January 2021
CLDP INITIATIVE
ARMENIA Commercial Law Development Program (CLDP), the U.S. technical assistance programs in Armenia aim to create a better business enabling environment, promote new and diversified trade and investment opportunities, and improve the commercial legal framework. In 2021 bilateral programming in Armenia will assist Armenian institutions in developing policies and best practices in competition and procurement; develop small and medium enterprises (SMEs) through franchising; and promote corporate governance. CLDP will also facilitate regional programming focused on the protection and enforcement of intellectual property rights and the promotion of alternative dispute resolution. BILATERAL PROGRAMMING Improving Competition Enforcement As part of a multi-year project CLDP will help to build the institutional capacity of enforcement bodies and sectoral regulators to implement policies and practices that prevent monopolies and stimulate competition. CLDP plans to work closely with the State Commission for Protection of Economic Competition on this project. Public Procurement The goal of this multi-year project is to build the institutional capacity of contracting personnel, personnel of the central procurement authority, and other procurement stakeholders on best practices in government procurement, covering the entire acquisition lifecycle, from acquisition planning and market research to award management, contractor performance evaluations, and bid protest review. Supporting Franchise Development The beneficiaries of technical assistance for franchise development are small and medium-sized enterprises and entrepreneurs as franchising helps to reduce the challenges and risks faced in starting a business. This project will raise awareness about franchising and investment opportunities and facilitate additional international franchises in Armenia. In addition to the economic benefits of employment, technology, output, and tax revenue, development of franchises injects expertise and training into industries and increases the entrepreneurial and managerial capabilities of the labor force. Preventing Corruption through Corporate Governance The goal of this multi-year project is to promote implementation of corporate governance standards in Armenia’s private sector businesses. This project will reduce uncertainties associated with doing business by promoting implementation of anti-corruption compliance standards and procedures. REGIONAL PROGRAMMING Intellectual Property Rights Protection and Enforcement Through regional funding, CLDP is focused on promoting greater harmonization and cooperation in the protection of intellectual property (IP) within the Caucasus; improving the efficiency of IP utilization; and promoting the commercialization of IP in line with internationally accepted standards and best practices. Promoting Alternative Dispute Resolution (ADR) Through regional funding, CLDP promotes arbitration and mediation as viable mechanisms for the resolution of commercial disputes and encourages collaboration between regional ADR institutions and the courts.
AUA GRADUATE CERTIFICATE PRESENTATION
On 14 January, 2021 AmCham Member the American University of Armenia (AUA) organized an online meeting on the newly launched Graduate Certificate in Hotel and Hospitality Management (GCHHM) Program at AUA. Recognizing that tourism has been among the hardest hit of all sectors due to the COVID-19 pandemic and war in Armenia, AUA strongly believes that they must support the sector now to prepare for it to come back stronger and more sustainable. Tourism has a proven capacity to bounce back and drive the recovery of other sectors, and for it to fulfill its potential to help societies and whole countries recover from this crisis, and the response needs to be quick, consistent, united, and ambitious. Many in the industry are looking at the significant underemployment as an opportunity for taking time off and upgrading their skills—believing it to be their competitive advantage in the market. AUA developed the Program based on the hospitality industry needs to help graduates prepare for the next step in their career in the tourism and hospitality industry through developing skills essential for managerial-level graduates including advanced business acumen, strategic insight, high-level management skills and specialized industry knowledge. The program was presented by: •
Dr. Vache Gabrielyan, AUA, Dean of the Manoogian College of Business and Economics,
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Ms. Zarmine Zeitountsian, AUA, Program Director
FAST MOVING CONSUMER GOODS (FMCG) COMMITTEE 1ST MEETING On 15 January, 2021, AmCham Armenia Fast Moving Consumer Goods (FMCG) Committee 1st Meeting on Sustainable Waste Management took place at the Armenia Marriott Hotel Yerevan. The Ministry of Environment, Ministry of Territorial Administration and Infrastructure, AmCham Members, AmCham Partners, and the AmCham Executive Team, reviewed and evaluated the Armenia Marketplace Sustainable Waste management assessment proposals from 4 different agencies. The Assessment study is to support the adoption of Extended Producer Responsibility (EPR) systems in Armenia, through identifying and proposing the best-case scenarios most suitable for Armenia. The participants discussed all 4 agency proposals and selected the top two proposals which were winning, in terms in terms of experts, overall project implementation and action plan details, for further consideration. The selected Proposals will pass to the next stage where the committee will choose the winner, based on the availability of funds. The Assessment project will be funded by the Armenia Business Community members as well as the Team is seeking international donors support opportunities. Representatives of the Ministry of Environment, Ministry of Territorial Administration and Infrastructure AmCham Members and Partners participated in the meeting: Ms. Lusine Avetisyan, Ministry of Environment, Ms. Meri Harutyunyan, Ministry of Environment, Mr. Davit Shindyan, Ministry of Territorial Administration and Infrastructure, Ms. Elina Makaryan, Coca-Cola Երջանկության գործարան and Mr. Karen Garaseferyan, JTI Armenia, who also represent the AmCham Board at the Committee, Mr. Harutyun Alpetyan, American University of Armenia, Ms. Tatev Haroyan, American University of Armenia, Ms. Irina Chaltikyan, McCann Yerevan, Mr. Armen Martirosyan, Antares Media Holding, Ms. Anahit Tunyan, CocaCola HBC, Ms. Lusine Mnatsakanyan, Coca-Cola HBC, Ms. Naira Manoukyan, Armenian British Business Chamber, Ms. Susanna Hayrapetyan, UMBA, Ms. Maria Sahakyan, Jermuk Group, Mr. Gurgen Narimanyan, Pepsi Armenia.
TAX, CUSTOMS, AND FISCAL POLICY (TCUFP) COMMITTEE MEETING
On 26 January, 2021 AmCham in Armenia held a Tax, Customs, and Fiscal Policy – TCuFP committee meeting. During the meeting, AmCham Members and the AmCham Executive Team discussed: 1. Planned 2021 activities 2. Reviewed the Tax Code of the Republic of Armenia and the Government Decree Activities plan on the Reduction of Tax Policy Gap presented by the Ministry of Finance Tax Reforms Council. It was discussed to understand the reasons for the change and was decided to review the Tax Policy Gap document in-depth, get the base numbers from the Ministry of Finance, if possible, and have another meeting in the week of February 1st to continue the discussion for a recommendation to the Government. During the Committee meeting, it was informed that Mr. Chilingaryan’s, BDO Armenia comment on the draft Law on Exemption of the Agricultural-Consumer Cooperatives from profit tax similar to the agricultural direct producers' practice, was also communicated to the Tax Reforms Council The objective of the change is to continuously improve the tax environment for the activities of the agricultural-consumer cooperative. Specifically, exempt the agricultural-consumer cooperatives from profit tax similar to the agricultural direct producers' practice. The law will also apply to the grants that the Cooperatives get throughout the year. The following were the comments which were shared with the Tax Reforms Council: 1. The draft provides a new definition of agricultural products. However, the reason for the is not clear and is not presented. Why is it mentioned in the text "genetic modification" and "modern biotechnology"? What will happen in that sense in 2025? 1. It is desirable to ensure that this definition to be consistent with the Preparation of Financial Statements and International Accounting Standards. 2. The 3rd point of the substation needs to be clarified that after January 1, 2025, economic entities producing agricultural products will be considered profit taxpayers only if they are considered VAT payers during the reporting year in the manner prescribed by the Code (for example, in case of exceeding the annual sales turnover of AMD 115 million). Regarding the taxable base attributed to the period of being considered a VAT payer. ” During the Council meeting, more companies, such as AN Audit, Auditors’ Association also raised the same concerns. On top, they raised to apply the same exemption for the farmers who do the slaughtering of animal husbandry excluding those legal entities who do the packaging and sales of the meat. Members from various AmCham Member companies participated in the meeting: Mr. Aharon Levonyan, Seraphim Consulting, and Ms. Irina Dumanyan, Mentor Graphics A Siemens Business, who also represent AmCham Board of Directors, Mr. Nerses Nersisyan, KPMG Armenia, Mr. Suren S. Ghalumyan, Deloitte Armenia, Mr. Karen Zakaryan, Fin=arm - Financial Market Members Association, Ms. Armine Sargsyan, Coca-Cola Երջանկության գործարան, Mr. Ara Khzmalyan, ADWISE, Mr. Aharon Chilingaryan, BDO Armenia, Mr. Kamo Karapetyan, EY Armenia, Ms. Lilit Gevorgyan, PMI Armenia.
EXTENDED PRODUCER RESPONSIBILITY (EPR) PAGER
Armenian Business Community
Take the lead and make your voice heard in the upcoming changes! With this letter, we encourage the Armenian business community to join the efforts in establishing transparent, efficient, and sustainable post-consumer waste management system to meet Armenia’s obligations to introduce Extended Producer Responsibility (EPR) system by 2023. This commitment is part of the EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA) signed between EU and RA of Armenia in 2017: While Nature Protection Payments (Բնապահպանական վճարներ) aim to mitigate the damages caused to the environment, the Extended Producer Responsibility system ensures the proper handling of specific post-consumer waste products (tires, batteries, packaging, etc.) that producers or importers have put in the market. The models of Extended Producer Responsibility vary from country to country, and Armenia is yet to develop and adopt the best working model that would meet its environmental and economic needs. The global practice shows that the earlier the businesses engage in the initial stages of the strategy development, the better model the country adopts. While the RA Government is obliged to create the necessary legislative framework, the role of the private sector is to support this process through the following: ▪ ▪
Engage in a dialogue with the government and follow up on policy development, Co-finance the research/study of various scenarios for the introduction of an Extended Producer Responsibility (EPR) in Armenia and the development of an appropriate model according to international experience.
It is important that the private sector will take an active role in helping to create the best recycling system in the country. Municipal Post consumption waste (PCW) management is in a development stage in Armenia and we as a business community need to produce data and evidence on deciding the best case scenario to increase packaging waste recycling in the most effective and efficient way to create a win-win scenario that will meet compliance targets and at the same time mitigate potential tax implications on business. Together, we need to conduct research/study through a professional agency for the following purposes: • Analyze the current PCW situation, specifically volumes, types, collectors, recyclers, and opportunities; run SWOT to decide on the best waste collection and recycling practices, from the available alternatives, which will be the most suitable for Armenia and financially justified. • Develop the best case implementation plan/guidance scenario for taking actions with the best expert agency. • To engage with the government and negotiate the best case scenario of collaboration to drive the agenda and support the business interests. Join the initiative! American University of Armenia (AUA) American Chamber of Commerce of Armenia (AmCham) Fast Moving Consumer Goods (FMCG) Committee Waste Management Working Group European Business Association Armenia (EBA) Union of Manufactures and Business of Armenia (UMBA)
EXTENDED PRODUCER RESPONSIBILITY (EPR) PAGER
Q&A Question․ What are the start and end dates of the research? Answer․ The dates will be determined when the number of organizations interested in the initiatives is confirmed. The study process is planned to start in September 2020. Before starting the study, a tender will be announced with detailed Terms of Reference. The best agency selection criteria will be based on the the best technical implementation experience and price. Question․ Which organization will conduct the research and how will it be selected? Answer․ Even though there are experienced organizations, the selection will follow the tender procedure – preparation of Terms of Reference, announcement for tender, receiving applications and selection. Question․ What is the purpose of the research and what will be the result. Answer․ As a result of the research, the best waste management model for both the public and private sectors will be selected. The model will be justified by financial and economic analysis based on the current situation in Armenia. Question․ Which level specialist form an organization shall be involed? Answer․ The organization should provide the contact details of a technical manager who is involved in waste management and environmental issues. However, the process must be under the general director’s supervision.
DID YOU KNOW? The International Day of Education The United Nations General Assembly proclaimed 24 January as a celebration of the role of education for peace and development. Without inclusive and equitable quality education and lifelong opportunities for all, countries will not succeed in achieving gender equality and breaking the cycle of poverty that is leaving millions of children, youth and adults behind. Today, 258 million children and youth still do not attend school; 617 million children and adolescents cannot read and do basic math. According to the 2016 Child Needs Survey in Armenia in, 71% of respondents agreed that a child with physical disability should study in a regular school, while in the case of intellectual disability only 40% of respondents agreed. UNICEF Armenia aims at continuing to support the Government in making all schools inclusive and child-focused, recognizing that the obstacles to children’s learning are not the ‘fault’ of a child’s impairment or social status, but rather inability of some schools to include children with disabilities or children from vulnerable families.