Interview with H.E. Mr. Vahan Kerobyan, Minister of Economy of Armenia


  1. What is your plan for increasing the economic relationship with the GCC and Arab countries?

Our main trade partner is the UAE. With Saudi Arabia we can see growth in trade, and I believe that by the end of the year we will see a $1 billion turnover in trade between Armenia and the Arab countries. It began with Dubai Expo 2020 when we exerted a lot of effort to improve relationships between Armenia and the UAE and other Arab countries, which created more opportunities for us.

Since then, and because we have personal relationships with ministers in the UAE, we can say that things are moving rapidly. Our investors go there, Arab investors come here. We have affiliated banks, diamond cutting, finance, jewellery and general regional trade as examples. Armenia is a part of the Eurasian Economic Union with good ties with other countries and the UAE is a trading hub for the GCC and much wider regions, so it is easy to reach and connect with different business people and work together. Trade this year has been extremely good and there are several investment projects ongoing in these countries with more in the pipeline.

  1. Apart from the GCC and the Gulf, are you seeing any interest from other Arab states?

We can say there is interest from other Arab states and the EU, as well as many European countries that had investments in Russia but have relocated their business to Armenia. In the Eurasian Economic Union Armenia has the best investment climate and business environment due to the reforms that have taken place over the past five years or so. As such we expect to see a dramatic improvement in our economic indices.

  1. What is the value of trade between Armenia and the GCC as well as other Arab countries, and what are your expectations?

I have already spoken about it this year, but hopefully this is just a part of it because we see a lot of professionals, especially in Saudi Arabia right now, as well as Qatar and other countries. We have a plan to diversify to the UAE, the GCC countries, Europe and the Americas. The Eurasian Economic Union is now confident and ready to engage in business world-wide.

  1. What opportunities are there at the moment for diversification and Armenian growth?

We have placed a lot of emphasis on the improvement of the business environment, and as you may know Armenians are very business-minded people, so when there are opportunities, they will take advantage of them. Small- and medium-sized businesses are really boosting the economy, with new ones popping up every day in large numbers, so our main goal for them is to incubate a part of their journey. A lot of new companies start up every year. Investments this year have increased by 18 percent of GDP and our target is to reach 25 percent over the next two or three years. We have several government programs supporting these investments by providing the infrastructure, clear regulations, and also state property if it’s needed.

  1. Exactly what help is available for these new entrepreneurs?

One of the biggest issues that the Armenian economy has is our productivity; at the moment it is approximately $10 per man hour GDP. Compared to GCC countries, for instance, where the man hour is $50, in Armenia it is about five times less. We thought to help companies here to modernize their equipment, to attract highly skilled professionals and to digitalize their processes so that we can become more productive. Our program is helping companies by subsidizing some of the costs to transform themselves in these three main ways.

We can say that a lot of companies are using these tools and modernizing, and this is probably the main basis for next year’s growth. This year, as you may know, Armenia’s economy has grown by almost 14 percent and we think it will reach 14 percent by the end of the year, which is record growth for the country and our GDP per capita will reach $7,000. We believe that helping companies become more productive, and of course as a result more competitive, will help the economy grow next year as well.

  1. As a landlocked country in the Caucus region with limited natural resources, what are some of the development challenges that Armenia faces?

Twenty-five years ago, Armenia had a small economy plagued with corruption. However, over the past five years, we have changed the way the nation is developing, reforming our laws and economy, and we have become a democratic country. We have dramatically changed the structure of the economy, transitioning from a consumption-based growth model to an investment led growth model. We are actively encouraging investment in industrial development, trade and many other sectors of the economy in order to free up space for companies and people to do business.

  1. Which economic strategies is the government currently implementing in order to improve industries’ development and competitiveness?

Armenia had a huge chemical manufacturing industry during Soviet times and our biggest efforts now are toward reviving this industry because we can see there are opportunities and also some niches where we can work. An example is rubber, as we are one of the very few nations that have rubber plants, and we are currently actively looking for investors, including from the Arab countries. We also are involved in metallurgy, in jewellery and diamond cutting as well as the diamond trade. There are also big projects: new towns, urban development close to Lake Sevan which is a resort, educational tourism projects, ski resorts, a new city center for Yerevan, and we are adding more so that is quite a big undertaking.

We also see that in the past investment was hindered by a lack of quality so we have been working hard on eliminating that in order to make investment more attractive. Some projects such as ski resorts, developing new towns close to Lake Sevan, tourism in cities and towns are already in progress, while others are anticipated in the near future.  A major overhaul of Yerevan city center will probably begin next year. The overall plan may take 10 years to complete but Phase 1 we hope to complete in three or four years.

  1. What are the most obvious achievements you have witnessed under your leadership?

The first that comes to mind of course is the 14 percent increase in the economy and productivity has grown by more than 50 percent. This of course is a good result and there has been a huge increase in the number of new jobs created through projects and investment. The ski resort project, for example, we pushed forward when I was appointed to this position and now we have it. We are not satisfied with these achievements, however. Our ambitions are much, much bigger and there is more to come.

  1. Given Armenia’s limited financial state, how is the government supporting the private sector?

Admittedly we have problems with properly spending our budget income. We projected more than the actual, meaning we in fact spent less than forecast. There is a constant challenge to complete projects properly and we have a lot of infrastructure investment, which I must admit we have not completed in the same volume as we had planned, but we have a very good regional government plan with many ways to support businesses and we adopt these government programs. What is important for us is to not have many programs but projects that will help the largest number of companies and then get a direct impact out of it because if you concentrate on small companies, you will spend a lot of your resources without achieving the fiscal results that you envision.

Before becoming a minister, I had a food delivery app like Talibat in four countries and my mindset is tuned to creating a scalable program so that you can deliver quality rather than quantity. If you do three smaller-scale projects with great quality, the results will be much, much better than those of many large-scale projects that do not deliver the best results. We also market our products ourselves, which is perhaps unusual for a government because there are many businesses to consider, and then of course we get results from them in the form of higher production.  Tax revenues are increased as a direct result of the success of these businesses.

  1. What efforts are being made to raise the low percentage of women in the work force and school to work transition rate?

Before I answer this question, I must touch on a problem that we already have, which is the lack of labor force we need. I believe that the UAE is one of the major countries in the world to attract a very large number of foreign workers to build their cities and country. Here in Armenia, we had the opposite. We were sending out people to work abroad who would send financial help to their families here. But now that we have a lot of work opportunities and a shortage of labor, we have started our immigration program to attract more people from Central Asia, India or African countries.

There are tens of thousands of vacancies in the construction industry alone, and we also have companies that are trying to recruit highly skilled professionals in order to modernize and become more productive. We see this as a short-term problem. There is also a reluctance on the part of some people from other towns in Armenia to relocate to Yerevan because of the considerable difference in rent, which of course is higher in the capital.  This short-term unemployment must be improved and a solution found.

Women in the work force are also very important for us and we have several projects targeting female entrepreneurs to help them accelerate their businesses. It’s going well I’m happy to say. We even have kindergartens and subsidized childcare to give mothers the freedom to work. In our society it has been traditional for women to take care of their children rather than men, but now we are actively facilitating women being part of the work force or starting their own businesses.

In small communities such as villages, we are subsidizing and encouraging nannies; women who do not wish to be part of the work force, but rather care for the children of working mothers for a fee. It is extremely easy for women to find work nowadays because of the help we are giving. At present, there are tens of thousands of vacancies available in construction, agriculture, manufacturing and tourism, for example, so it is not at all difficult to find work.

  1. How do you see Armenia’s development prospects over the coming years?

The Armenian government is investing a lot to nail down a long-term peace agreement with our neighbours so that we can look forward to long-term development, and our calculations and studies show that improved regional communications will see our economy grow by at least 30 percent in the relatively short term, and of course we are focused on bringing a decent result, which will be a good investment for Armenia’s future growth. Again, we have a lot of work to do on the reform side to improve the business environment even more and to digitalize all the services that the government provides so that processes become streamlined and eliminate the human factor.

Of course, we must create more business opportunities, provide large-scale investments for investors who want to have a footprint in the Eurasian economy and ensure that Armenia can provide the best environment for this. Logistics, financial services and more are all available and of the highest standards. The IT sector is a major success story for us, growing 30-40 percent per year, and will reach 50 percent this year in all likelihood. We also project Yerevan as a tech hub to which we can attract people from other countries in the region, including India and Iran.

Expo 2020 in Dubai was undoubtedly an excellent platform for us, bringing recognition in terms of both business opportunities and the leisure sector. This year, travel regulations have been eased for all UAE residents, making travel to Armenia very simple.

Consequently, air traffic has increased dramatically as more and more travellers from the UAE are seeing Armenia as an attractive destination. Wizz Air, Air Arabia, FlyDubai and Fly Arna, which is a joint venture between the Armenian National Interests Fund (ANIF) and the Air Arabia Group, all have regular flights to and from Yerevan and UAE.