The American Times Investment Brief – Armenia

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The American Times Presents: The Great Juxtaposition


As with many things in life, for every weakness there almost always exists an equal or greater strength. It’s a natural condition, a balancing act. Although, Armenia is a country with a disadvantaged geographical location: Landlocked, 72% of borders closed to commercial traffic due to sour relations with both Turkey and Azerbaijan and minimal natural resources, the country still offers unique opportunities from a regional point of view and also internalities specific to Armenia. When we compare Georgia to Armenia we recognize that there is a stark contrast in ease of doing business with Georgia largely trumping in all indices. What Georgia does not offer, is unfettered access to the large Russian market.

Armenia, with its historic and contemporary ties to the giant in the north, offers an easy jumping off point for services and products to the 150 million person market with preferential treatment for Armenian exports that Georgia cannot possess. Depicted by the October 2011 signing of the Free Trade Agreement with the Commonwealth of Independent States (CIS) and more specifically an arrangement with Russia via the extension of the Long-term Economic Cooperation Program until 2020 between the two nations, adopted a year later in October 2012.

Of course, Russia stands to gain more from this agreement based on the tremendous trade-deficit facing Armenia with imports from Russia being 3x greater than exports to, as of 2011. The Armenian economy does rely heavily on Russia for high-necessity items such as fuel for heating to vehicles (via the ubiquitous Lada) as well as seasonal workers entering Russia en masse contributing greatly to Armenia’s dependency on remittances, a sum totaling over 16% of GDP. However, this does leave room for leveling the trade imbalance for export oriented firms entering Armenia; but, only if those exports are service oriented or Armenian derived products with minimal or zero requirements for variable material imports for production. Reason being? High import duties levied at $2,195/container compared to Georgia at $1,595/container for a total of 18 days and 10 days lading time, respectively. Customs handling also happens to be one of the largest sources of vested-interest corruption points in the country with minimal remediation efforts from government officials.

There are, however, tremendous soft-investment opportunities in large scale projects currently underway in Armenia that negate many of these concerns, from Mining to Greenhouse projects (several of which are represented in our physical report on Armenia). With that stated, much of our work conducted in Armenia is geared towards their historic expertise in sciences and engineering with much of the nuanced detail of this anomaly lying within these very pages. So, to avoid redundancy we will focus squarely on what investment opportunities are available.

When looking at the narrowed focus the country places on sciences and mathematics education but not on business and entrepreneurial studies and coupled with low wages, the opportunity presents itself very clearly. One in which small and large scale American ICT firms can benefit from. More understated is the opportunity that exists for smaller IT firms. Viewing this in a real life context, we offer a few examples:

1) A new mobile application is conceptualized from an American entrepreneur, a person that knows how to commercialize and scale a new idea. This individual can leverage the latent talents available in the Brain-sector of Armenia by dispersing their programming requirements to this low-wage and highly skilled populace. This does one major thing; it removes the allocation of equity to a skilled American developer brought on in the earliest stages. An American may be reading this and thinking, “Well, usually the developer is also the entrepreneur”. We would agree. This example is intended to empower both sides. A new variation of IT impresarios should emerge, those with strong ideas, entrepreneurial chops but minus the programming skills. These people should feel encouraged to think big about great ideas that are beyond their current skillset or capacity.

As Richard Branson states, “hire people smarter than you to do the stuff you can’t”. Somehow, this notion has not been adopted at the conceptualization stage of a business, rather at the “well-oiled machine” stage. That notion should be shown the door. Synergy and complimenting skillsets between people working together is the only thing that matters…who cares who does what and what country each person is from; so long as each one is executing something the other(s) cannot.

2) There is another opportunity that many US website developing firms are keenly aware of; in fact it’s their business model: Sell to local clients and outsource the actual development work to, let’s face it, primarily India. This is cheap labor which allows for substantial margins and Armenia ought to be considered a favored destination along with India for these types of businesses. The same can be said when we revert back to science fields (Armenian firms are available to partner with US investors; represented in the physical AMT report through our “Investor’s Card series”).

To summarize: The country offers several barriers to entry but also a western aligned personality (believe us, this is 100% regardless of strong Russian connections), hard-working and diligent people (ruling out of course most government officials) that are determined to succeed in light of governmental shortcomings and always will be. It’s all about navigating the good and the bad. The prettiest woman is the one in the black dress at night.


  • Invest in the myriad of soft-investments (institutional, correspondent bank opportunities).
  • Focus on export heavy industries that require only up-front equipment imports and no operating material imports.
  • All things ICT. Use their brains; this is their greatest asset by far. Without that and their large pool of Western Diaspora re-investing and remitting, this country would be in a world of hurt, 99% at least.


  • Assume that the negatives mentioned here are insurmountable, they are absolutely navigable. This is a country, like many, that when visited you will not necessarily notice these negative items. It takes months in a market to discover and/or corroborate these items for investors.
  • Work without a local partner in the marketplace. The American Times can place you in contact you with the appropriate people.
  • Finally, don’t get too hung up on what you read in reports, International Organizational matrices and traditional media types. The fact is there are a lot of foreign businesses here.