these and other specialized organizations based in Geneva Armenia closely cooperates also on wide array of issues related to trade, e-Commerce, transport, connectivity, communications, high technologies, to name but a few. The representatives of Armenia regularly participate in the numerous meetings organized on these issues in Geneva, where they exchange best practices and knowledge. Also, Armenia hosts events organized in these frameworks and visits by high level representatives of these organizations. Last year alone, the Director General of the International Labor Organization (ILO), Executive Secretary of the UNECE and the Deputy Director General of the WTO visited Armenia and participated in various international meetings. Such contacts give an important boost to our international engagements contributing to the sustainable development of Armenia.

1. What kind of cooperation opportunities can Swiss entrepreneurs envisage with Armenia?

Armenia is a country of opportunities with a modern, well-educated, hard-working human capital. Its membership in various international organizations and free trade agreements enhance the attractiveness for businesses seeking access markets in the Eurasian Economic Union, the European Union, neighboring Georgia, Iran and beyond. Armenia enjoys GSP preferential trade regime with Switzerland, Japan, Norway, Canada and USA.

The Government is carrying out deep and comprehensive reforms providing favorable investment and business climate. It is worth to mention that according to the IMF Armenia's GDP reached 8.7 percent in 2023. This has put Armenia among the most rapidly growing economies of the world and testifies to the efficiency of the Government reform program. It is also worth to mention that by the GDP per capita Armenia is ahead of its neighbors in South Caucasus - Georgia and Azerbaijan.

An important footnote to this point. The Armenian nation boasts of having historically strong entrepreneurial traditions that do not limit only to the Republic of Armenia but extends to seven million strong Armenian diaspora that is closely connected to the ancestral homeland and bridges hundreds of countries with Armenia including by providing enhanced business opportunities. Switzerland is not an exception.

Armenia's democratic profile largely enhances its economic attractiveness. The business in Armenia operates in a free and democratic atmosphere where the rule of law and human rights commitments are respected and preserved. Needless to say, how important this is from the investors' point of view. It's one thing to deal with the country with the democratic traditions, it's completely different where the democracy is lacking. Democracy comes with the good governance, predictability and guaranties inherent to its values. Let me bring you some references in this regard. For several years in a row Armenia is ranked as the most democratic country of the region by such Index as the Economist Intelligence Unit. On Corruption Perception Index of the Transparency International Armenia ranks 62nd and on Heritage Foundation's Index, Armenia's economic freedom ranks 50th. In both cases Armenia is ahead of even some countries of the European Union. Armenia has been also traditionally ranked among top ten safest countries of the world according to international reports.

Finally, nestled in the South Caucasus, Armenia occupies a strategic location at the crossroads of Europe and Asia. Recently the Government of Armenia has introduced "The Crossroads of Peace" project, which seeks to rebuild new cooperation in the region and foster mutual understanding among nations, by actively engaging with neighbors and international partners seeking connectivity between the continents. It includes infrastructure development - roads, railways, pipelines, cables and electricity lines. This project requires huge investments and promises to largely enhance Armenia's business attractiveness.

1. What specific advantages does the investing in Armenia offer to foreigners? Please elaborate on issues of favorable taxation, logistical support, simplified legal frameworks, other advantages.

The Government of Armenia implements flexible policies for facilitating and encouraging foreign investments. Let me bring you some examples. Armenia's FDI legislation is one of the friendliest investment legislations among emerging markets. Foreign nationals doing business in Armenia have the right to 100% ownership of the resident legal entities in Armenia. The legislation safeguards investors against discriminatory policies. Investors, regardless of their citizenship, receive equal treatment unless a more favorable regime is provided by a respective treaty. Investors have virtually unrestricted access to any sector and location throughout the country. Resident Legal Entities registered and/or owned by foreign nationals have the right to purchase and own land in the country, while foreign citizens as individuals can have long-term lease contracts. Additionally, there are no restrictions on repatriation of profits, exchange of currencies, staff recruitment and remittances.

The Armenian government has introduced a range of favorable tax incentives. The full list is accessible on the websites of relevant agencies. Let me make only couple of highlights. Businesses in border-adjacent communities are exempted from VAT, profit tax, and personal income tax. Furthermore, there's an exemption from VAT and profit tax for investment projects (over 4 million USD) in and around the town of Dilijan - a beautiful resort in the mountainous and forest-covered area. The medical sector also offers favorable opportunities for investment projects in producing Prosthetic and Orthopedic accessories, medical equipment, sales of medical products and medical assistance services. Tax benefits exist in the IT sectors as well, where the government offers an exemption from profit tax and a reduction of the income tax rate on employees' salaries (10%). The government also provides mechanisms for exemption from customs duties on products to be imported from non-EAEU countries in the scope of export-oriented investment projects.

As a part of the effort to modernize the economy, 17 government support programs were introduced in the last couple of years. For instance, the program "Infrastructure in exchange for investments" offers assistance in the amount of 10% for investments of up to 500 million drams (or 1.3 million USD) and 20% for those exceeding 500 million drams, in the form of infrastructure.

Companies producing economically complex products can receive up to 35% reimbursement of the real assets of their capital investments. The government subsidizes credit and leasing for new equipment devices and their parts in the case of credits from 6-8%, or subsidies on leas from 8-10%. Subsidized loans are provided through RA financial institutions to purchase pedigree high-yielding cattle. Subsidized loans in the maximum amount of 3.0 billion drams are provided through the Republic of Armenia's financial structures for the construction of each beneficiary's greenhouse.

Also, Government subsidizes loans for procurement of agricultural raw materials: 9% per year, 12% for border communities. It provides reimbursement of clinical trials and bioequivalence studies: - 50% of the costs of clinical trials, up to a maximum of 25 million drams per study; 50% of the costs of bioequivalence studies, up to a maximum of 30 million drams per study.

And this is not an exhaustive list.

1. Please provide some examples of existing successful Swiss-Armenian joint ventures.

There are several areas that attract more attention and interest in terms of Armenian-Swiss business cooperation. These traditional areas are banking system, watchmaking, pharmaceuticals, IT sector, winemaking and tourism. Let me bring some successful examples:

ArmSwissBank is a notable Swiss-Armenian joint venture in the banking sector, established in 2004. The bank specializes in investment banking, corporate banking, and asset management, offering a range of financial services to both individual and corporate clients. It is known for its innovative financial products and adherence to international standards, contributing significantly to the financial landscape of Armenia.

Franck Muller, a renowned Swiss luxury watchmaker, has successfully entered the Armenian market through collaboration with local partners. Known for its high-quality and innovative timepieces, Franck Muller's presence in Armenia has enriched the local luxury goods market, appealing to affluent clients and watch enthusiasts. This venture highlights the blend of Swiss craftsmanship and Armenian appreciation for luxury and fine artistry. These two businesses are connected to the successful entrepreneur Mr. Vartan Sirmakes, who is also active in other business spheres both in Armenia and Switzerland.

The "Azad Pharmaceuticals" company was founded in 2000 in Switzerland, and in 2004 began its activities in Armenia. It cooperates with European, Chinese, and Indian companies. "Azad Pharmaceuticals" develops active pharmaceutical components. The main function of the company is to develop methods of drug manufacturing. The company maintains offices in Canada, Switzerland, Armenia, and China. Since 2005, the company has been developing injectable and ophthalmic dosage forms.

With nearly two decades of distinguished experience, ARATOURS SA stands as one of Switzerland's foremost travel companies, dedicated to crafting personalized travel experiences. It is specializing in private transfer services and curated travel adventures.

Successful examples of joint ventures in winemaking include "NOA" - Noah of Areni wine, produced by Swiss winemaker Mr. Jakob Schuler and "Oshin" wine, one of the co-founders of which is Swiss-Armenian Mr. Vahe Gabrache.

In IT sector, one of the successful examples is the Polixis SA. The company specializes in the Information Technology and Services, Internet Software, Data Processing Services areas. Its headquarters is located in Geneva.

There are about 40 companies registered in Armenia which are doing business with Switzerland contributing to creation of more than 1000 jobs in Armenia.

1. We are aware that negotiations are being held with Ecole Hoteliere de Lausanne to open a branch in Armenia. What are the perspectives of this initiative?

Indeed, this is one of the examples of a successful project implementation in Armenia, which is an embodiment of the close cooperation of several stakeholders active in the field. The project pertains to the establishment of the hospitality school in Armenia with the help and participation of the EHL Hospitality Business School of Lausanne. The idea and the driving force behind are the representatives of the Armenian community of Switzerland, mainly Mr. Vahe Gabrache. The project enjoys the endorsement of the Government of Armenia, which is engaged with the specific support tools, private sector, strong cooperation with the EHL, as well as the Swiss Development and Cooperation Agency, several Armenian NGOs. This example vividly demonstrates the potential that exists and outlines the main stakeholders who can join the efforts for the result-oriented objectives. Needless to further elaborate on the importance of the school and the impact it can have on the development of the hospitality and tourism sector of Armenia. The benefits are obvious.

1. What is the potential of the Swiss-Armenian relations, what are the most perspective fields that can be explored or further developed?

In 2022, Switzerland was in the 5th top export destination for Armenian goods. Though its share subsequently declined, this figure demonstrates the available potential. Switzerland accounts for only 1% of Armenia's imports. However, here too there is an untapped potential. For instance, in 2022 there was a 76% growth in imports from Switzerland, which reflects positive trends in this regard. In the same year Armenia enjoyed 12% growth in tourism from Switzerland. This figure also shows the growing interest of Swiss people to Armenia.

One of the important aspects of exploring the potential of relations is awareness raising. Even though there are robust people-to-people contacts between Armenia and Switzerland, there is a clear need of continuously demonstrating the business opportunities that Armenia presents for Swiss investors and the possibilities that Switzerland may provide for the Armenian entrepreneurs. The Swiss-Armenian Chamber of Commerce created in 2017 makes a solid contribution in this regard. It is led by Mr. Mike Baronian, who knows from his own experience as the head of "Azad Pharmaceuticals" what business potential of two counties can provide.

Every year the Chamber organizes business forums both in Armenia and Switzerland. This May it organized another event together with the Geneva Chamber of Commerce. Armenia was well represented by two deputy ministers, who delivered detailed remarks on various aspects of doing business in Armenia. Literally on the same days the Swiss Embassy in Armenia organized another economic forum in Armenia. This kind of initiatives are very important.

In terms of the sectors that can develop further cooperation, I would highlight the Information Technologies, that is one of the most rapidly growing spheres in Armenia, almost 50% annually. It is also worth mentioning that more than 40% of workforce engaged in the IT sector in Armenia are women and girls, which is much higher from the world average. Armenia's ICT sector is well positioned in such rankings as the Global Innovation Index, the Network Readiness Index, and the Global Competitiveness Index. As a renowned leader in IT and Innovation, Swiss companies can be interested in exploring business opportunities in this regard.

However, the potential is not limited to one sphere alone. The economic cooperation already has a solid foundation that can afford further construction of robust and firm building blocks.

I hope that this interview can contribute in drawing further attention to this untapped potential.

In conclusion I would like to emphasize my firm conviction that in the current turbulent world the democracies should stand together and mutually reinforce each other, including economically to withstand the modern challenges and threats, preserving and strengthening the values and principles that stand at the foundation of free societies.

Thank you.

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