While its neighboring countries work on improving their railway infrastructure, Armenia has targeted a whole different sector to enhance its economy: technology. Following the war between Russia and Ukraine, a wave of thousands of Russian, Ukrainian, and Belarusian citizens arrived in Armenia in March to seek temporary refuge.
As foreign nationals continue to relocate to Armenia, numerous companies came along and registered their businesses; the majority of these firms are in the IT sector, which gives hope for Armenia’s economy to prosper.
Armenian institutions have been helping these companies experience a seamless opening of new offices. At the spark of the war, the Armenian Ministry of Economy formed a working group whose role is to assist foreign entrepreneurs in relocating to Armenia and even integrating new businesses into the Armenian market.
The National Center for Innovation and Entrepreneurship (NCIE) under the Ministry of Economy, along with other private and public agencies, was supportive in facilitating the process of opening new legal entities in Armenia for non-Armenian businesses, most of them being in the tech industry.
“At NCIE, we witnessed hundreds of business owners opening their branches in Armenia daily or registering new companies,” said Hayk Margarian, CEO of The National Center for Innovation and Entrepreneurship.“Most new businesses are IT companies, but we also welcomed businesses from the Engineering, Scientific, Tourism, Agriculture, and HORECA sectors.”
This rush of foreign entities into Armenia can be a great opportunity for boosting its economy; more investments come along with economic benefits, such as increased employment and job creation. According to the NCIE, those companies pay taxes, competitive wages, and a new culture and technologies are brought to the country. As a result, tax revenues to the state budget exceeded the level planned for the year’s first half by about 60 Billion AMD. In addition, those companies plan on renovating old Soviet factories and sites which have been abandoned for ages, as well as improving ties with western markets.
Why Armenia?
Armenia is a small country in the Caucasus, yet it offers various benefits to entrepreneurs, such as networking with the diaspora community and acting as a mediator between the Middle East, Asia, EAEU, and the Americas.
There are numerous reasons which contributed to foreign entrepreneurs’ decision to open new offices in Armenia. A few decades ago, much of the scientific and technological research was produced in Armenia during the Soviet Union. “The absence of language barriers and the significantly comfortable business environment, combined with the great startups and low cost of living, has made neighboring countries choose Armenia,” asserted Mr. Margarian. “Companies based in Armenia can get the best of these worlds.”
Having said that, Armenia has a pleasant and seamless startup environment, and it is improving by the day. The ongoing development of Armenia’s tech industry makes it a competitive advantage over other regional countries. Picsart, which was an early startup success, is renowned today as one of the best photo editing apps in the world, and it ranked fifth on Forbes’ 50 Top Startups in 2015.
Some of Armenia’s agencies have organized events and combined efforts to promote community and ecosystem development. For instance, the NCIE co-organized the National Entrepreneurship Cup that took place at the American University of Armenia, with the purpose of helping local startups in attaining their goals and having more recognition.
“Armenia has moved five spots up to be ranked 60th globally in StartupBlink’s annual Global Startup Ecosystem Index Report of 2022. Armenia’s Fiscal policy is exceptional, and startups pay almost no taxes,” said the CEO of the NCIE. “The number of investors is growing annually, and there are successful Armenian unicorns (in Armenia or founded by Armenians). If Armenia succeeds in the Democratic course, the rule of law and, very importantly, building institutions that can more systematically help people and international businesses, we will achieve significant results.”
There is hope for Armenia to become a prominent player in the tech industry due to its substantial human capital, quality education, and government subsidies. The opening of foreign entities in Armenia can provide local entrepreneurs with new experiences, new business cultures and more employment opportunities. With the newcomers’ new pair of eyes and extensive expertise, Armenia will one day be home to numerous innovative and advanced tech firms.
