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EBRD Business Support Office Armena [EBRD

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EBRD Business Support Office Armena [EBRD Table of contents Table of contents ............................................................................................................... 2 List of abbreviations and terms....................................................................................... 3 Introduction....................................................................................................................... 4 Background, structure and organisation of the BSC .................................................... 4 Developments in the BSC since the establishment of the assignment.......................... 6 Results achieved since the establishment of the project................................................ 7 Technical progress of the assignment ........................................................................... 14 Reporting to the Bank .................................................................................................... 16 Conclusions...................................................................................................................... 18 LIST OF ANNEXES....................................................................................................... 22 ANNEX 1 Members’ lists...................................................................................................................23 ANNEX 2 Key structural developments within the BSC ...................................................................25 ANNEX 3 Frequency of BSC meetings .............................................................................................26 ANNEX 4 Minutes of the BSC Meeting 15 May 2008 ......................................................................27 ANNEX 5 Minutes of the BSC Meeting 4 July 2008.........................................................................38 ANNEX 6 Speech of the Senior Consultant at the BSC Meeting 4 July 2008 ...................................43 ANNEX 7 Local press coverage of the BSC Meeting 4 July 2008 ....................................................45 ANNEX 8 Comparative analysis of business environment in Armenia 2000-2008 ...........................46 ANNEX 9 Mapping of obstacles for exporting in Armenia ...............................................................83 ANNEX 10 Mapping of the work of donor organisations in developing small and medium businesses and improving business environment................................................................................87 ANNEX 11 Brief analysis of the 2008 state budget and its provisions for improvement of business environment ......................................................................................................................91 ANNEX 12 Presentation on the BSC ...................................................................................................95 ANNEX 13 Presentation on business climate in Armenia..................................................................102 ANNEX 14 Minutes of the BSC Meeting 19 November 2008............................................................107 2 List of abbreviations and terms ADA Armenian Development Agency ATDA Armenian Tourism Development Agency BSC Business Support Council Council Business Support Council Office Business Support Office established by the EBRD 3 Introduction In recent years Armenia has registered impressive economic growth as well as improvement in business environment indicators. However, many problems in this area remain unresolved. Armenia has exposed significant asymmetry between its business climate indicators; having a very favourable position in registering property, it is at a worryingly low level with tax collection, trade deficit, investor protection and other indicators. An effective solution to these problems is only possible through intensive cooperation between the government and the private sector. The BSC, being the only formal platform for dialogue between the authorities and the business community, should play a crucial role in facilitating the public-private cooperation. Increasing the efficiency of the work of the BSC is vital for addressing the problems of the private sector of Armenia as well as for introducing the necessary reforms aimed at achievement of a truly business enabling environment in the country. It is with the objective of upholding and maintaining the dialogue between the government and the business community on a high level and increasing the efficiency of the work of the BSC that the EBRD’s Business Support Office was established in mid-May 2007. In order to evaluate the progress of the assignment since its establishment, this Report starts with a brief overview of the BSC and the developments affecting the BSC since the start of the project, and then focuses on the specific results achieved by the project. Background, structure and organisation of the BSC The BSC was initially created in 2000 upon the initiative of the World Bank and its Foreign Investment Advisory Service (FIAS) and as a result of a joint effort of these structures and the government of Armenia. The BSC was established as a governmental structure. The legal basis for the establishment of the BSC was a presidential decree, and the Prime Minister was to be in charge of the structure. The BSC is comprised of 15 members, seven of whom are state officials and permanent members of the BSC. The composition of the permanent membership is as follows: Prime Minister of Armenia (Chairman) 4 Advisor to the President of Armenia on Economic Affairs (Deputy Chairman) General Manager of ADA (Executive Secretary, as ADA also acts as the BSC Secretariat) Minister of Economy Minister of Finance Mayor of Yerevan Chairman of the Chamber of Commerce and Industry of Armenia. The other eight members are included in the BSC from a wider list of 50 businesses on a rotational basis. For the full list of the BSC, current members and those that can be included in the BSC through rotation, please refer to Annex 1. However, as the Armenian economy and the needs of the business community were evolving with time, the BSC’s structure underwent changes accordingly. Originally it was comprised of only 28 members. Later, with the expansion of the Armenian economy, this number seemed to be inadequate and in 2002 the number of members was increased to 44. In 2006 the number was further increased to 50 members. But that last change was not just a mere addition of six new members – the whole composition of the BSC altered. Many of the oligarchs that had had vast representation in the former list were excluded. The current composition includes many players of a more modest weight category, and the percentage of both unions and development agencies has almost doubled in terms of their ratio in total, reaching 13 and 12 per cent respectively. The BSC members can be classified into three categories, namely: - businesses - unions that are groups of companies - development agencies and programmes. For more information on the development of the structure of the BSC please refer to Annex 2. 5 The BSC Charter acts as a regulatory document for all the BSC activities and for decision making within the Council. Between the sessions, the work of the Council is carried out through a mechanism called a “Pool of Problems”. The concept of the “Pool of Problems” involves a database of issues, based on actual complaints received from businesses. Once a complaint is received, it is re-addressed to a relevant decision maker (a ministry, an agency, etc.) who is in charge of the area. The responses from appropriate organisation(s) with added recommendations from ADA are then passed back to the company where the complaint has been generated. Developments in the BSC since the establishment of the assignment The Senior Consultant was recruited with the aim to establish and maintain, through the BSC, policy dialogue at the highest level between the government, the business community and the donors in Armenia. However, when the Senior Consultant started in May 2007, the BSC was undergoing a passive period. The number of meetings per year was steadily declining and no meetings were held in 2007 (please see Annex 3). The circumstances were not favourable to hold a BSC meeting. From January 2007 to May 2008, the BSC changed three Chairmen and three Executive Secretaries due to changes in the government structure. In March 2007, Prime Minister Andranik Margaryan passed away and in April Serzh Sargsyan was appointed Prime Minister hence becoming the Chairman of the BSC. However, timing did not work for the BSC’s advantage since the May 2007 parliamentary elections were underway followed by the presidential election campaign for the February 2008 elections. Upon winning the presidential elections in February 2008, Mr Sargsyan automatically stopped being the Chairman of the BSC and in April of 2008 a new Prime Minister was appointed. Mr. Tigran Sargsyan, former Central Bank Chairman, became a new Prime Minister and according to the BSC Charter took the position of the Council Chairman. 6 During the first 12 months of the appointment of the Senior Consultant, the BSC Secretariat has also undergone changes in leadership thus resulting in three different BSC Executive Secretaries (as the ADA General Director is also the Executive Secretary of the BSC). In September 2007 former General Director of ADA Mr Vahagn Movsisyan left his position for diplomatic service and was succeeded by former Deputy Minister of Trade and Economic Development Mr Tigran Davtyan. Following
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