Challenges Many Foreign Companies Face in Armenia —U.S. State Department Report
According to BMG, this information is included in the U.S. State Department’s report on Armenia’s investment climate for 2024.
The report notes that Armenia has achieved respectable rankings in global indices measuring the country’s business climate. Armenia’s investment and trade policy is relatively open; foreign companies are entitled by law to the same treatment as Armenian companies.
“Many international companies have established branches or subsidiaries in Armenia to take advantage of the country’s qualified specialists and its position within the Eurasian Economic Union (EAEU),” the report states.
The authors of the report point out that following the 2022 war in Ukraine, dozens of American technology companies relocated from Russia to Armenia, increasing the high-tech workforce from around 20,000 to over 30,000 people.
“However, many companies face challenges related to the investment climate in Armenia: a small market (with a population of three million), limited consumer buying power, relative geographic isolation due to closed borders with Turkey and Azerbaijan, and issues related to weaknesses in the rule of law and a slow judiciary,” the report says.
The fight against corruption, which began in earnest after the peaceful change of power in 2018, needs to be institutionalized, especially in critical areas such as the judiciary, tax and customs operations, healthcare, education, the military, and law enforcement, U.S. State Department experts note.
“Foreign investors continue to express concerns about the rule of law, equal treatment, and the ethical conduct of government officials. The Armenian government’s acquisition of stakes in three major foreign-owned companies without clear compensation or criteria has raised questions about its policy in such cases,” the report states.
It is also noted that American companies have reported that the investment climate is marred by the failure to enforce intellectual property rights (IPR), although the government has committed to strengthening IPR enforcement and welcomes numerous U.S.-backed IPR development programs.
“There are concerns about the lack of an independent and strong judiciary, which undermines the government’s assurances of equal treatment and transparency and reduces access to effective recourse in instances of investment or commercial disputes. Representatives of U.S. entities have raised concerns about the quality of stakeholder consultation by the government with the private sector and the government’s responsiveness in addressing concerns among the business community,” the report says.
