By Atom MarkarianThe Armenian government approved on Thursday a set of measures to support the burgeoning production of gem diamonds, one of the country’s main export items, in the next three years.
The action plan, which also covers the broader jewelry sector of the economy, is aimed at doubling the annual volume of rough diamonds polished in and exported from Armenia to $500 million in 2006. The anticipated production increase is to translate into 10,000 new jobs.
Trade and Economic Development Minister Karen Chshmaritian, whose agency is responsible for the sector, said administrative and legislative measures envisaged by the government will spur the expansion of more than 50 diamond-processing plants operating in Armenia.
The biggest of them are owned by foreign investors lured by the availability of cheap and skilled labor. The current average salary in the sector is about $130 a month.
Among the leading investors are Lev Leviev of Israel and Haik Arslanian of Belgium. Leviev is one of the world’s leading diamond traders.
Also present in the Armenian diamond industry is another major foreign player, the Indian firm Rosy Blue. It reportedly plans to invest some US$5 million in the construction of a new jewelry plant next year. Rosy Blue already owns two plants in Armenia that refine $60 million worth of the precious stones annually.
Chshmaritian said the government will strive to attract more foreign investment in by improving the overall business environment. He said the diamond sector has already seen a ten-fold increase in output over the last six years and currently employs more than 4,000 people.
“In this sphere Armenia holds the ninth place in the world market in terms of production volume and the fifth place in terms of productivity,” Chshmaritian told reporters.
Statistical data from the Trade Ministry show the Armenian diamond output increasing by 37 percent on a year-on-year basis to $226 million in the first eleven months of 2003. Almost all of the stones were exported abroad, with Belgium remaining their principal destination.
The strong growth occurred despite a rise in the price of Russian rough diamonds that prevented Armenia-based firms from fully utilizing their combined purchase quota of 400,000 carats per annum set under a Russian-Armenian agreement. Only a quarter of that has been imported this year, Chshmaritian said.
This meant that the local diamond-cutters continued to rely on the South African cartel De Beers as well as rough suppliers from Israel and Belgium for meeting most of their demand.