New initiative to enhance investment protection and retention in Armenia
09.06.2017,
10:26
Since 2008, in part due to the global economic crisis, foreign direct investments in Armenia have registered a sharp decline. In an attempt to reverse this trend, the government has implemented several reforms to improve the quality of the country’s business environment. As a result, Armenia recently improved its Ease of Doing Business position and is ranked 38th among 190 economies in the Doing Business 2017 report, the World Bank Group’s flagship publication, five points up from last year’s rank – 43.
YEREVAN, June 9. /ARKA/. Since 2008, in part due to the global economic crisis, foreign direct investments in Armenia have registered a sharp decline. In an attempt to reverse this trend, the government has implemented several reforms to improve the quality of the country’s business environment.
As a result, Armenia recently improved its Ease of Doing Business position and is ranked 38th among 190 economies in the Doing Business 2017 report, the World Bank Group’s flagship publication, five points up from last year’s rank – 43.
However, more needs to be done. Investors usually look not only at international rankings, but also consider investor protection guarantees and the quality of their implementation.
How is the issue of legal certainty and its proper implementation addressed in other countries? For example, what happens if a company encounters issues such as expropriation, restrictions on its ability to transfer currency, lack of transparency, arbitrary government action, breach of contract, or discrimination? Should investors go through the formal dispute process, which can often be costly and time-consuming?
Efficient mechanisms to deal with investors’ grievances early can be an effective solution. In order to catch grievances early and prevent them from escalating into formal disputes, a new tool called the Systemic Investment Response Mechanism has been introduced by governments in some countries, following advice from World Bank Group experts.
This aims to improve coordination among government agencies so that issues raised by investors can be dealt with early, helping to prevent the withdrawal of existing investments or the cancellation of expansion plans and also preventing costly investor-state disputes. In Bosnia and Herzegovina, for example, the new tool has helped retain $15.89 million in investment, attract $41.62 million in new investment, and generate more than 900 new jobs.
The International Finance Corporation (IFC) Armenia Investment Climate Reform Project, implemented by the World Bank Group’s Trade and Competitiveness Global Practice, is providing advice to the Armenian government to help implement the Systemic Investment Response Mechanism. International experts have shared experiences from other countries, including insights on what works and what doesn’t.
In practice, this means that investors in Armenia shall have a single point of contact to report and seek resolution of grievances. Once set up, this coordinative unit will have an investor tracking system in place and work proactively with investors to collect their complaints. Investors will also be able to fill out a complaint form online and submit to the coordinative unit.
“Addressing investor grievances efficiently provides another positive signal to existing and potential investors, and highlights Armenia as a favorable destination to do business,” says Aleksandr Khachaturyan, Executive Director of Armenia’s Center for Strategic Initiatives Foundation. “We expect this new tool to help us attract more foreign direct investment, which can help drive job creation and economic growth.”
How will the Systemic Investment Response Mechanism be set up? World Bank Group experts will work with the Armenian government to help them design the mechanism and build the capacity of the relevant government authority to ensure its sustainable implementation. They will also work with the government to introduce a monitoring tool to measure investments made and retained and jobs created due to this initiative.
The IFC Armenia Investment Climate Reform Project is implemented by the World Bank Group Trade and Competitiveness Global Practice, in partnership with Austria’s Federal Ministry of Finance and Hungarian Partnership Funding/Hungary EXIM Bank. -0-
As a result, Armenia recently improved its Ease of Doing Business position and is ranked 38th among 190 economies in the Doing Business 2017 report, the World Bank Group’s flagship publication, five points up from last year’s rank – 43.
However, more needs to be done. Investors usually look not only at international rankings, but also consider investor protection guarantees and the quality of their implementation.
How is the issue of legal certainty and its proper implementation addressed in other countries? For example, what happens if a company encounters issues such as expropriation, restrictions on its ability to transfer currency, lack of transparency, arbitrary government action, breach of contract, or discrimination? Should investors go through the formal dispute process, which can often be costly and time-consuming?
Efficient mechanisms to deal with investors’ grievances early can be an effective solution. In order to catch grievances early and prevent them from escalating into formal disputes, a new tool called the Systemic Investment Response Mechanism has been introduced by governments in some countries, following advice from World Bank Group experts.
This aims to improve coordination among government agencies so that issues raised by investors can be dealt with early, helping to prevent the withdrawal of existing investments or the cancellation of expansion plans and also preventing costly investor-state disputes. In Bosnia and Herzegovina, for example, the new tool has helped retain $15.89 million in investment, attract $41.62 million in new investment, and generate more than 900 new jobs.
The International Finance Corporation (IFC) Armenia Investment Climate Reform Project, implemented by the World Bank Group’s Trade and Competitiveness Global Practice, is providing advice to the Armenian government to help implement the Systemic Investment Response Mechanism. International experts have shared experiences from other countries, including insights on what works and what doesn’t.
In practice, this means that investors in Armenia shall have a single point of contact to report and seek resolution of grievances. Once set up, this coordinative unit will have an investor tracking system in place and work proactively with investors to collect their complaints. Investors will also be able to fill out a complaint form online and submit to the coordinative unit.
“Addressing investor grievances efficiently provides another positive signal to existing and potential investors, and highlights Armenia as a favorable destination to do business,” says Aleksandr Khachaturyan, Executive Director of Armenia’s Center for Strategic Initiatives Foundation. “We expect this new tool to help us attract more foreign direct investment, which can help drive job creation and economic growth.”
How will the Systemic Investment Response Mechanism be set up? World Bank Group experts will work with the Armenian government to help them design the mechanism and build the capacity of the relevant government authority to ensure its sustainable implementation. They will also work with the government to introduce a monitoring tool to measure investments made and retained and jobs created due to this initiative.
The IFC Armenia Investment Climate Reform Project is implemented by the World Bank Group Trade and Competitiveness Global Practice, in partnership with Austria’s Federal Ministry of Finance and Hungarian Partnership Funding/Hungary EXIM Bank. -0-
