As published in print with Girl in a jacket
As published in print with Girl in a jacket

Armen Avak Avakian

CEO, Business Armenia

Born in Iran, educated in Armenia and Hungary, and with experience in the US and Europe, Armen Avak Avakian is both an advisor to the PM and head of the country’s investment promotion arm. Here, he reveals the bold initiatives he’s introduced to ensure investors get every ounce of help they need and that Armenian growth continues spiralling upward

You took over as head of the Development Foundation of Armenia (DFA) in May 2017, which was just rebranded to Business Armenia in 2018. What is your overall vision for the authority?

When I took over, we went through a lot of changes. The first thing we did was to get rid of tourism promotion. The vision was to become the business authority and an entity that can liaise between governments and business, and business and business. Our job is as a dealmaker. Before I entered, the DFA was broader spectrum – it was just marketing, forums, exposure. And we were doing that for the sake of doing it, which is, by the way, how the majority of investment promotion agencies around the world do it. My key performance indicators now have dollar amounts – how much foreign capital has actually come into Armenia. From that perspective, we quickly realised we couldn’t just leave it to the businesses to find each other – we had to sit down, broker deals and make sure they happen. We follow up all the way to actual contracts being signed and money being transferred. We have added an investor protection component to what we do – ‘Aftercare’ – and I’m putting more and more resources into that. It is going to include a hotline, the Systemic Investor Response Mechanism (SIRM) programme with the World Bank, and an e-regulations programme with the United Nations Development Programme. I’m adding a lot of foreign expertise. And that’s where me being an advisor to the prime minister helps – having that direct access helps me protect investors.


Armenia has a diverse, stable and growing economy – last year it recorded a 7.7% rise in GDP growth and the lowest inflation in the region. What strategy has the country been following to achieve these results?

There are two reasons for the growth that is happening. Number one is the very aggressive reform agenda, especially when it comes to the business sector – tax reforms, investor protection reforms and laws. The second thing is trust. Businesses don’t like the unknown, so as long as we’re not an unknown entity and they see consistency in the policies and they know what’s coming, it becomes more clean and open. We created a reform think-thank called the Centre for Strategic Initiatives and it specifically works on policy reforms. There are 11 people on the board: six from the private sector and five from the government. We have provided a platform where the private sector can come and tell us what they think the reforms should look like, so when a reform does happen they know about it in advance and also have their say on the policies. We’re listening to businesses and understanding what their real problems are.

“Armenia is the only country on earth that is a member of the Eurasian Economic Un-ion, has the GSP+ regime with the EU, US, Canada, Norway, Switzerland and Japan, and also has very good relations with Iran”

Where do you view the most important economic synergies between Armenia and the Gulf? Which areas in Armenia would you like to highlight as of particular interest?

Agrofoods is definitely interesting – from bottled water to meat and vegetable products. We have slaughterhouses that are halal certified already, and having a border with Iran means we know how to work in that system. We have good products, they’re cheap and, most importantly, the Gulf needs them. The second big one is innovation technologies – fintech, blockchain, anything revolving around AI and the entire IT sector. Armenians are mathematicians. All the innovation that Armenians have created are testament to that – every single Armenian who finishes high school knows how to play chess because it’s in our curriculum and you start learning it from third grade.


Armenia lies in a unique position when it comes to trade: not only is it a member of the Eurasian Economic Union, but it also has a preferential trade agreement with the European Union. Can you outline the advantages that the country can provide to Gulf investors?

Armenia is the only country on earth that is a member of the Eurasian Economic Union, that has the GSP+ (Generalised Scheme of Preferences) regime with the EU, has a GSP+ regime with the US, Canada, Norway, Switzerland and Japan, and has very good relations with Iran, with a Free Economic Zone on the border. To Gulf countries, we’re saying Armenia is a place for dialogue. A French company can talk to an Iranian company in Armenia. A Russian company can talk to a Japanese company in Armenia. And the key thing is not only can they talk, but at the same time, if a deal is struck that goes through Armenia, you have fiscal advantages – you gain money. There’s no export regime here, no tariffs and so on.


What services does Business Armenia offer foreign investors?

The first main service we provide at the outset is business consultancy, which we do for free. We have investment offers that we can give and we can also create a specific investment offer for them. They’re not full feasibility studies, but they give a good idea about the market – market research, the kind of investments that might be required, what the rate of return might be, turnover, and so on. The second thing we do is that as soon as we come to a memorandum of understanding level, my Aftercare team kicks in. I call it the anti-bureaucratic team. Its job is to hold the investor’s hand and literally walk them through every step of the process of setting up a company here – bank accounts, taxation papers and any issue that might come up. We have opened a Business Support Club and within that we have the top firms in Armenia in business consulting, law, accounting, finance and logistics – and they give their services to the investor for free for a certain period of time, just to get them kick-started. You might get law services for free from a top firm in Armenia for three months.

“Via our Business Support Club, the top firms in Armenia give their services to investors for free”

At the UAE Investment Forum last March, President Serzh Sargsyan remarked that bilateral trade between Armenia and the UAE had witnessed unprecedented growth – growing 2.5 times by the end of 2016 and multiplying again by a factor of eight by early 2017. What explains this growth, and in which areas do you see potential to continue to boost exports?

The first reason is because we have made very high-level visits to the likes of Qatar, Abu Dhabi and Kuwait, which gives a good governmental umbrella for businesses to operate under. The second thing is that we don’t have a visa regime with a lot of the countries in the Gulf. That doesn’t seem like it would drive business, but it does. They come here as tourists, they like it and they invest – and it’s enough to get things rolling. When it comes to the future, the possibilities are endless. As a government, all we have to do is not get in the way of business, because they’ll find the money. My job is to make sure they’re comfortable, so they know the government has their back and we can act as an interface – the liaison between the business and the government.


Armenia has already set up three Free Economic Zones. What benefits do they provide investors? Are there plans to create more?

There are plans to create more – we’re thinking about it. The tax incentives are very straightforward. It’s 0% corporate tax, 0% VAT, 0% property tax and 0% customs. It’s the four zeroes, and I think that’s good enough for businesses.

“Armenia is going to grow at a rate of at least 7% for the next 10 years. If you invest now, you win big”

What is the overall message you would like to send to potential Gulf investors? Why invest in Armenia and why now?

There are two main reasons. If you’re investing in Armenia for the Armenian market, then you’re investing in the tourism sector. Tourism is growing at a very rapid pace. We’re going to hit 3 million visitors in a couple of years so from that perspective, we’re solid. Anything you invest in now is going to earn money in that sector. In any other sector, you’re going to export the products. In Davos we had meetings with people from the Gulf, and their main idea is to invest in Armenia to produce something to take back home. They’re looking at gaps in import versus export in their own countries, saying, “We’re importing meat, so where can we get meat? Armenia is the place to be.” Why now? It’s first-mover advantage. Armenia is going to grow at a rate of at least 7% for the next 10 years – that’s my expectation. If you invest now, you win big. If you invest four years from now, it’s going to be much more expensive and competitive.


What are the unique characteristics that make Armenia a place to visit and do business in?

I wasn’t born here. I moved here and now I can’t imagine living anywhere else. Although I’m ethnically Armenian, the last time my family had lived here was in the 1700s. But I do identify myself as Armenian. So one of the things that’s unique about Armenia is having that rich history. When you have that, you almost feel obligated to be honourable because you represent an entire civilisation that has come before you. From that perspective, I believe Armenian businessmen are more honourable. Because of our history, background and heritage, it almost feels like we are representing our forefathers, and from that perspective, I think honour is one of the characteristics we have.