“A radical advance of the economy will be possible through a new stage of state–private sector cooperation”: Arsen Ghazaryan

Although in recent years our economy has seen major changes in terms of competition, certain issues still remain, some of which are, to an extent, objective. This view was expressed by Arsen Ghazaryan, President of the Union of Manufacturers and Businessmen of Armenia, during the panel discussion held on November 21 as part of the World Bank Office’s presentation of the first “Armenia: Country Economic Update” report. According to the UMBA President, several companies with dominant positions still exist, entities that are a historical legacy, have formed systemic structures over the years, and are very difficult to compete with today. “This is where the role of the state, in particular the Competition Protection Commission and state regulation, becomes crucial in ensuring balance and preventing the crossing of red lines,” the speaker noted.

Problems related to competition exist across various sectors, including wholesale and retail trade, which are also mentioned in the report. According to Ghazaryan, these issues have been raised for many years, yet they still remain on the agenda. To overcome the situation, he believes it is necessary to define more clearly the concepts of anti-competitive behavior, abuse of dominant position, and the indicators that lead to such situations. In his view, existing legislation must be aligned with current realities based on sound criteria.

At one time, the business community fought to prevent the introduction of criminal liability into the evolving legislation; nevertheless, such provisions were eventually codified. “We believe that when an entrepreneur commits violations, liability should be financial so that the entrepreneur bears the primary cost, while the state benefits from penalties and fines. Criminalization, however, is not justified, because fear of it always produces negative effects, both for managers and for entrepreneurs,” the UMBA President said.

According to the speaker, the main problem is that we have not managed to change the structure of the economy and ensure diversification. Some sectors do demonstrate certain development, yet it is still impossible to radically advance the economy as a whole and thereby address employment issues. Ghazaryan believes this can be achieved through a new stage of cooperation between the state and the private sector. “It is true that we are satisfied with the platforms through which business-coordinating public organizations engage with the state, our concerns are heard, and we debate and discuss them. But greater cooperation is expected specifically in terms of restructuring the economy. We must move beyond the current situation,” he stated.

The list of the country’s largest taxpayers shows that the top ten provide 70–80% of tax revenues, with a significant share accounted for by the top four. In this context, current unemployment indicators are hardly surprising. “We need substantial investment to create new jobs, especially in processing industries and manufacturing, because the trade and services sectors are already oversaturated. We have once experienced the effect of a construction-industry bubble bursting, and now we are again approaching the expansion of such a bubble. True, on one hand this is beneficial, it brings investment and creates jobs,but it is a sector with natural limits,” the UMBA President noted.

He added that although the state has managed to drastically reduce systemic corruption and somewhat restrain dominant players, these processes still objectively persist. “How to overcome this is difficult to say, because for many years the same problems have confronted us under all administrations. Today there is a bit more hope, as the government is trying to approach matters more objectively and modernize its management methods; the sense of fairness appears somewhat higher. But coordinated effort and comprehensive analysis are needed to find effective solutions,” Ghazaryan concluded.