Last week, the Prime Minister of Armenia, Hovik Abrahamyan, declared the progress in the Doing Business 2016 report. The Head of the government, like his predecessor Tigran Sargsyan, urged the Minister of Economy to disseminate this good news thru the media.
Pertaining to Armenia’s ranking in the report and what it will give to our economy, etc., “Aravot” talked to the Chairman of the “SME Cooperation Association” NGO Hakob Avagyan.
– Mr. Avagyan, according to the Doing Business 2016 report, Armenia has improved its position by 3 points, it ranks the 35th position. Do you consider this a progress? Will this indicator somehow influence on the development of Armenia’s economy?
– As an improvement of the indicator, yes, of course, it is a progress, but whether this indicator mirrors the true economic snapshot, unfortunately, no. These indicators are formed mainly as a result of certain specific legislative reforms. For example, our country improved its position when there was a change in the procedures of connecting to the electricity network, the timing was reduced and so on. But in the real life, the start-up fanning factory that is a member of our Association was connected to the electricity network 8 months later of defined deadline. Can you imagine the losses of this businesses: loan interest, missed the season, revenues and fell behind for several years? Now, it is natural that this businessman is not interested in that kind of indicators, he is already experiencing a deep disappointment. Well, this is the real life and the true indicator. Or, conditioned by the EaEU legislation, when importing from these countries, instead of the documents to be presented to the customs authorities, the business is presented to the territorial authority in a more facilitated manner and declared.
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One more legislative reform that may also effect on earning a positive indicator. According to this defined procedure, within 10 days after the submission of the declaration on import, the business must get the answer, we witnessed a specific case of 2-month-long bragging. This is the real life and an indicator. I never deny that we have good and liberal legal acts about businesses that can deserve the favor of international structures, but our business environment has serious problems with the enforcement of these laws as to who and when will be favorable to enforce these laws without demonstrating arbitrariness, without making my and yours. This requires a counterbalance so that the public authorities would be unable to manifest arbitrariness, may be in this case this type of indicators would be close to the real business environment indicators.
– The Prime Minister and the Minister of Economy Karen Chshmarityan assured that ranking the 35th position in the Doing Business 2016 report is a good opportunity and a base to attract investments from outside. Do you agree with this opinion?
– In my opinion, this kind of indicators can influence the people on the other side of the world, who are trying to find the location of Armenia on the map for the first time. I consider our Diaspora countrymen as primary potential investors, who come to the homeland once in 3 or 5 years without these indicators, make inquiries, wonder in the streets of our country, try to find out which official’s acquaintance is the owner of this-or-that newly built facility or business, find out the reasons of a friend of them to shut down and leaving the country and go back again. With more and more difficulty, they come back to the idea of doing the next possible investment to their country.
– The report says that under the new law, the appointment of judges for any lawsuit is done by the principle of contingency and thru the completely automated system. The implementation of agreements in all court of the country is facilitated. Don’t you think that this is a trickery because the judicial system in our country, estimated by various international organizations, is one of the most corrupt sectors?
– Let us leave the estimations of the judicial system to the lawyers, but I cannot reverse to the indicators against the axiomatic characterizations. The three ruling powers of the country: legislative, executive, and judicial, should act independently from one another and control each other, in this case, we will have the balance, which we do not have now, now we have a centralization. I repeat, counterbalances should exist in any system, for example, the institute of “Jurors” in the courts, which, as you know, are selected from ordinary citizens and serve as a certain countervailing force for the judges.
– There is nothing in the report about unequal conditions of competition and monopolies in Armenia. The Doing Business 2016 report reflects the facilitation of registering the business, but whether only registration can be considered for saying that everything is fine and easy in our country. What do you think, is it easy to do a business in Armenia?
– Yes, the business registration, e-statements and introducing other systems, indeed, have facilitated these procedures. But we should not “boast” for introducing these systems. We are introducing these systems in the 21st century, hence, it is no surprise, it is normal, we should have introduced. I’ve already brought you some real-life examples of doing business you as to how the legislative amendments having positive impact on the Doing Business indicators affect the businesses who employ them in the daily life, and what losses they are registering today. Today, I find it difficult to say which of the spheres we can do business in our country to avoid illegalities. If earlier we were saying that the businessman feels more protected in the spheres of human mind, production connected to the innovation and service delivery, now we are afraid of it too. For example, in the spheres of accounting, lawyer, consulting and advertising we are already witnessing the emergence of state sponsorship companies. To some extent the IT sector and industrial and agricultural innovations are left, the latter have a serious problem with appearing in the domestic market and being inaccessible from the public procurements. While the retail trade sector is under a direct attack of monopolies and the lawlessness of the enforcement of laws.
– In the last one year, according to the Union of Employers of Armenia, 18 thousand small and medium enterprises were closed for various reasons. What will Armenia’s progress in the Doing Business 2016 report give to the SME sector that is so important for our economy?
– I do not want to rely on the number you said, I know the obscure source disseminating this number, the tax authorities know the real statistics specifically on SMEs and we are still waiting for some information from them. The information about the SMEs in the same report is posted on the website of the Ministry of Economy, indicating that the position of “protecting the small investors” had recorded backslide by 3 points, sliding from the 46th position to the 49th position. A backslide is recorded at the account of methodological changes, as well as in the result of comparison with other countries. The problem here is very simple too. Where is the independent mechanism of guarantee that should stand beside the business every day and on every issue?
Today, we receive many calls and complaints from the small businesses, one complains about the tax authorities, the other – about the customs services, the third one from the municipality, the next one from the Compulsory Enforcement Service, Governor’s office and so on. But each of these complaints brings disappointment, mistrust in the government. This is the most unprotected elite of the business. We need to do revolutionary steps, let’s stop falling behind the indicators, let’s go and stand next to the business, create independently functioning mechanisms for the protection of the business interests that will go behind every problem, will deal with every closed up business, will present the problem to the head of the government, will conduct real healthy debates, and the reverse opinions will lead to the formation of more civilized business environment. Otherwise, we will continue rejoicing by some indicators, the public authorities will submit nice indicators to the prime minister, will not listen to a contrary opinion, and thus deceiving ourselves, we are headed to uncertainty.
Interviewed by Nelly BABAYAN,
“Aravot” daily
