Country Presentation
General Information About Armenia
v Territory - 29.800 km2
v Population - 3.8 million, 98% of which are Armenians v Capital - Yerevan (1.25 million population)
v State Form - Republic
v Head of State - President of Republic
v Highest Legislative Body - National Assembly
v Highest Executive Body - Prime Minister’s Cabinet
v Administrative Division - 11 Regions (Marzes) including Yerevan
The Role of SME Sector in the the
Country’s Economy
Considering the important role that SME plays in
facilitating the country’s economic growth,
creating new jobs, improving living standards,
building a middle class within society and in
ensuring social and political stability inside the
country, the Government of the Republic of
Armenia considers it as a priority for development
of the country’s economy and undertakes continual
steps towards strengthening the sector and
improving SME state support as well.
State Policy and Strategy for SME
Support
-
Concept for SME Development Policy and
Strategy in Armenia (adopted by the Armenian
Government in August 2000)
-
Law of the Republic of Armenia on “State
Support of SME” (adopted by the National
Assembly of Armenia in December 2000)
Statistic Data on SME Sector in Armenia
• The number of SMEs increases year by year thus
creating many new jobs: during the last three years
about 20.000 SMEs were established, and only in
2004 - about 8.000 new SMEs, providing over 20.000
new work places
• SME sector plays significant role in the formation of
the country’s GDP: according to the data of 2004
the participation of SME sector in GDP made 39
percent, almost twice exceeding the level of 2000.
Definition of SMEs According to the
Law on “SME State Support”
Commercial organizations and individual
entrepreneurs with average number of
employees not more than 5 persons are
considered as micro company.
Definition of SMEs According to the
Law on “State Support of SME”
Commercial organizations and individual
entrepreneurs with average number of employees
are considered as small company that meets the
following criteria:
– Industry and other productive spheres – not more than 50
employees;
– Construction and power engineering sphere – not more than
25 employees;
– Science and education sphere – not more than 25 employees; – Transport, trade and services sphere – not more than 15
Definition of SMEs According to the
Law on “SME State Support”
Commercial organizations and individual
entrepreneurs with average number of employees
are considered as medium company that meets
the following criteria:
– Industry and other productive spheres – not more than 100
employees;
– Construction and power engineering sphere – not more than
50 employees;
Main Directions for State Support of SME
I.
• Formation of favorable legal environment
• Financial and investment support and
provision of guarantees
• Assistance for creation and development of
support infrastructures
• Business information and consultancy
support
Main Directions for State Support of SME
II.
• Support for application of innovations and
modern technologies
• Performance of favorable tax policy
• Vocational education and training
• Creation of simplified systems for statistic
SME Support Structure in Armenia
Policy Level
Main Governmental Body
Ministry of Trade and Economic
Development of the Republic of Armenia
Institutional Level
SME Support Main Institution
Fund “Small and Medium
Entrepreneurship Development National
Center of Armenia”
SME Support Structure in Armenia
SME Financial Support Organizations
• International Donor Organizations
WB, USAID, USDA, World Vision, GTZ, etc.
• Funds (Foundations) and Commercial Banks
Eurasia Foundation, SME DNC of Armenia, etc. and commercial banks of Armenia that provide convenient terms for cooperation with small businesses
Other SME Support Institutions
SWOT Analysis of SME sector in
Armenia
STRENGHTS
• With considerably small investments and in a short period of
time SME units provide a lot of job opportunities, thus improving the situation in job market and solving a number of serious social problems
• SME units more effectively utilize the local raw
materials/resources in industrial/manufacturing sector, thus diminishing dependence on imports
• Newly created SME units often impact positively on
restructuring and modernizing processes of non-operating and non-profit large enterprises
SWOT Analysis of SME Units in Armenia
WEEKNESSES
• Taxation (high tax rates, uncertain and unfriendly tax
system administration, etc.) is a major problem for Armenian SME units
• Access to finance (high interest rates, practically no
chances for short or mid-term loans, etc.) is the next major factor hindering business development (development of SME units)
• National business-information and consulting system is in
a stage of formation (appropriate services are provided by SME DNC of Armenia and some private companies (NGOs)
SWOT Analysis of SME Units in Armenia
OPPORTUNITIES
• SME units provide an opportunity for implementation of
new technologies and innovations with more rapidness and less expenses
• Due to their quality characteristics and design the
products and services produced/provided by domestic SME units withstand the imported similar ones and successfully substitute them
• SME development enables the creation of middle class,
which is considered to be the basis of contemporary society
