05, 2009

Welcoming remarks of President Serzh Sargsyan to the participants of the Conference of the Union of Industrialists and Entrepreneurs of Armenia

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"Ladies and Gentlemen,

Distinguished Guests,

I salute the participants of the Fifth Conference of the Union of Industrialists and Entrepreneurs of Armenia. The previous conference of the Union took place four years ago and this, fifth conference is being held in a period of time when the actions of the members of the Union and the representatives of business community in general are having great impact on the resolution of the problems facing our country and our economy. From this point of view and taking into consideration the impressive presence of business community, I believe this conference will be able to discuss a much wider range of issues than is customary for this kind of gatherings. And the main topic of discussion is, undoubtedly, the compound of state, corporate and public actions under the global economic and financial crisis, when it is necessary not only to assess the efficiency of the undertaken steps but also to chart a new course for moving forward.

A motto, which was announced months ago - “We must protect our economy” is still valid, however it should be accompanied by the answer to the question “How to get fast to the phase of economic recovery”.

Prognosis made in the end of last year regarding economic performance in the beginning of 2009, unfortunately mostly came true. Serious economic decline was registered, decline in the main areas of economic activity – industry, construction, energy; exports plummeted, personal transfers diminished considerably, as well as the opportunities to provide for the budget receipts and attract investment. The global crisis, which became a total disaster for the world economy, “manifested” itself also in Armenia. These have been particularly difficult months, which we were able to pass through without serious losses – passed through with difficulties, probably with noticeable shortcomings but at the same time we did it thanks to important and hard work, hard work of many, many people.

As a result, the most vulnerable social groups, as it often happens, didn’t not become the first target of unfavorable developments: social benefits, pensions, wages of teachers and medical workers and in general all the wages allocated by the budget were not reduced; they are being paid in time and with the increase made at the beginning of this year. We have been able to avoid turbulences in the banking area, major enterprises in mining and extraction area were able to sustain activities or reopen after a short break even though the international prices for their production keep low. Pessimistic predictions regarding the collapse of currency market or universal panic didn’t come true. And most importantly, under these conditions, moreover, even with a considerable depreciation of the national currency we have been able to prevent a steep surge of consumer prices – this too has become a serious social factor.

Today I would like to thank our people for their wise composure, for not panicking which would only unnecessarily complicate the situation; I would like to thank our villagers, who have carried out spring agricultural works with whatever scarce resources they have, also all our workers including those who hurry to work every day even though their salaries have been reduced, to those who went through the period of idleness but were able to recover their jobs and to those who are still patiently waiting for their jobs and do not shun away from other work in the interim. I would like to thank our businessmen who continue to actively search for new inspirations, ideas, and initiatives, to our Government for being able to make bold decisions even under most unfavorable circumstances, to the National Assembly for its speedy and extensive cooperation in taking up economic decisions, to our political parties, social forces, mass media for their assistance and increasingly more tolerant attitude.

I know only too well that the majority of our population has already felt the repercussions of the crisis, and some of our citizens were forced to postpone some of the planned expenditure or switch to cheaper products. I also know that there is a handful of businessmen that were not affected by the crisis, and I also know problems facing major industrial companies, as well as small and medium businesses. I realize that during these months many became distressed, I understand the feelings of our citizens who are about to pay their utility bills and businessmen who have to pay their taxes. I share concern of a member of the Government who receives data indicating foreign economic activities and short-lived disappointment of the Prime Minister when exerted efforts do not yield results soon enough. I do understand all this.

But at the same time, I would like to identify one important factor: it is true that because of the crisis all of us, the entire society have had occasions to be disheartened, to be concerned, and to make difficult decisions. However, one thing is clear: there is no despair in our society, our businesses and the Government don’t despair either. And this is a perfect opportunity to redouble our efforts after this difficult period of time and go through the period of economic recovery much faster than other countries.

Distinguished Delegates:

The anti-crisis program of the Government continues to be anchored on the implementation of infrastructure projects and targeted assistance to small and medium enterprises which are currently having temporary difficulties. We must redouble our efforts aimed at the creation of equal and favorable field for businesses. Actions toward this end will continue and among them the simplification and improvement of the tax and customs administration, reduction of the number of financial reports, concluding agreements to facilitate our entry into foreign markets, etc. The unprecedented instruments and among them the state guarantees, subsides, including those in the area of agriculture, direct loans for businesses – all this intended to rise economic resistibility. Reduction of the tax burden is accompanied by the increase of loans for small and medium businesses, which is also supported by 50mln USD allocated by the World Bank. These are new funds. I want you to know that for this purposes we will be attracting larger funds from other sources as well.

Obviously, measures taken by the Government only are not enough to withstand the crisis. Cooperation of our businesses is significant which can first and foremost be manifested in

high discipline at the enterprises, including the fulfillment of tax obligations
improvement in the area of accountability and transparency
a more open and honest interaction with the Government so that the latter is able to give more accurate estimate to the situation and subsequently to be more efficient in its actions aimed at assisting businesses
and finally, more aggressive approach in introducing new technologies and manufacturing new products.

Social obligations of the businesses also increase during crises. Many of our entrepreneurs understand it well and their efforts on that direction are observable. I am confident that such approach will be rewarded three-fold in the future and gratification will be not only moral.

However, the most important assistance, which I anticipate from the businessmen, is their confidence in their abilities and confidence in future. Several studies show that today our people are more confident and optimistic about overcoming the crisis, than the entrepreneurs. I understand that the businessman is concerned not only for himself. But at the same time I believe that the right mood is essential for achieving success. I trust your abilities and call upon you to be more self-assured.

Despite external pressures, which really have considerably changed our work style, the Government has not deviated from its course of reforms. On the contrary, the best way of surmounting the imposed crisis is the intensification of the process of reformation and not its postponement.

As much as under the circumstances budgetary performance is a priority for the Government, it cannot be an end in itself or undermine economic processes. The necessity to provide for budget receipts cannot justify any delay in the implementation of the most important measures aimed at the improvement of economic conditions and fair tax administration.

With this regard I believe it’s important that the business community facilitates the reforms through more active, open and public discussions with the Government. In their turn, all governmental structures should be able to put cooperation with businesses on a less rigid footing. Any concern of any businessman should be discussed thoroughly, so that eventually both the businessman and the Government will undertake concrete measures to address the issue. And in general, opinion of the businesses regarding various administrative issues should be welcomed and offered due processing. An official who will try to limit discussions on the general improvement of business climate has no place in the government system. I would like to invite your attention to the fact that these processes and actions must be a two-way street – the process of reforms must not be compromised under the pretext of improving business climate and the crisis cannot be brought as the excuse for delaying reforms. I would like to bring three examples:

First, you all know that for many years in our country there was the intention and willingness to install cashier machines, since it is one of the most efficient and proper ways to fight shadow economy in the world, and in general, these machines are indivisible part of civilized trade and business operations. But look what’s happening – many, many are saying that business is being suppressed, that under current circumstances the installation of the cashier machines is damaging and thus are avoiding this process. I don’t believe it’s a right way because ultimately the installation of cashier machines does not serve only the Government’s purposes, but also business’s.

Second fact, I intend to talk about ill-fated documenting processes. Everyone says that there are corruption risks, that the state officials abuse their power. Many, many things are said, but everyone wants everyone else to work through documents, everyone except himself or herself. This is unacceptable. I said it once, I repeat it now: regardless of the fact that the economy is going through difficult times and GDP is declining, we will steadfastly pursue this course and I call upon all of you to support the Government and the President.

Third, you all remember that for many years the state was neglecting its obligation to return the added value tax on exports. You also see that during the last two or three years the situation has improved. But again: the tax administration is spending extra resources to check on the authenticity of these documents and encounter very odd and ridiculous cases. An enterprise presents documentation, which claims 1-1.5 billion AMD, while after examination it becomes clear that the state has nothing to do in this case and is under no obligation to return even 1 Dram. At our meeting two years ago, we were discussing whether it would be fair if the state paid fine for not returning enterprise’s money in time. I have no objection to that, but how to deal with the enterprise or the businessman who presents phony documents and becomes a cause for the months-long pointless work. It is not right. I consider it to be not only slackness but also an attempt to steal money from the state.

We all should understand that we do one common job. Cooperation between a state official and a businessman and their joint work must rest on mutual respect. When everyone of us realizes that we all do one job, that we all fight one common hazard, that we all together in one boat and we all face a very perilous crisis, in that case, I am confident, we will act much more coherently.

Distinguished Delegates,

Such a broad representation of business circles at this Conference, presence of those who create economic policy allow to anticipate interested and constructive discussions over the issues which concern us all. I wish you success and thank you for your efforts".

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