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Executive Summary

Armenia is an increasingly welcoming place for U.S. and foreign investment, scoring well on international indices. In 2015, Contour Global acquired the Vorotan Hydroelectric Cascade, a major U.S. investment in Armenia’s energy generation sector. In 2016, Lydian International benefited from the largest U.S. private equity investment in Armenia from Orion Mine Finance and Resource Capital Fund for its Amulsar gold project. In 2017, new U.S. investors in the energy, pharmaceutical, IT, and mining sectors entered or acquired assets in Armenia. However, Armenia’s investment climate poses several challenges and risks through its small market (Armenia has a population of less than three million), its relative geographic isolation due to closed borders with Turkey and Azerbaijan, its per capita gross national income (GNI) of about USD 3,800, and through artificial limits on competition due to corrupt influences. It has been three years since Armenia formally entered the Eurasian Economic Union trading bloc, a single economic market of about 180 million people between Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. In May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA establishes a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues and examine ways to strengthen the trade and investment relationship between the two countries. In November 2017, Armenia signed a Comprehensive and Enhanced Partnership Agreement with the European Union, aimed in part on improving the investment and business climate in Armenia.

Armenia does not limit the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, and management or technical service fees. The banking system in Armenia is sound and well-regulated, but Armenia’s financial sector is not highly developed. Foreign individuals who do not hold special residence permits cannot own land, but may lease it; companies registered by foreigners in Armenia as Armenian businesses have the right to buy and own land. There are no restrictions on the rights of foreign nationals to acquire, establish or dispose of business interests in Armenia. IT, energy and mining sectors have traditionally attracted significant investments in Armenia. The U.S.-Armenia Bilateral Investment Treaty (BIT) provides that if a dispute arises between an American investor and the Republic of Armenia, the investor may choose to seek remedy through binding international arbitration. Although Armenian legislation complies with the Trade Related Aspects of Intellectual Properties (TRIPS) Agreement and offers protection of intellectual property rights (IPR), enforcement efforts and recourse through the courts still require improvement.

Major sectors of Armenia’s economy are controlled by well-connected businesspeople enjoying government-protected market dominance. Overall the investment climate is improving; however, corruption remains a problem in critical areas such as the judiciary and tax and customs operations. The health, education, military, and law enforcement sectors continue to lack transparency in procurement and often use selective enforcement to elicit bribes. Tax and customs procedures, while having recently improved with a reduction in the use reference pricing and elimination of pre-clearance customs procedures, still suffer from manipulation of the classification of goods and demands for pre-payment of taxes. The court system lacks independence, making it an unreliable forum for resolution of disputes.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2017 107 of 180
World Bank’s Doing Business Report “Ease of Doing Business” 2018 47 of 190
Global Innovation Index 2017 59 of 127
U.S. FDI in partner country ($M USD, stock positions) 2016 USD1
World Bank GNI per capita 2016 USD3,770

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Toward Foreign Direct Investment

The Armenian Government officially welcomes foreign investment; the country has achieved respectable rankings on some global indices measuring the business climate. Armenia’s investment and trade policy is relatively open; foreign companies are entitled by law to the same treatment as Armenian companies (national treatment). Armenia has strong human capital and a well-educated population, particularly in the Science, Technology, Engineering and Math (STEM) fields. The high-tech and information technology (IT) sectors have particularly attracted foreign investment. Many international companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists and trade preferences with Russia and the Eurasian Economic Union. However, Armenia’s investment climate poses several challenges as a result of its small market (Armenia has a population of less than three million), its relative geographic isolation due to closed borders with Turkey and Azerbaijan, its per capita gross national income (GNI) of about USD 3,800, and high levels of corruption.

Major sectors of Armenia’s economy are controlled by well-connected businessmen enjoying government-protected market dominance, creating barriers to new entrants and preventing a level playing field for all businesses. The Armenian government has also on occasion deployed government agencies, including the tax and customs services, for political motives. Foreign businesses, especially SMEs, may encounter non-transparent tax and customs procedures that increase costs and business risks. The open legislative framework and the government’s visible effort to attract more foreign investment are complicated by instances of unfair tender / procurement processes and practices and preferential treatment. The investment climate is also tainted by the failure to properly enforce or to selectively enforce intellectual property rights. The lack of an independent and strong judiciary has undermined the government’s assurances of equal treatment and transparency and reduced businesses’ recourse in the instances of contract or tax disputes. However, in 2011, the Republic of Armenia became the first country among the Commonwealth of Independent States (CIS) to accede to the WTO’s Government Procurement Agreement (GPA 1994). Armenia joined the GPA 2012 version in June 2015. Currently, the Armenian Government has submitted to Parliament a new draft Law on Foreign Investment, which would strengthen protections for foreign investors.

The Development Foundation of Armenia (DFA) is Armenia’s national authority for investment and export promotion; the DFA provides services and information to foreign investors related to the business climate, investment opportunities and legislation. It also provides support for investors’ visits as well as a liaison with governmental institutions. More information about the legislation, procedures and registrations can be obtained from the DFA (E-mail: ). The Armenian Government established the Center for Strategic Initiatives to advance essential reforms, increase exports, and attract long-term and sustainable foreign investments into Armenia through public-private partnership ( ). Investment projects promoted by the Armenian Government could be found at .

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limitations on foreign ownership and control of commercial enterprises. There are also no sector specific restrictions.

The Armenian government does not screen foreign direct investments.

Other Investment Policy Reviews

Armenia has not undergone Investment Policy Reviews by either the Organization of Economic Cooperation and Development (OECD) or U.N Conference on Trade and Development (UNCTAD). The World Trade Organization (WTO) conducted a Trade Policy Review in 2010, which can be found at .

Business Facilitation

Armenia has traditionally ranked well in the World Bank’s Ease of Doing Business report. Companies can register businesses electronically at . This single window service was launched in 2011 and allows individual entrepreneurs and companies to obtain name reservation, business registration, and tax identification services at a single location and at the same time. The legal time limit for the process is two working days, but the application may be dealt with in one day. However, an electronic signature is needed in order to be able to register online. Foreign citizens can obtain an e-signature and more detailed information from the e-signature portal at . A foreign company is not required to seek investment approval. Companies in Armenia are free to open and maintain bank accounts in foreign currency and there are no minimum capital requirements for foreign or domestic companies.

Outward Investment

The Armenian Government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Basic provisions regulating American investments are set by the U.S.-Armenia Bilateral Investment Treaty (BIT), which has been in force since 1996, and by the 1994 Law on Foreign Investment. The U.S.-Armenia BIT sets forth conditions for investors of each party to be no less favorable than for national investors (national treatment) or for investors from any third state (most favored nation) and also provides the option of international arbitration in the case of investment disputes. Armenia has BITs in force with 36 countries: the U.S., Argentina, Austria, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Egypt, Finland, France, Georgia, Germany, Greece, India, Iran, Italy, Israel, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, The Netherlands, Luxembourg, Romania, Russia, Spain, Sweden, Switzerland, Syria, Ukraine, the United Kingdom, Uruguay, and Vietnam. According to the U.N. Conference on Trade and Development (UNCTAD), Armenia has also signed BITs with Iraq, Jordan, Kazakhstan, Qatar, Tajikistan, Turkmenistan, and United Arab Emirates, but these agreements have not yet entered into force. Armenia is a signatory of the CIS Multilateral Convention on the Protection of Investor Rights.

Armenia became a member of the Russia-led Eurasian Economic Union (EAEU) in January 2015, together with Russia, Belarus, Kyrgyzstan and Kazakhstan. As an EAEU member, Armenia is currently engaged in negotiations on temporary free trade agreement between the EAEU and Iran, as well as a trade agreement between the EAEU and China. Armenia also entered into a Comprehensive and Enhanced Partnership Agreement with the EU in November 2017; while it will not affect customs or tax rates, it will, over time, align Armenia’s regulatory system and standards with that of the EU’s, as much as is possible under Armenia’s EAEU obligations.

There is no free trade agreement between the U.S and Armenia; however, the U.S. includes Armenia in its Generalized System of Preferences program. Also, in May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA established a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues and examined ways to strengthen the trade and investment relationship between the two countries.

Tax Treaty: Armenia does not issue foreign tax credits and does not recognize the existing 1973 double taxation treaty signed by the Union of Soviet Socialist Republics (USSR) and the United States. The United States considers Armenia a party to this treaty by virtue of state succession to treaties, and Armenia’s declaration of its commitment to fulfill the international treaty obligations of the former U.S.S.R. as expressed in the Alma Ata Declaration of 1991. The Armenian Government has expressed interest in negotiating a new double taxation treaty with the United States, but there is no strong evidence at this time of a U.S. company being subject to double-taxation or that the lack of such an agreement deters new investments.

According to Armenia’s new Tax Code, starting from January 1, 2017 foreign individual investors will pay a higher dividend tax of 10 percent compared to 5 percent dividend tax for local individual investors, which became effective in January 2018.

3. Legal Regime

Transparency of the Regulatory System

The Armenian regulatory system is still not implemented in a sufficiently transparent manner. A small cadre of businesses dominates particular sectors and utilize government assistance to suppress full competition. Despite some improvements in customs with regard to import procedures and the application of reference prices, the inconsistent application of tax, customs (especially with respect to valuation and classification), and regulatory rules (especially in the area of trade) undermines fair competition and adds risk for less politically-connected businesses, particularly small-and medium-sized businesses and new market entrants. Armenia’s legislation on protection of competition has recently been improved with clear definitions of limitation of competition and newly introduced concepts on price manipulation, imposition of fines on economic agents as a percentage of revenue vs. previous fixed amounts, and penalties for state officials for fixing tenders. However, the State Commission for the Protection of Economic Competition (SCPEC) lacks investigative powers and operates based on document studies, often provided by competing claimants. The efforts of the SCPEC alone are not enough to ensure a level playing field because of the roles of other state institutions, which affect competition, like courts, tax and customs agencies, and law enforcement agencies. Banking supervision is relatively well developed and largely consistent with the Basel Core Principles. The Central Bank of Armenia is the primary regulator for all segments of the financial sector, including banking, securities, insurance and pensions.

Safety and health requirements, most of them holdovers from the Soviet period, generally do not impede investment activities. Bureaucratic procedures can nevertheless be burdensome, and discretionary decisions by individual officials still provide opportunities for petty corruption. Despite persistent problems with corrupt officials, both local and foreign businesses assert that a sound knowledge of tax and customs law and regulations enables business owners to deflect the majority of unlawful bribe requests, which is easier for big companies than for SMEs. The unified online platform for publishing draft legislation was launched in March 2017, available at . The proposed legislation is available for everybody to view and the registered users can send feedback and get a summary of comments on draft legislation. However, the time period devoted to public comments in Armenia is often not sufficient for proper feedback. The results of consultations have not been reported by the government in the past.

International Regulatory Considerations

Armenia is a member of the Eurasian Economic Union (EAEU) and adheres to the technical regulations adopted within the EAEU. Armenia is also a member of the WTO and the Armenian Government notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade. Armenia is a signatory to the Trade Facilitation Agreement and had already implemented all category A requirements. Notification on implementation of category B requirements will be submitted to the WTO in April 2018 and the Armenian Government is working with international donors on potential assistance for the implementation of category C requirements.

Legal System and Judicial Independence

Armenia has a hybrid legal system that includes elements of both civil and common law. Although Armenia is developing an international commercial code, the laws regarding commercial and contractual matters currently are set forth in the civil code. Thus, because Armenia lacks a commercial court, all disputes involving contracts, ownership of property, or commercial matters are resolved by litigants in the courts of general jurisdiction, which handle both civil and criminal cases. However, the courts which handle civil matters are overwhelmed by the volume of cases before them and are seen by the public as corrupt. Despite the ability of courts to use the precedential authority of the Court of Cassation and the European Court of Human Rights, many judges do not do so, making civil court decisions unpredictable.

Many Armenian courts suffer from low levels of efficiency, independence, and professionalism, creating a need to strengthen the Armenian judiciary. Very often in cases when additional forensic expertise is requested during the judicial proceedings, the court may suspend the process until the forensic opinion is received, which may take months. Litigants are wary of turning to Armenian courts for redress because of the lack of judicial independence. Many judges at the court of general jurisdiction are reluctant to make a decision without getting advice from high court judges. Thus, decisions may be influenced by factors other than the law and merits of the cases. In general, the government honors judgments from both arbitration and Armenian national courts.

Due to the nature and complexity of commercial and contractual issues and the caseload of the civil courts, many matters involving investment/commercial disputes take months or years to work their way through the civil courts. In addition, because of the inherent inefficiencies and institutional corruption of the courts, matters are often delayed and outcomes are not predictable. Even though the Armenian Constitution provides investors the tools to enforce awards and their property rights, there is little predictability in what a court may do.

Laws and Regulations on Foreign Direct Investment

The Development Foundation of Armenia (DFA) is Armenia’s national authority for investment, and export promotion that provides services and information to foreign investors on business climate, investment opportunities and the legislation, support for investors’ visits, as well as liaison with governmental institutions. More information about the legislation, procedures and registrations can be obtained from DFA (E-mail: ).

Competition and Anti-Trust Laws

The State Commission for the Protection of Economic Competition reviews transactions for competition related concerns. The law, regulations, commission decisions, and more information can be found at .

Expropriation and Compensation

Under Armenian law, foreign investments cannot be confiscated or expropriated except in extreme cases of natural or state emergency, upon obtaining an order from a domestic court. In all cases, proper and fair compensation is owed to the property owner. The U.S. Government is not aware of any confirmed cases of expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Armenia is a state member of the ICSID convention and a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Under Article 5 of the Armenian Constitution, international treaties are a constituent part of the legal system of the Republic of Armenia. When an international treaty is ratified, if it stipulates norms other than those present in the domestic laws, the guidelines of the treaty shall prevail.

Investor-State Dispute Settlement

According to the 1994 Foreign Investment Law, all disputes that arise between a foreign investor and the Republic of Armenia must be settled in Armenian courts. A law on Commercial Arbitration was enacted in 2007, which provides investors with a wider range of options for resolving their commercial disputes. The U.S.-Armenia BIT provides that in the event of a dispute between an American investor and the Republic of Armenia, the investor may take the case to international arbitration. As an international treaty, the BIT supersedes Armenian law, a point which Armenia’s constitution acknowledges and which holds in actual practice. While there have been a few investment disputes involving U.S. and other foreign investors, there is no evidence of a pattern of discrimination against foreign investors in these cases.

International Commercial Arbitration and Foreign Courts

Commercial disputes may be brought before an Armenian or any other competent court, as provided by law or in accordance to party agreement. Commercial disputes are heard in courts of general jurisdiction. The specialized administrative courts adjudicate cases brought against state entities. Final judgments may be appealed to the Court of Appeal and Court of Cassation, the highest judicial authority in Armenia.

The Law on Arbitration Courts and Arbitration Procedures provides rules governing the settlement of disputes by arbitration. Armenia is a member state to the International Center for Settlement of Investment Disputes (ICSID Convention) and convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). The stipulations of the New York convention have been incorporated into Article 5 of the Armenian Constitution which requires domestic courts to recognize foreign arbitral awards.

Armenia intends to develop an alternative dispute resolution (ADR) mechanism that will include mediation and arbitration. ADR could be used not only in commercial matters, including those involving mobile property and secured transactions, but also in cases involving family and labor disputes. While ADR options are available for those who seek alternatives to litigation, they currently are not widely used or trusted.

Bankruptcy Regulations

According to the Law on Bankruptcy adopted in 2006, the creditors, equity and contract holders (including foreign entities) have the right to participate and defend their interests in the judicial proceedings of a bankruptcy case. Creditors have the right to access all materials relevant to the case, submit claims to the court in relation to the bankruptcy, participate in creditors’ meeting, and nominate a candidate to administer the case. Monetary judgments are usually made in local currency. The Armenian Criminal code defines penalties for false and deliberate bankruptcy, for concealment of property or other assets of the bankrupt party, or for other illegal activities during the bankruptcy process. Armenia amended its bankruptcy law in 2012 to clarify procedures for appointing insolvency administrators, reducing the processing time for bankruptcy proceedings, and regulating asset sales by auction.

According to the World Bank’s 2018 Doing Business Index, resolving insolvency takes 1.9 years on average and costs 11 percent of the debtor’s estate, with the most likely outcome being that the company will be broken up and sold. The average recovery rate is 36.4 cents on the dollar. Globally, Armenia stands at 97 in the ranking of 190 economies on the ease of resolving insolvency in the World Bank’s Doing Business 2018 Report (

4. Industrial Policies

Investment Incentives

Armenia currently offers incentives for exporters (no export duty, VAT refund on goods and services exported) and foreign investors (income tax holidays, the ability to carry forward losses indefinitely, VAT deferral and exemptions from customs duties for investment projects). On January 1, 2018, the Armenian Government started to exempt the imports of capital investment-related goods from VAT payments at the border. In 2015, the Armenian Government exempted from customs duties investment-related import of equipment and raw materials from non-Eurasian Economic Union member countries. VAT and customs duties exemptions are implemented based on Government’s decision made on a case-by-case basis. Also, in accordance with the Law on Foreign Investment, several ad hocincentives may be negotiated on a case-by-case basis for investments targeted at certain sectors of the economy and/or of strategic importance to the economy.

Foreign Trade Zones/Free Ports/Trade Facilitation

In June 2011, Armenia adopted a Law on Free Economic Zones (FEZ), and developed several key regulations at the end of 2011 to attract foreign investments into FEZs; these regulations include exemptions from VAT (value added tax), profit tax, customs duties, and property tax. The Alliance FEZ was opened in August 2013, and currently has thirteen businesses taking advantage of its facilities. The focus of Alliance FEZ is on high-tech industries which include information and communication technologies, electronics, pharmaceuticals and biotechnology, architecture and engineering, industrial design and alternative energy. In 2014, the government expanded operations in the Alliance FEZ to include industrial production as long as there is no similar production already occurring in Armenia. In 2015, another Meridian FEZ, focused on jewelry production, watch-making, and diamond-cutting, opened in Yerevan, with seven businesses operating in it. The investment programs for these companies must still be approved by the government. The Armenian Government approved the program to construct the Meghri free economic zone at the border with Iran, which was formally opened in 2017. A revision of legislation on free economic zones, which simplifies and brings more transparency in customs procedures, is currently in the Parliament pending approval.

Performance and Data Localization Requirements

There are no performance requirements for investment in terms of mandating local employment. The processes for obtaining visas, residence or work permits, etc. are quite simple. There are no government imposed conditions on permission to invest, including tariff and non-tariff barriers.

Armenia does not follow any policy which would force foreign investors to use domestic content in goods and technology. There are no requirements for foreign IT providers to turn over source code or provide keys for encryption. There are also no requirements to store data within the country.

5. Protection of Property Rights

Real Property

Armenian law protects secured interests in property, both personal and real. Armenian legislation provides a basic framework for secured lending, collateral and pledges, and provides a mechanism to support modern lending practices and title registration. In the World Bank’s Doing Business 2018 report Armenia ranked 13th among 190 economies on the ease of registering property. Lack of clear title to land in Armenia is not an issue.

Intellectual Property Rights

Armenia has a strong intellectual property rights (IPR) framework. Domestic legislation, including the 2006 Law on Copyright and Related Rights, provides for the protection of IPR on literary, scientific and artistic works (including computer programs and databases), patents and other rights of invention, industrial design, know-how, trade secrets, trademarks, and service marks. The Intellectual Property Agency (IPA) in the Armenian Ministry of Economy is responsible for granting patents and for overseeing other IPR related matters. Armenia requires no state registration for copyright. The collective management organization ARMAUTHOR manages authors’ economic rights. Trademarks and patents require state registration by the IPA. There is no special trade secret law in Armenia, but protection of trade secrets is partially covered by patent registration. Formal registration is easy and transparent, the database of IPR registrations is public, and applications to register intellectual property are published online for two months for comments by third parties.

Armenia’s legislation is in compliance with the Trade Related Aspects of Intellectual Properties (TRIPS) Agreement. In 2005, Armenia created an IPR Enforcement Unit in the Organized Crime Department of the Armenian Police, which does not, however, have ex-officiorights and acts only based on complaints from right holders.

Despite the existence of relevant legislation and executive government structures, the concept of IPR remains unrecognized by a large part of the local population. The onus for pursuing IPR complaints remains with the offended party. The police assert that the majority of cases are settled through out-of-court proceedings. While the GOA has made some progress on IPR issues, strengthening enforcement mechanisms remains necessary.

A new Law on Copyright has been drafted and circulated within the Government. It includes provisions from new international agreements and provides additional detail on many of the provisions in the current law. Copyright contract rights are better defined and examples of contracts between the user and the right-holder are included. Phonogram producers’ rights are harmonized with copyright holders’ rights and are extended to 70 years. The new legislation also includes specific provisions from the Marrakesh and Beijing Treaty, regulating the rights of disabled artists and orphan works. In 2017, Ministry of Justice initiated a review of the Chapter of the Civil Code on IPR by including the main provisions on IP rights, eliminating redundancies with other IPR legislation, as well as highlighting provisions on trade secrets. This new legislation was submitted to the Parliament for approval in March 2018.

The Armenian customs authorities track statistics related to the seizure of counterfeit goods, but the reports are not periodically updated. The latest relevant information can be found at:  and the descriptions of smuggling cases can be found in Armenian at: .

Armenia is not listed in USTR’s Special 301 Report or the Notorious Markets Report.

The American Chamber of Commerce in Armenia can be contacted at A list of local lawyers can be found at U.S. Embassy Yerevan’s web-page at:

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

Capital Markets and Portfolio Investment

The banking system in Armenia is sound and well-regulated, but Armenia’s financial sector is not highly developed. IMF estimates suggest that banking sector assets account for about 90 percent of total financial sector assets. Financial intermediation is poor. Because Armenian banks charge service and other fees, the actual interest rate paid by the customer may be higher than the nominal interest rate quoted by the banks. Nearly all banks require collateral located in Armenia, and large collateral requirements often prevent potential borrowers from entering the market. This remains the main barrier for SMEs and start-up companies.

The Armenian Government welcomes foreign portfolio investments and there is a system in place and legal framework for investments. However, Armenia’s securities market is not well developed and has only minimal trading activity through the NASDAQ-OMS exchange. Liquidity for the transfer of large sums can be difficult due to the small size of Armenia’s financial market and overall economy. The Armenian Government is hoping that as a result of the 2014 pension reform, which brought two international asset managers (Amundi and C-Quadrat) to Armenia, the capital market will play a more prominent role in the financial sector of the country. Armenia respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and foreign investors are able to access credit locally.

Money and Banking System

The banking sector is healthy; non-performing loans are less than 10 percent which is within acceptable international standards. The top three Armenian banks by assets are Ameriabank – 677.7 billion AMD (1.4 billion USD), Armbusinessbank – 574.9 billion AMD (1.2 billion USD) and Ardshinbank – 568.2 billion AMD (1.1 billion USD) and. The Central Bank of Armenia has initiated consolidation in the banking system; as of January 1, 2017 the minimum capital requirements for banks increased from the 5 billion AMD (10.4 million USD) to 30 billion AMD (62.5 million USD). This is intended to allow the banks to issue bigger loans at lower interest rates and will further strengthen the Armenian banking system. There are no restrictions for foreigners to open bank accounts. Foreign banks and branches are allowed to establish operations in the country, being subjected to the same prudential measures and regulations as local banks.

Foreign Exchange and Remittances

Foreign Exchange Policies

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, or management or technical service fees. Most banks can transfer funds internationally within two to four days. Armenia maintains the Armenian dram (AMD) as a freely convertible currency under a managed float. The Central Bank of Armenia (CBA) sought to maintain the AMD through intervention in the foreign exchange market and through administrative measures in November– December 2014 to prevent market panic and drastic devaluation in the currency market. As a result, a 17 percent depreciation of the Armenian dram was roughly on par with the widespread decline of many currencies against the dollar over the same period. The AMD/USD exchange rate as of March 2018 fluctuated around 480 AMD to the USD.

According to the 2005 law on Currency Regulation and Currency Control, prices for all goods and services, property and wages must be set in AMD. There are exceptions in the law, however, for transactions between resident and non-resident businesses and for certain transactions involving goods traded at world market prices. The law requires that interest on foreign currency accounts be calculated in that currency, but be paid in AMD.

Remittance Policies

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, lease payments, private foreign debt or management or technical service fees.

Sovereign Wealth Funds

Armenia does not have a sovereign wealth fund.

7. State-Owned Enterprises

Most of Armenia’s state owned enterprises (SOEs) were privatized in the 1990s and early 2000s; yet SOEs are still active in geodesy/cartography and the energy sector. SOEs in Armenia operate as state-owned closed joint stock companies that are managed by the Department of State Property of the Armenian Government and state non-commercial organizations (schools, universities, forest enterprises). There are no laws or rules that ensure a primary or leading role for SOEs in any specific industry. Armenia is a party to the WTO’s Government Procurement Agreement (GPA) and SOEs are covered under that agreement. SOEs in Armenia are subjected to the same tax regime as their private competitors, and private enterprises in Armenia can compete with SOEs under the same terms and conditions. A public list of state-owned closed joint stock companies can be found at: (

Armenian state owned enterprises adhere to the OECD Guidelines on Corporate Governance for SOEs. The enterprises owned by the state are providing public services, like geodesy or nuclear power generation, and hence do not impact the competitive environment in the country.

Privatization Program

Most of Armenia’s state owned enterprises were privatized in the 1990s and early 2000s. Many of the privatization processes for Armenia’s large assets were reported to be neither competitive nor transparent, and political considerations in some instances prevailed over a fair tender processes.

The Department of State Property Management publishes the announcements on tenders and auctions on its web-page. In the past, there have been reports that the process of privatization tenders and auctions is not always competitive and transparent enough.

8. Responsible Business Conduct

There is not a widespread understanding of responsible business conduct (RBC) in Armenia, but several larger companies with foreign ownership or management are introducing the concept. It is rare to see examples of Armenian companies that contribute to their local community through charity, employee service days, or other similar programs, but those RBC programs which do exist are viewed favorably. There are no NGOs that actively promote or monitor responsible business conduct. Armenia joined the Extractive Industries Transparency Initiative (EITI) in March 2017 as a candidate country. Armenia does not adhere to the OECD Guidelines for Multi-National Enterprises (MNEs) or the UN Guiding Principles for Business and Human Rights, which address generally-accepted CSR principles.

Domestic laws related to labor, employment rights, consumer protection, and environmental protection are not always enforced effectively. These laws and regulations cannot be waived to attract foreign investments.

9. Corruption

Corruption remains a significant obstacle to U.S. investment in Armenia, particularly for SMEs. The government introduced a number of legislative reforms over the last few years, including simplification of licensing procedures and civil service reform amendments to the Criminal and Criminal Procedural Codes to criminalize illicit enrichment, a law on whistleblower protection, and the introduction of a national anti-corruption strategy. Many of these laws are in their initial stages of implementation and have not yet been tested through enforcement or prosecution. Nevertheless, corruption remains a problem in critical areas such as the judiciary, tax and customs operations. The health, education, military, corrections and law enforcement sectors lack transparency in procurement and often use selective enforcement to elicit bribes. The Special Investigative Service is responsible for carrying out preliminary investigation of alleged criminal conduct, including corruption cases, by government officials of all branches of government, with the Prosecutor General’s Office responsible for prosecution. While market capture and petty corruption remain widespread, neither is routinely prosecuted. The new Corruption Prevention Body, to take effect in spring 2018 in place of the Commission on Ethics of High Ranking Officials, will be vested with broader powers of scrutinizing asset declarations, but lacks any investigative power. Armenia’s ability to counter, deter, and prosecute corruption is hindered by the lack of independent, empowered anti-corruption body with both investigative and prosecutorial powers, the lack of a strong and independent judiciary, and the lack of robust enforcement of official disclosure laws to prevent the entrance and retention of corrupted officials in positions of authority and influence. Anti-corruption legislation is limited in scope and not applied consistently, does not address beneficial ownership, and permits family members to hide allegedly corrupt officials’ assets and income. As part of its Extractive Industries Transparency Initiative (EITI) membership aspirations, the Government of Armenia adopted the roadmap to disclose beneficial ownership in the metal ore mining industry in March 2018.

In 2016, the Armenian government initiated legislation on criminal penalties for noncompliance or filing of false declarations and illicit enrichment, which were approved and enacted by the Parliament in late 2016. A new law adopted in June 2017 set up the Corruption Prevention Commission which is set to take full force in the spring of 2018. The new body will replace the Commission on Ethics of High Ranking Officials and will have a separate budget and support staff to perform corruption prevention and public education functions. While the new body does not have prosecutorial functions, it is empowered to institute administrative proceedings against officials violating reporting requirements and to refer prima facie cases of corruption to the Prosecutor General’s Office for investigation. According to the new legislation, a larger number of public officials are subject to the Commissions scrutiny of financial and interest disclosures.

According to current practice, income, gifts or assets from undisclosed sources are not considered evidence of corruption, nor do they represent sufficient grounds for launching an investigation, although the law allows for it.

The Government of Armenia adopted the Unified Tax Code in late 2016, which became effective in January 2018. This document vouches for a unified approach to taxpayers and more simplified tax administration procedures. Also, both the Ministry of Finance and State Revenue Committee have established public-private dialog councils that include representatives of civil society organizations (CSOs), professional organizations, private sector and academia. These fora allow engaging public into tax related legal, administrative and operational issues discussions. Together with the passage of the Unified Tax Code, the creation of councils and automated electronic filing and e-services allowed for improved transparency and reduced opportunities for corruption.

The State Revenue Committee (SRC) opened a monitoring center in April 2017 equipped with a state-of-the-art electronic control system, which is supposed to improve and upgrade the process of identification and risk analysis carried out by the SRC to trigger audits or closer investigation of customs and tax filings. The center is expected to implement expanded and centralized analysis, monitoring of turnover declarations, payment processing and products, import, transport and so on, facilitating the process of identification of risks and improve surveillance. The targeted monitoring will allow the SRC to conduct fewer inspections and minimize the interaction of tax officers with the taxpayers. This has the potential of reducing opportunities for corruption. With increased capacities of risk management, the SRC is planning to move focus from pre-clearance customs verification process to post clearance control, which implies that the management of risks at the border, not linked to security, should be gradually moved to a post-clearance control phase, expectedly bringing to simplification of the operations at the border. An advance decision on classification of goods is possible under Eurasian Economic Union regulations for a fee of $63 USD and valid for three years.

The Law on Civil Service, in force since 2002, as well as the Laws on Municipal Service (2005) and on Local Self-government (2002), prohibits participation of civil and municipal servants, as well as local government elected officials (mayors and councilors) in commercial activities. However, powerful officials at the national, district, or local levels often acquire direct, partial, or indirect control over private firms. Such control is exercised through a hidden partner or through majority ownership of fully private parent companies. This involvement can also be indirect, e.g., through close relatives and friends. These practices promote protectionism, encourage the creation of monopolies or oligopolies, hinder competition, and undermine the image of the government as a facilitator of private sector growth. Because of the strong interconnectedness of political and economic spheres, Armenia is unable to differentiate between the two and introduce legislation to encourage strict ethical codes of conduct and the prevention of bribery in the business field.

According to the 2017 Transparency International (TI) 2017 Corruption Perception Index (CPI) report, Armenia with a score of 35 out of 100 ranked 107th among 180 countries.

No specific law on NGOs dealing with anti-corruption investigation exists. The government, in close coordination with civil society, approved new legislation on Public Organizations in December 2016. The new law gives NGOs the right to engage in economic activities, providing these organizations with mechanisms for sustainability. The law replaced the 2001 law on NGOs that covered all aspects of the relationship between the GOA and non-governmental organizations

Western companies seeking to invest in Armenia are typically large enough that they do not, to our knowledge, need to get involved in corruption or bribe officials to facilitate their business. They follow the rule of law and are transparent in their dealings and demand the same of the government.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Armenia is a member of the UN Anticorruption Convention. While not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Armenia is, however, a member of the OECD Anti-Corruption Network for Eastern Europe and Central Asia, and has signed the Istanbul Action Plan. Armenia was included in the third round monitoring mission in 2014 and the report that came out in 2015 highlighted the absence of a truly independent body responsible for anti-corruption policy implementation with the power to prosecute. A round of monitoring is ongoing in the spring of 2018 with a report expected out by August 2018. Armenia has also joined the global Open Government Partnership initiative.

Resources to Report Corruption

For investigating corruption:

Investigation Department of Corruption, Organized and Official Crimes
Special Investigation Service of Armenia
13A Vagharsh Vagharshyan Street
Yerevan, Armenia
[+374 11] 900 002

For prosecuting corruption:

Arsen Simonyan
Head of Department for Combating Corruption
and Economic Crimes
RA Prosecutor General’s Office
5 V. Sargsyan Street
Yerevan, Armenia
(37410) 511-655

For financial and asset declarations of high level officials:

Siranush Sahakyan
Ethics Commission
26 Baghramyan Street
Yerevan, Armenia
374 10 524689

Watchdog organization:

Varuzhan Hoktanyan
Executive Director
Transparency International (Armenia)
164/1 Antarayin Street
Yerevan, Armenia
374 10 569589

10. Political and Security Environment

Armenia has a history of political demonstrations, with some that have turned into violent confrontations between the police and protesters; however, the frequency of protests has decreased in recent years. In the fall of 2014 and early 2015, violence against civic and political activists resulted in detentions and injuries. None of these incidents caused any damage to projects or installations nor did they impede the functioning of businesses in the country. On July 17, 2016, the armed group Sasna Tsrer stormed and occupied a police compound in Yerevan, killing three officers and taking police personnel hostage. During the two-week standoff that followed, Sasna Tsrer took additional police and medical personnel hostage, demanding political changes. During the standoff, numerous protests and demonstrations in support of Sasna Tsrer took place in Yerevan and other parts of the country. Law enforcement officers engaged in illegal detentions, disproportionate and excessive use of force toward peaceful demonstrators, abusive treatment of journalists, and other serious human rights abuses, especially on the night of July 29, when police forcefully dispersed a protest supporting Sasna Tsrer’s political demands. These clashes did not pose any damage to businesses and generally do not increase Armenia’s political risk.

The Armenian Government has been known to use tax audits, money laundering investigations, and other official mechanisms to retaliate against business people who support the political opposition, including members of Parliament. At the same time, the Armenian Government has used economic and administrative resources to reward political loyalists, provide them with political protection, and keep them above the law. This, in turn, has led to monopolies in many areas and a strong interconnection between the political and business spheres.

The state of war between Armenia and Azerbaijan, including the regular exchanges of fire along the international border and the disputed territory of Nagorno-Karabakh presents some political risk to investors and business. A cease-fire with Azerbaijan has been in effect since 1994 for the conflict surrounding the disputed region of Nagorno-Karabakh. However, intermittent gunfire along the cease-fire line and along the border with Azerbaijan continues, often resulting in injuries and/or deaths. There was an increase in violence along the Line of Contact and Armenian-Azerbaijan international border April 2-5, 2016. The heavy clashes led to the highest death toll since the signing of the 1994 cease-fire agreement. There have been no threats to commercial enterprises from skirmishes in the border areas. It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community. The Government of Azerbaijan has suspended the importation and operations of U.S. companies in Azerbaijan if the companies’ products or services are provided in Nagorno-Karabakh and has banned the entry into Azerbaijan of some persons who have visited Nagorno-Karabakh. Because of the existing state of hostilities, consular services are not available to U.S. citizens in Nagorno-Karabakh.

11. Labor Policies and Practices

Armenia’s human capital is one of its strongest resources. The labor force is generally well educated, particularly in the Science, Technology, Engineering and Math (STEM) fields. Almost one hundred percent of Armenia’s population is literate. According to official information, enrollment in secondary school is over 90 percent, and enrollment in senior school (essentially equivalent to American high school) is about 85 percent. The official unemployment level is about 18 percent, but according to various expert estimations, the real unemployment level is closer to 30 percent.

Much of the new foreign investment in Armenia has occurred in the high-tech sector. High-tech companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists in electrical and computer engineering, optical engineering, and software design. There is a shortage of workers with vocational educations qualified in professions like welders and plumbers. About 20 percent of the non-agricultural workforce is employed in the informal economy, primarily in the services sector. Armenian law protects the rights of workers to form and to join independent unions, with exceptions for personnel of the armed forces and law enforcement agencies. The law also provides for the right to strike, with the same exceptions, and permits collective bargaining. The law stipulates that workers’ rights cannot be restricted because of membership in a union. It also differentiates between layoffs and firing with severance. Labor organizations remain weak because of employer resistance, high unemployment, and poor economic conditions; collective bargaining is not common in Armenia. Labor unions are generally inactive with the exception of those connected with the mining and chemical industries. Unions are tied closely to the government. Labor laws are not waived to retain or attract investments.

The current Labor Code is considered to be largely consistent with international standards. The law sets a standard 40-hour work week, with 20 days of mandatory annual paid leave. However, there are consistent reports that many private sector employees, particularly in the service sector, are unable to obtain paid leave and are required to work more than eight hours a day without additional compensation. Treatment of labor in free economic zones is no different than elsewhere in the country. Employers are generally able to adjust employment in light of fluctuating market conditions. Severance in general does not exceed 60 working days. Benefits for workers laid off for economic reasons, like unemployment insurance and social safety net programs, are mostly limited to offering qualification trainings to the unemployed and assistance in job search.

Individual labor disputes can usually be resolved through courts; however, the courts are often overburdened, causing significant delays. Collective labor disputes should be resolved through collective bargaining. The newly formed Health Inspection Body (HIB) under the Ministry of Health has a mandate to monitor health and occupational safety issues, but the enforcement has been halted by continuous restructuring of the body and absence of a legal framework and regulations in support of the HIB functions.

Amendments into Labor Code of Armenia entered into force in 2015 clarified the procedures of making changes in labor contracts, and the content of labor contracts, including the requirement to reflect probation period and duration of vacation in labor contracts, introduced the order of calculation of average hourly wage.

The current legal minimum wage is AMD 55,000 (USD 115) per month. Most companies also pay an unofficial extra-month bonus for the New Year’s holiday. Wages in the public sector are often significantly lower than those in the private sector.

12. OPIC and Other Investment Insurance Programs

Since 1992, Armenia has had in place an agreement with the Overseas Private Investment Corporation (OPIC). OPIC mobilizes private capital to help solve critical development challenges, providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds. OPIC has been involved in several projects in Armenia, including expansion of the Yerevan Marriott, expansion of operations of First Mortgage Company and loans to FINCA Universal Credit Organization which is part of a multi-country, seven-year USD 45 million loan to FINCA Microfinance Holding for micro-lending. Armenia is also a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA).

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 USD 10.57 2015 USD10.55 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2015 USD 175.7 2015 USD1 BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) N/A 2014 USD2 BEA data available at
Total inbound stock of FDI as % host GDP 2015 USD 36.4 2014 USD56.7 N/A

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 4,169 100% Total Outward 228 100%
Russia 1,921 46% Latvia 56 24.6%
Argentina 247 5.9% Bulgaria 36 15.8%
UK 244 5.8% United States 1 0.4%
Lebanon 243 5.8%
United States 223 5.3%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio investment data is not available for Armenia.

14. Contact for More Information

U.S. Embassy, American Avenue 1, Yerevan 0082, Armenia

2018 Investment Climate Statements: Armenia
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