During his New Year’s address, Armenia’s Prime Minister Nikol Pashinyan promised to carry out an economic revolution in 2019. The purpose of this article is not to assess the possibility of that revolution, but rather to extend an invitation to all interested parties to discuss the future logic of economic development in Armenia. In order to orient ourselves, let us reveal the meaning of some terms. For one, let’s understand the term “economic revolution” to mean the rapid destruction of the existing economic order and its dismantling in order to create a new one. Alternatively, there is an “economic evolution,” which could be defined as a progressive transformation of ready-to-use reforms into qualitatively new, modern development systems.
One option is to transition from revolution to evolution. But the purpose, the program, the experience and knowledge of the authors of such processes, as well as a higher level of responsibility for their actions, must be identified.
Is there a need for a revolution in Armenia? Has a complete risk assessment been carried out? And who are the leaders? Or is the path of Armenia nevertheless an evolutionary development?
If there is no clear vision of the tools of transition from revolution to evolution, then it becomes destructive. An economic revolution is necessary when economic development is disrupted globally, and there is no other way.
In recent years, development of the industry and agrarian sector issues have been discussed at length. As a result, we now have developed and enshrined in law an “Industrial Policy of the Republic of Armenia,” which has been enacted from 2012 to 2014 through the combined efforts of the government, experts and business community.
Many different industries were studied by experts and newly established industry associations in order to identify the challenges and “vulnerable points” and develop enterprise support measures and export promotion. I will not enumerate all sectors, but the winemaking sector obtained powerful development and investment during that period. Today, Armenia can be proud of its wine manufacturers and their products, which occupy stable positions in the international market. That was a successful example of cooperation between the private and public sectors. Unfortunately, at that moment, one major obstacle to economic development that remains is the arbitrary procedures by the fiscal and customs bodies. Specifically, “discretionary” charges by tax authorities and non-transparent customs procedures, which continue to hinder the development of business.
Prioritization of industries and the development of targeted support programs were the way of evolutionary development. However, those business models opposed the existing governmental system. As a result, pace of development has decreased and eventually plateaued. Today, when the current government speaks about the industry or agrarian sector, they offer the leading industries that have been bolstered by the “Industrial Policy” as examples, and this, of course, pleases crowds. This would suggest that rather than revolution, this is an opportunity for the continuity of the country’s economic policy. In parallel, the IT industry has evolved rapidly in Armenia, and it seems it may play the leading role in promoting growth in the military sector and other industries.
Finally, now, when the whole world (Armenia included) is entering its the fourth industrial revolution (in which an unprecedented volume of knowledge-based models is taking place), we have an opportunity to sync the logic of our economic development with global trends and carry out a “revolution” by creating a new one, rather than dismantling the existing one. Therefore, the declared economic revolution can only complicate the processes that has already commenced unless it is based on the logic of formed development of the leading sectors of the economy.
In the current situation, the National Agenda party proposes ten priorities for the development of the industry and the agrarian sector:
- Reduce the aggressive and inefficient rhetoric in the fight against corruption, and instead focus on the systemic reductions of real corruption by setting transparent “rules of the game” for investors and businessmen.
- To audit the major agrarian sector and industry in order to obtain information about the situation “as-is,” in particular for the agrarian sector, in which statistics are traditionally very approximate and questionable.
- Restart private-public sector cooperation in priority industries with a view of elaborating relevant sectoral development programs with a clear 5 to 10 year road map.
- Provide priority conditions for the rapid development of the IT sector through revising the income tax scale.
- All key positions in these areas, in the Government and National Assembly committees should be occupied by professionals with experience and knowledge who have passed the State certification. A key intermediate link would provide a staffing position in which specialists involved would undergo professional growth over the next 5 years.
- Raise the transparency of tax and customs authority activities, simplify complaints procedure of their decisions by business representatives.
- Ensure equal conditions for all investors, to carry out all transactions of privatization or the use of state-owned property by way of organizing transparent procedures for tendering.
- It should be noted that changes in the tax legislation should not lead to the increase of the tax burden on any given business for a grace period of five years.
- If the taxpayer has not violated the legislation after two years, the taxpayer will be exempt from tax inspections for the next two years assuming the maintenance of the taxpayer’s current tax bracket.
- Focus on the development of all possible markets for the implementation on the principle of “AND” and not “OR” by excluding contradistinction to EAEC (EurAsEC), EEC or other markets.
The above paragraphs, from our point of view, will allow the development of the economy in an evolutionary way using already formed economic preferences and opportunities and avoid unpredictable deterioration of the economic environment that we witnessed in the second half of last year.
The National Agenda party is ready to make continuous investment in this process, constantly offering innovative solutions by integrating the current international experience of economic development in Armenia.