Tuesday, 5 May 2015

Banking on Armenia: Will minister’s appeal to Diaspora investors fall flat again?

Banking on Armenia: Will minister’s appeal to Diaspora investors fall flat again?
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A fresh call by Armenia’s Diaspora minister to Armenians worldwide to open accounts at Armenian banks and thus help their historical homeland’s financial system continues to be debated in Armenia and abroad. Many believe that making appeals alone is nonsense and in order to secure Diaspora Armenians’ investments, the government needs to restore their confidence first. 

During the April 23 open-air concert in Yerevan’s central Republic Square Serj Tankian, the lead vocalist of System of a Down, a popular American rock band consisting of four ethnic Armenian musicians, called on Armenia’s political leadership to “finally start getting rid of the institutional injustice” in the country and curb the out-migration of its citizens. 

In response, talking to local media a few days later, Diaspora Minister Hakobyan said that making critical statements is “the easiest thing” to do. 

“If our compatriots had higher salaries, they would not be leaving the country. So, be so kind and help our economy here to develop so that people will not have to leave. Let each of these gentlemen, a million [Diaspora] people open accounts at Armenian banks, each depositing $1,000. We don’t want this money, let them deposit it in the banks… The banks will become stronger, the economy will develop and they’ll get their interests paid. We don’t want charity from them,” she said.

Hakobyan has made similar appeals also before. In 2013, for example, the minister said the same thing at a pan-Armenian meeting of bankers and financiers and repeated it the following year during the fifth Armenia-Diaspora Forum. 

But it is the latest call from the minister that stirred particularly heated discussions in social media, perhaps because it was made in response to Tankian’s criticism. 

Still a few years ago, Diaspora Armenian businessmen began to express their dissatisfaction with the level of corruption and monopolies in Armenia that they said were strangling the country’s economy. Some spoke about their personal experiences and discriminatory treatment from tax authorities.

French-Armenian businesswoman Valerie Gortsunian, who was the founder of Le Café de Paris, a popular outdoor coffeehouse in downtown Yerevan, and made investments in her Armenia-based business for years, left the country after encountering problems with local tax authorities in 2011 and nearly losing her entire business here. She told ArmeniaNow that she perceives Minister Hakobyan’s statement as an insult to the Diaspora. 

“The Diaspora is well aware that the situation in Armenia is very unjust today, it is very well aware of how many investors have left Armenia offended and robbed. Of course, if our homeland were fair and just, it would be good for the Diaspora to take such steps. But today we are very far from this reality. I personally wait every day for Armenia to become a just state, but, unfortunately, I see every day how many people emigrate from Armenia, how much poverty there is, how oligarchs feel unrestrained and how much injustice there is,” the businesswoman said, mentioning the imprisonment of opposition leaders Jirair Sefilian, Shant Harutyunyan as well as actor Vardan Petrosyan. 

Meanwhile, the Union of Banks of Armenia welcomed the minister’s approach. Head of the Union’s Analysis and Public Relations Department Ashot Aramyan told the Armenpress news agency that Armenia has a reliable banking system and that by depositing their money in Armenian banks Diaspora Armenians will have a high level of profitability, as interest rates on deposits at Armenian banks are relatively high. At the same time, he said, Armenia’s economy will benefit from these deposits.

Economist Vilen Khachatryan, meanwhile, believes that serious work needs to be done in Armenia, and first of all on raising people’s trust, before it will be possible to attract a fair amount of investments from abroad, including from Diaspora Armenians. 

“It would be a better idea for each Diaspora Armenian to be able to have an apartment in Armenia, for all those who have businesses abroad to be allowed, on a free economic zone model, to have branches of their businesses in Armenia as well. But trust remains the most serious problem in any case,” Khachatryan told ArmeniaNow, adding that investments in Armenia have been falling since 2009.

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