Pashinyan to Wealthy Foreign Investors: “Our policy motto is to get rich and enrich”

During a dinner in Zurich, Prime Minister Nikol Pashinyan addressed a room of Swiss businessmen. His speech, republished below in full, is characterized by a staunchly neoliberal rhetoric, in which Pashinyan described Armenia’s tax code as an open door policy for foreign investors, as well as his government’s plans to drastically decrease economic regulations and restrictions in Armenia. "Dear Guests, fellow Armenians, ladies and gentlemen: It is a great pleasure to meet all of you here and discuss issues of mutual interest. This forum and this venue presents an opportunity for us to ask questions, identify problems and come up with solutions that will enable better economic relations between our countries. And we can and should do this together. The first question we should answer is as follows: Where are we? Before we go into our vision of the future we first need to take a step back, look at the path that our country has followed and ask ourselves whether we want to keep walking down this road. Now, Armenia stands at the crossroads between economic prosperity and stagnation. Historic transformations have recently happened in Armenia. [The] non-violent velvet revolution held last spring led to the victory of democracy in our country. The snap parliamentarian elections held last December further strengthened democratic achievements. These fundamental changes are irreversible—they are based on the will of our people and the overwhelming consensus in our society. Today, our Government has an unprecedented high level of legitimacy and public support. Based on this high-level public confidence, [the] Armenian Government adopted an ambitious reform agenda. As a result, the situation in Armenia already fundamentally differs from the one that we had before the revolution. In particular, the level of corruption has been drastically reduced; we have almost eradicated monopolies; very serious measures have been taken to strengthen independent judiciary system[s], [and] establish rule of law and a level playing field for all economic and political actors. Despite significant progress made in some crucial areas, such as ensuring market contestability and eliminating corruption in the public sector, there is still a vast amount of work to be done. Today we have to complete another revolution—the economic revolution—in order to justify the trust and expectations of our people. GDP growth over the past years has been promising with 7.5 percent registered in 2017 and persisted during 2018 with estimates exceeding 5 percent. The foreign exchange rate of the Armenian Currency and inflation have remained stable, thus showcasing the resilience of our economy to both external and internal shocks. The export to GDP relation has topped 37% in 2017 and has continued with record breaking figures in 2018. Those promising trends, however, cannot be enough if we want to ensure Armenia’s rightful place in the global economy. Assumedly, the second question is: Where do we want to be? The cornerstone of our future growth will be an investment policy framework that drives productive job creation and export competitiveness. The government and the people are united in this vision. Indeed, recent surveys have shown that the two things that Armenian people want and expect the most are more jobs and less corruption. The results can be interpreted as follows: Armenian citizens do not want more redistribution of income. They have seen enough of that. What we, as Armenians want, is the ability and opportunity to earn and contribute to economic growth and prosperity of our homeland. And here comes the role you are playing, since the ability of individuals to be productively employed depends on you. To facilitate this process, on its part, the Armenian government has adopted: [an] open door policy towards foreign investors—our policy motto is to get rich and enrich; a growth-friendly tax code based on investors wills and needs; export and industrial modernization support mechanisms, such as tax and customs incentives; [and] a policy principle ensuring an unbiased and much less restrictive regulatory environment for doing business. We have ensured that the economic agents operating in our country have access to markets around the world. (Armenia is a member of EEU and benefits from GSP with a number of countries, including Switzerland, and GSP+ with EU).* And of course, we guarantee free movement of capital and protection of property rights (including intellectual property). Thus, the next question to be asked is: what can the Armenian people offer to reach the place it wants to be [sic]? It has been said on many occasions and we continue to believe that Armenia has a small internal market with a lot of value-creation potential. And there are [sic] both a market to monetize this potential and a demand for Armenian products, ideas and culture. We must satisfy this demand and present value to the world. This means higher export of goods, services and, last but not the least [sic], culture. The cornerstone of Armenian economy is the creativity and ingenuity of the people. This translates into our increased competitiveness in niche, high value-added products and services. Armenians are responsible for a number of innovations, such as the MRI machine, the oxygen mask, the automatic gear-box, to name a few. To put it concise [sic], if Germans are engineers and Italians are designers, Armenians are creators. Considering all the above-mentioned we have developed the priorities for our government: Industry: Biotech and pharmaceuticals. [The] Armenian government is committed to increasing competitiveness in the manufacturing sector. We will engage in constructive dialogue with businessmen across the sectors to identify the bottlenecks to competitiveness where coordinated effort of the public and the private are needed. In order to be competitive we must integrate innovative technologies into the industrial processes. High-tech will serve as the pillar of industrial development and inclusive growth. The industry is quite diverse with competitive sectors ranging from textiles and shoemaking to pharmacy, from biotech to finely crafted jewelry and watch cases. There are many great examples of successful investments leveraging the competitive advantages of Armenia. A number of those companies have grown from manufacturing to include R&D centers, with some exciting innovations in the pipeline. To ensure this, we are developing an industrial modernization toolkit: this may include creation of free economic zones to facilitate investments in, pharmacy as well as high- and bio-tech; Establishing venues of dialogue between the government and the business community; Supporting skill development and creation. The first targeted sub-sectors could be jewelry, diamond cutting and watch-making; ensuring business-friendly tax and regulatory environment; supporting exporters through improved representation in external markets and removal of logistic bottlenecks Armenia has great potential in high-tech and engineering fields. The government is committed to enhancing this potential through high-low doctrine. That is enhancing the STEM subjects in schools and higher education institutions, as well as supporting creation and operation of centers and clusters of excellence such as Tumo. I am proud to announce that in 2018 Tumo has established a branch in Stepanakert, Paris. Branches in Germany and Russia are on their way. Agriculture, processed food and beverage. With around 15% of Armenia’s economy being agriculture we must pay special attention to this sector. The agro sectors' future will rely on a mix of strong traditions and innovation. Integrating cutting edge technologies into Armenia’s agro sector will be a priority for our government. The organics and widespread use of intensive farming methods, such as drip irrigation, will spearhead the development of this sector. The tradition of winemaking plays a special role in our culture. Armenia has over 6000 years of wine making experience and the trends are continuing until today with the wine making sector growing at an astonishing rate of almost 80% in 2017! Tourism. As mentioned above, Armenia has a lot to offer to the world. One of the crucial aspects is the culture itself. And I think we all agree that the best way to learn about a culture is to dive into it head first. That is why Armenian tourism sector has been booming and still has tremendous potential for growth. Furthermore, growing [the] tourism sector has the highest potential for improving [the] economic situation in the regions, considering that there are lots of unique experiences situated outside of large cities. To this end we are raising awareness about noteworthy touristic attractions as well as small-scale hotels in the regions; developing of the niche fields such as eco- and gastro-tourism; development of transport and relevant supporting infrastructure to enable access to the far situated high interest locations; [and] decreasing the financial and time costs of travel to, from and within Armenia. Infrastructure. To ensure free movement of people, skills and knowledge across and within our borders, the government is going to embark on a long-term program to improve transport[ation] and quality infrastructure. The importance of diversification of electric power generation is an issue of extended attention in the international community. For Armenia it is not only a question of economic need but also strategic necessity. We see this as a question that can be resolved in the observable future, as Armenia has tremendous potential for renewable energy generation. In recent years, the field of solar power has seen rapid development and Armenia is on the way to leverage its natural endowment to increase the share of solar power generation in electricity consumption. We know that we cannot address our infrastructure needs alone. We need the know-how and the resources of the private sector. Thus the government is rolling out PPP legislation and procedures to enable effective cooperation between the private and public sectors. Dear friends, we could go on and on about the vision, strategic objectives, priorities and concrete actions of the government to be undertaken and addressed in the upcoming 5 years. However, those objectives can only be achieved through coordinated effort on of the government and our private and public partners both within and outside of Armenia. The only fact, which is not contestable, is that Armenia will continue the upward trajectory of its development. We have the potential, we have opportunities and we have the political will to become a regional and global economic player. The question is whether you are ready to join us and befriend us on this interested and not an easy path; if you are ready to make your move, come to Armenia, get rich and enrich! Thank you.

Pashinyan to Wealthy Foreign Investors: “Our policy motto is to get rich and enrich”

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