By Atom Markarian
Conditions for doing business in Armenia are still far from meeting Western standards despite their improvement in recent years, according to a World Bank survey on business environments around the world.
The survey paints a mixed picture of the investment climate in Armenia, finding the existing procedures for setting up a business and registering property in the country quite simple but rating it poorly on other indicators such as the rule of law.
“I think the Armenian business environment is coming closer to the more sophisticated developing or developed countries. But there is still a long way to go,” the head of the World Bank’s Yerevan office, Roger Robinson, told RFE/RL on Friday.
The overall conclusion of the bank’s report is that doing business in most impoverished countries of the world is much more difficult and risky than in the economically developed nations. It notes in particular that the creation of new companies there usually requires twice as much time and resources as in the West where the whole process takes an average of 27 days and six bureaucratic procedures.
Armenia appears to be an exception from that rule. The research found that enterprise registration there is usually carried out within 25 days and is no more expensive, in relative terms, than it is in most Western economies. In neighboring Azerbaijan, for example, the average registration period is 123 days.
Armenia is also very high in the country rankings based on the amount of time needed for certifying real estate deals.
However, its ratings on contract enforcement and tax administration are much worse. “That is where Armenia is not so well in terms of other countries,” Robinson said.
Serious problems with the rule of law have long been seen as one of the main impediments to the country’s fast economic recovery. Even though the Armenian government has simplified and reduced its licensing requirements to businesses in the last few years, some lucrative forms of economic activity still require government connections.
Local entrepreneurs continue to complain about endemic corruption, harassment by tax authorities and a lack of independent judiciary. According to a separate survey conducted by the World Bank earlier, at least 7 percent of their profits is spent on bribes to various-level government officials.
The Armenian authorities, for their part, argue that while the business environment may still be flawed it compares favorably with economic conditions in other members of the Commonwealth of Independent States. Officials point to global surveys of “economic freedom” by two U.S. conservative institutions which have described the Armenian economy as the most liberal and open in the CIS.
According to the most recent Index of Economic Freedom released by “The Wall Street Journal” and the Heritage Foundation earlier this year, Armenia is the only member of the Russian-dominated grouping of ex-Soviet states with a “mostly free” business environment.
(Photolur photo: Roger Robinson.)