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  • Armenian Small And Medium-Sized Business Isn't Developing

    ARMENIAN SMALL AND MEDIUM-SIZED BUSINESS ISN'T DEVELOPING

    Vestnik Kavkaza, Russia
    Oct 31 2013

    31 October 2013 - 11:44am

    David Stepanyan, Yerevan. Exclusively to Vestnik Kavkaza

    The sphere of small and medium-sized business (SMB), which is still
    the basis of the Armenian economy, isn't developing due to unbearable
    taxation. This is one of reasons for the migration of businessmen,
    which leads to a reduction in demand for SMB goods among the
    population. SMB is under a extremely strong negative influence which
    can be called "the ripple effect." It can be concluded, after reading
    the results of the survey "SMB in Armenia: the current situation,
    tendencies, development, and applied instruments," which has been
    conducted by the consulting company Ameria.

    Considering the fact that the share of SMB in Armenia's GDP was
    about 43%, the problems of the sphere had to cause concerns among
    top officials. However, it isn't taking place. According to surveys
    involving 1003 enterprises, only 5.1% of Armenian SMB entities are
    medium-sized enterprises, 20.2% are small, while the other 74.7%
    are micro-entities. 47.6% are involved in trading; 34.4% - in the
    service sector; 15.5% - in industry; 2.2% - in construction.

    According to the director of development of the group of companies
    Ameria, Tigran Dzhrbashyan, the SMB sphere suffered a significant
    fall in comparison to 2012. And Armenia hasn't established favorable
    conditions for development of the sphere. Small and medium-sized
    enterprises, especially micro-entities, remain in a profound
    depression. This is encouraged by huge migration from the regions. One
    of main problems in the path of SMB development is heavy taxation,
    which traditionally attacks micro-businessmen. As a result, some of
    them have shut down, others are almost bankrupt.

    Another negative factor is the low accessibility of loans for
    enterprises working in the regions, i.e. pay-back periods are short,
    while rates are enormously high. Average dram credit rates are about
    18.5%, dollar credit rates - 14.5%. This means that an SMB is an
    instrument of profit for commercial banks.

    Low demand in the SMB sphere can be compensated only by growing
    exports. Exporting enterprises are least vulnerable to the fluctuations
    of internal demand. Considering the fact that SMB goods are unlikely to
    be popular in Europe, Armenian businessmen will have to wait to join
    the Customs Union. At least this can be concluded from the results
    of the surveys by Armenian experts. .

    http://vestnikkavkaza.net/articles/economy/47042.html

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