Armenia Market Entry

Armenia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

Basic info for entering the market, rating, distribution and sales channels, factors affecting sales, important legal standards and regulations, import conditions and documents, customs system, customs and foreign exchange regulations, export control, protection of the domestic market.

According to cheeroutdoor.com, doing business in Armenia, despite a number of changes for the better since 2018, has long been made difficult by cronyism, the linking of business with the highest politics, corruption, money laundering, an opaque judicial system and abuse of power. Although new laws are adopted, they are not always of good quality and, above all, their implementation or enforcement is problematic (as needed).

Before entering the market, it is important to check the information about the partner and the company, financial and other conditions and requirements. For a successful business in Armenia, it is good to have a capable and trustworthy contact person or intermediary in place. In order to find good local partners and understand the Armenian culture, which is important for doing business here, it is good to know the partners personally. Therefore, a visit to Armenia is very important, especially in the case of the planned signing of the contract. Czech companies often operate in Armenia through mediation of the Armenian diaspora in the Czech Republic.

Information on import conditions to the EU market, export conditions, information on customs duties and taxes, rules of origin, trade agreements, anti-dumping obligations, import taxes and procedures, other formalities and requirements (including sample forms) or also the main barriers to trade can be found on the Access2Markets page (https://trade.ec.europa.eu/access-to-markets/en/home). In the case of Armenia, the main persistent obstacle to trade is only the insufficient protection of Geographical Indications of Origin (EU Geographical indications) for wines and spirits (HS2204, HS2208).

Additional important information regarding distribution and sales channels, use of local agents, export control, domestic market protection and other factors affecting sales can be found on the Invest in Armenia website (http://www.investinarmenia.am/en/import-and-export -regime). Relevant information on standards and technical regulations is provided by the Ministry of Economy.

Since 2015, Armenia has been a member of the Russian-led “Eurasian Economic Union” (EAEU), which means a common market for goods, unified customs, customs and non-tariff regulations. EAEU regulations now also deal with trade and customs, since the introduction of harmonized tariffs within the EAEU, a single customs code applies. There is uncertainty in many areas, such as the granting of import licenses, customs procedures and the enforcement of intellectual property rights. A potential problem may also arise with the EAEU’s complex standardization system, which is based on the Russian regime. There are temporary exemptions, but they are being phased out and are due to expire completely by 2022. According to EAEU requirements, customs clearance should be carried out in the jurisdiction of the relevant participants in foreign economic operations. For example, the transit of goods to Armenia from foreign suppliers via Russia is cleared at the external borders of the EAEU in Russia. The same procedure applies to items entering Armenia and destined for other EAEU countries. However, Armenia does not share a border with the rest of the EAEU, so all goods must pass through Georgia. Customs clearance remains one of the main problems of foreign companies operating in the Armenian market. Current information on EAEU harmonized tariffs can be found on the website (http://www.eurasiancommission.org/ru/act/trade/catr/ett/Pages/default.aspx). Customs clearance remains one of the main problems of foreign companies operating in the Armenian market. Current information on EAEU harmonized tariffs can be found on the website (http://www.eurasiancommission.org/ru/act/trade/catr/ett/Pages/default.aspx). Customs clearance remains one of the main problems of foreign companies operating in the Armenian market. Current information on EAEU harmonized tariffs can be found on the website (http://www.eurasiancommission.org/ru/act/trade/catr/ett/Pages/default.aspx).

Armenia’s domestic distribution channels correspond to the country’s small size, population and market. The main warehousing and wholesale companies are based in Yerevan. The problem from the point of view of transport is both insufficient infrastructure (despite efforts to restore it), trade barriers and the closure of the border with Turkey and Azerbaijan. Still closed borders limit export and import options and increase transport costs due to greater distance and insufficient/poor infrastructure. Armenia depends on the availability via Georgia for transport. The transport route through Georgia (usually passing through the ports of Poti and Batumi on the Black Sea coast) is reliable but expensive. The land route between Georgian ports and Yerevan is often the most expensive part of the journey. The connection through Iran is dependent on a single common border crossing and passes through complicated terrain. The risk is

Most imported products and services are provided by agents and distributors. Services for customs clearance and other matters connected with the import of goods are provided by so-called brokers. Most companies in Armenia are relatively small, although there are notable exceptions including several major local and European supermarket chains (e.g. Carrefour) and a few department stores. Large companies that represent multiple brands often have their own distribution center based outside of Yerevan. The Armenian company Haypost (the post office and the largest logistics and forwarding company) opened its logistics center for the whole of Europe near Prague.

Forms and conditions of operation on the market

Armenia’s trade and investment policy is relatively open, despite significant obstacles in the form of widespread corruption, a still rather poor business environment and the complexity of law enforcement. The country does not impose major restrictions on foreign control and the right to private property. Establishment and registration of businesses are fast. In the Doing Business ranking (2020), Armenia was ranked 47th out of 190 countries.

Business registration in Armenia is generally quick and efficient. Registration is done electronically through the State Register of Legal Entities of the Ministry of Justice of Armenia (https://www.e-register.am/en/) on the principle of “one-stop shop” and free of charge. If the documents are according to the approved templates, the registration is immediate (within one day). If documents are submitted physically or remotely under a power of attorney, approval may take up to 1-3 business days. There are no minimum capital requirements (can be as low as $1).

Foreigners can choose from a wide range of available organizational forms for doing business in Armenia. There are the following legal forms of entities: entrepreneur / sole proprietor (Private Entrepreneur, PE), limited liability company (Limited Liability Company, LLC), joint-stock company (JSC or Open Joint-Stock Company, OJSC), business partnership (Partnership), cooperative, private equity fund and some other forms (joint-venture, franchising, trust management, agency, commission, delegation). Different forms of representation are also possible (Branch Office, Subsidiary, Representative Office, Permanent Establishment). There are a number of factors to consider before registering, such as taxes, liability, costs, structure and more. It is advisable to use legal advice in the field of business registration.

Office space in Yerevan is widely available. The workforce is generally fairly well educated (especially in technical fields) and cheap compared to the West. Foreign companies use qualified experts in electrical and computer engineering, optics, software design. In administrative positions in foreign companies, a good knowledge of English and/or Russian is common.

Marketing and communication

Advertisements on television, radio and print media are common ways of promoting goods. The use of billboards, stands, posters and other outdoor advertising surfaces is expanding, as is, for example, advertising on public transport buses. Marketing campaigns on the Internet (especially Facebook, Instagram) represent a possible alternative to classic channels with a reach mainly to younger generations. Advertising can be negotiated either directly with the media or through advertising agencies.

Advertising is governed by the Law on Advertising, which sets standards and says, among other things, that the official language of advertising must be Armenian (it does not apply to printed materials published in a foreign language). The text may be accompanied by a foreign language translation provided that it is printed in a smaller font. A permit from the Ministry of Health is required for the promotion of medicines, medical devices or treatment methods. The law prohibits the promotion of the stimulating or relaxing effects of alcohol and cigarettes, and prohibits advertising of weapons (except for hunting or sporting weapons). Specific restrictions apply to the promotion of banks, insurance companies and other financial institutions.

Issues of intellectual property protection

Armenian legislation (Patent Law, Trademark Law, Copyright Law) formally guarantees the protection of intellectual property through the Intellectual Property Agency of the Republic of Armenia. Currently, the legal field of intellectual property is governed by laws and regulations, as well as international agreements. It applies to literature, scientific and artistic works including computer programs and databases, patents, industrial design, know-how, trade secrets, trademarks and more. However, enforcement and enforcement is weak and defenses are complicated. Therefore, pirated CDs, programs, books, fake branded clothes and other products are common in Armenia.

Public procurement market

The public procurement market is governed by the Law on Public Procurement, which entered into force on 22 December 2010. The text of the law is only available in Armenian. The regulatory body is the State Agency for Public Procurement. In 2017, public procurement regulations underwent a major reform. The legislation now provides for four different types of procurement procedures. These are electronic auction, tender, request for a price offer and single-source procurement. The types of tenders are open tenders, restricted tenders and single source procurement. Information about international tenders, including relevant conditions (rules for registration, financing, documentation) are published on the websites https://www.tender.am/en, https://www.gnumner.am/en and https://www. armeps.am/epps/home.do.

Payment terms, payment ethics and resolution of commercial disputes

In Armenia, the cash payment system prevails, although the use of payment cards in hotels, restaurants and shops is increasing. Businesses between companies are primarily carried out by bank transfers, letters of credit or barter. The growth in the use of bank transfers is mainly influenced by a large number of remitters from abroad and trust in foreign partners. Most banks transfer funds within 2-4 days. The Armenian Dram (AMD) is freely convertible. By law, the prices of all goods and services, property and salary levels must be set in AMD. Exceptions are for transactions between local and foreign firms and certain transactions involving goods traded on world markets.

From July 1, 2022, the circulation of cash will be restricted by law in Armenia. The maximum amount of cash payments will be AMD 300,000 (approx. EUR 620). Transactions above the specified amount will be mandatory cashless. It is currently unclear how the regulation will be controlled (or circumvented).

Even taking into account the limited solvency of some entities, problems with paying for orders can sometimes occur. Local merchants sometimes ask for concessions in installment terms such as credit or barter. In such a case, we recommend the granting of a loan only on the basis of previous experience with the given subject, and in such a case only in a limited amount. It is also wise to require a deposit with a reputable local bank.

Commercial disputes are resolved by Armenian courts (or other bodies deciding economic disputes; with the consent of the parties to the dispute, also by conciliation courts, unless another method of resolution is treated based on the prior agreement of both parties). Enforcing contractual rights through local courts is problematic.

Visas, fees, specific conditions for traveling to the territory

Armenia abolished the visa requirement for nationals of EU countries. Since January 10, 2013, citizens of the Czech Republic, as well as other EU citizens and citizens of the other four countries of the Schengen area, do not need an entry visa to enter the territory of Armenia and stay up to 180 days. The conditions of entry for a stay longer than 180 days should be obtained from the Embassy of Armenia in Prague. A valid passport is required for entry (must be valid for more than 6 months). Registration is officially mandatory in Armenia; a foreigner must report his place of stay to the police within 3 days after entering the territory of Armenia (hotels do this automatically), but in practice registration is currently not required. During the time of the coronavirus, additional restrictions may apply, the validity of which is recommended to be checked on the website of the Ministry of Foreign Affairs of Armenia (https://www.mfa.am/en/COVID-19).

Before traveling, we recommend checking the currently valid safety warnings on the website of the Ministry of Foreign Affairs of the Czech Republic and voluntary registration in the DROZD system. Health insurance is not required upon arrival, but we definitely recommend insurance before traveling abroad. Medical services in the territory of Armenia are provided for financial payment – paid in cash at the place of provision of medical care, the amount of the price depends on the level of the medical facility. Health care in the capital city of Yerevan, where medical facilities are established with foreign investment, is at a good level, in rural areas this care is at a low level. You can pay by card in Yerevan, but cash is still more common and safer (especially outside the capital). Public transport in Yerevan consists of one backbone metro line, a network of buses and minibuses (routes) and taxis. The center is compact and walkable. Both Armenia and Yerevan are generally safe, but caution is advised (perhaps petty crime, significantly worse road safety, etc.).

The entry and stay of foreigners from Armenia to the Czech Republic within 90 days is governed by common rules within the Schengen framework. The EU and Armenia have an agreement on visa facilitation. Current information on the entry of foreigners is available on the websites of the Ministry of Foreign Affairs of the Czech Republic, the Ministry of the Interior of the Czech Republic and the ZÚ Yerevan.

Employment of citizens from the Czech Republic

Conditions for employment of foreigners in the territory of Armenia (how to obtain a work permit and who provides it, salaries, minimum wage, social security) can be found on the websites http://jurist.am/en/employment or https://armenian-lawyer. com/work-permits/. There is no contract between the Czech Republic and Armenia in the field of social care.

Fairs and events

Most of the fairs take place in Yerevan Expo Center, more information can be found at https://expo.am/en/. The following major events are planned for 2022:

Caucasus Building and Reconstruction EXPO 24.3.2022 (3 days)

ArmHiTec (International Exhibition of Arms and Defense Technologies) 31.3.2022 (3 days)

Education and Career EXPO 27/04/2022 (3 days)

EXPO FOOD & DRINKS YEREVAN 19.5.2022 (3 days)

LADY EXPO: Beauty Expo 4/6/2022 (3 days)

WORLD OF CHILDHOOD: Childhood International specialized Exhibition 4/6/2022 (3 days)

Wine Days Yerevan 4/6/2022 (2 days)

AUTO SHOW – ARMENIA: International Automobile Exhibition 10/09/2022 (3 days)

ARMENIA EXPO: Universal trade-industrial expo-forum 16/09/2022 (3 days)

BUILD-EXPO YEREVAN 16/09/2022 (3 days)

COMP-EXPO YEREVAN: Computers & IT Technologies Exhibition 16/09/2022 (3 days)

FINANCE, CREDIT, INSURANCE AND AUDIT EXPO 16/09/2022 (3 days)

FURNITURE SALON: Furniture International specialized Exhibition 16/09/2022 (3 days)

INDUSTRIAL ARMENIA EXPO: Industrial Fair of Armenia 16/09/2022 (3 days)

INTER FOOD EXPO: Food, Food production & Packing Expo 16/09/2022 (3 days)

POLYGRAPHS. PUBLISHING. ADVERTISEMENT 16/09/2022 (3 days)

REST & ENTERTAINMENT EXPO: International Rest & Entertainment Expo 16/09/2022 (3 days)

TRANS-EXPO YEREVAN: Transport & Logistics Exhibition 16/09/2022 (3 days)

Areni Wine Festival – October, takes place in the town of Areni in the province of Vayots Dzor

ARM PROD EXPO: Food, Drinks, Food Processing Technologies and Agricultural Machinery & Equipment Expo 15/10/2022 (3 days)

HEALTH SERVICE & PHARMACY EXPO YEREVAN 28/10/2022 (3 days)

Armenia Market Entry