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Armenia’s Business Environment ‘Best In CIS’


By Atom Markarian
Armenia has the most investor-friendly business environment in the Commonwealth of Independent States, according to the latest World Bank survey of economic freedom around the world.

The survey, conducted on an annual basis, evaluates “the ease of doing business” in 155 countries ranked accordingly by World Bank experts. Armenia holds a respectable 46th place in the rankings, putting it almost on a par with France and ahead of other European Union countries like Italy and Hungary.

Russia has the second highest score among the CIS nations and is 79th in the overall rankings. Armenia’s ex-Soviet neighbors, Azerbaijan and Georgia, are in 98th and 100th places respectively.

The ratings assigned to each country are based on ten different factors such as taxation, business registration and labor legislation. Armenia was found to have particularly simple procedures for buying and registering property. Its laws regulating the launch and closure of businesses as well as contract enforcement were also rated highly by the World Bank.

The survey notes in particular that registering a company in Armenia usually takes 25 days and involves ten different steps. The process is also not costly, it says. In Azerbaijan, by comparison, opening a business takes an average of 115 days.

Armenia fared poorly in other respects though. Its overall tax burden on businesses is judged to be heavy by the World Bank. The report says that a typical medium-sized Armenian company spend 1,120 hours each year to pay 50 types of taxes and other duties that take away 53.8 percent of its gross profit. It also describes as cumbersome the costs and procedures of import and export operations in Armenia.

The World Bank’s description of the Armenian business environment is largely in tune with the findings of annual global surveys conducted by the Heritage Foundation and “The Wall Street Journal.” The 2004 Index of Economic Freedom released by the two conservative U.S. institutions last January described Armenia as the only member of the Russian-dominated grouping of ex-Soviet states with a “mostly free” economy.

However, both surveys are based on laws and regulations existing in a particular country. None of them seems to gauge their actual implementation by governments. Serious problems with the rule of law and endemic government corruption represent a serious obstacle to Armenia’s development.
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