Armenia 2018 1 Table of Contents Doing Business in Armenia __________________________________________ 5 Market Overview ______________________________________________________________ 5 Market Challenges _____________________________________________________________ 6 Market Opportunities ___________________________________________________________ 7 Market Entry Strategy __________________________________________________________ 7 Political Environment _______________________________________________ 7 Political Environment __________________________________________________________ 7 Selling US Products & Services _______________________________________ 8 Using an Agent to Sell US Products and Services ___________________________________ 8 Establishing an Office __________________________________________________________ 8 Franchising __________________________________________________________________ 9 Direct Marketing _______________________________________________________________ 9 Joint Ventures/Licensing ______________________________________________________ 10 Selling to the Government _____________________________________________________ 10 Distribution & Sales Channels __________________________________________________ 11 Express Delivery _____________________________________________________________ 12 Selling Factors & Techniques ___________________________________________________ 12 eCommerce _________________________________________________________________ 12 Trade Promotion & Advertising _________________________________________________ 15 Pricing ______________________________________________________________________ 15 Sales Service/Customer Support ________________________________________________ 16 Protecting Intellectual Property _________________________________________________ 16 Due Diligence ________________________________________________________________ 16 Local Professional Services ____________________________________________________ 17 Principle Business Associations ________________________________________________ 17 Limitations on Selling US Products and Services __________________________________ 17 Web Resources ______________________________________________________________ 17 Leading Sectors for US Exports & Investments _________________________ 18 Energy ______________________________________________________________________ 18 Agricultural Sector (Example Sector) ____________________________________________ 24 Mining and Minerals __________________________________________________________ 30 Information Technology _______________________________________________________ 33 Travel and Tourism ___________________________________________________________ 37 2 Fast Moving Consumer Goods (FMCG) ___________________________________________ 40 Customs, Regulations & Standards ___________________________________ 42 Trade Barriers _______________________________________________________________ 42 Import Tariff _________________________________________________________________ 43 Import Requirements & Documentation __________________________________________ 44 Labeling/Marking Requirements ________________________________________________ 44 U.S. Export Controls __________________________________________________________ 45 Temporary Entry _____________________________________________________________ 45 Prohibited & Restricted Imports _________________________________________________ 45 Customs Regulations _________________________________________________________ 45 Standards for Trade ___________________________________________________________ 46 Trade Agreements ____________________________________________________________ 48 Licensing Requirements for Professional Services _________________________________ 48 Web Resources ______________________________________________________________ 48 Investment Climate Statement _______________________________________ 49 Executive Summary ___________________________________________________________ 49 Openness to and Restrictions upon Foreign Investment ____________________________ 50 Bilateral Investment Agreements and Taxation Treaties _____________________________ 52 Legal Regime ________________________________________________________________ 52 Industrial Policies ____________________________________________________________ 55 Protection of Property Rights ___________________________________________________ 56 Financial Sector ______________________________________________________________ 57 State-Owned Enterprises ______________________________________________________ 58 Responsible Business Conduct _________________________________________________ 59 Corruption __________________________________________________________________ 59 Political and Security Environment ______________________________________________ 62 Labor Policies and Practices ___________________________________________________ 63 OPIC and Other Investment Insurance Programs___________________________________ 64 Foreign Direct Investment and Foreign Portfolio Investment Statistics ________________ 64 Contact for More Information on the Investment Climate Statement ___________________ 65 Trade & Project Financing __________________________________________ 65 Methods of Payment __________________________________________________________ 65 Banking Systems _____________________________________________________________ 66 Foreign Exchange Controls ____________________________________________________ 66 US Banks & Local Correspondent Banks _________________________________________ 66 3 Project Financing _____________________________________________________________ 67 Financing Web Resources _____________________________________________________ 68 Business Travel ___________________________________________________ 68 Business Customs____________________________________________________________ 68 Travel Advisory ______________________________________________________________ 69 Visa Requirements ___________________________________________________________ 69 Currency ____________________________________________________________________ 69 Telecommunications/Electronics ________________________________________________ 70 Transportation _______________________________________________________________ 71 Language ___________________________________________________________________ 71 Health ______________________________________________________________________ 71 Local Time, Business Hours and Holidays ________________________________________ 71 Temporary Entry of Materials or Personal Belongings ______________________________ 72 Travel Related Web Resources _________________________________________________ 72 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 4 Doing Business in Armenia Market Overview Armenia is a small market, facing difficult challenges based on its geography and the ongoing hostilities over Nagorno-Karabakh that has closed two of its four borders. U.S. goods and services compete successfully for market share and there has been a significant increase in U.S. investment in Armenia over the last five years, particularly in the energy and mining sector. Unexpected political changes in April and May 2018 have not adversely affected the market, and new political will, if sustained, could positively address long-term systemic concerns about corruption and distortions to the market by politically-connected businesses. In May of 2015 the United States and the Armenian Government signed a Trade and Investment Framework Agreement (TIFA). The TIFA provides a strategic framework and principles for dialogue on trade and investment issues. The agreement creates a platform to meet and discuss issues of mutual interest with the objective of improving cooperation and enhancing opportunities for trade and investment and provides high level government engagement for protecting business interests in both countries. The Republic of Armenia became a member of the Russian led Eurasian Economic Union (EAEU) on January 2, 2015. This membership provides Armenian products direct access to the Russian, Belarussian, Kazakh, and Kyrgiz markets with a combined population of over 175 million and a combined gross domestic product (GDP) of 2.2 trillion USD. In November 2017, the European Union and Armenia signed the Comprehensive and Enhanced Partnership Agreement (CEPA) aimed at significantly deepening their relations. The new agreement is expected to improve the investment climate, stimulating growth and jobs and create better regulatory environment for businesses to grow. With international donor assistance, the Armenian government has been implementing a program of reforms aimed at attracting trade and foreign investment by improving the business environment and tax and customs administration. As a WTO member since 2003, Armenia has the most liberal investment regime among EAEU countries making it an attractive location from which to base international and regional operations focused on EAEU markets. The country has GSP access to the U.S., EU, and Japan, and a Free Trade Agreement with neighboring Georgia which remains available even after Armenia’s accession to the EAEU. Armenia’s gross domestic product grew 7.5 percent in 2017 to $11.6 billion, the largest annual expansion in a decade after close to zero growth in 2016. According to the World Bank country snapshot, growth was driven mainly by a recovery in the external environment