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FREE ECONOMIC ZONE OF ARMENIA
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 2013-11-06
Armenian economic zones offer investors the maximum privilege

PanARMENIAN.Net - Successful operation of FEZ, namely, the attraction of foreign investments and introduction of new technologies by global leading companies may give a huge impetus to development of any economy, including the Armenian one.

After studying the international practice of FEZ operation in post-Soviet countries including Russia, Georgia, Estonia, as well as UAE and Iran, Sitronics Armenia CJSC proposed an initiative of creating a similar regime of enterprise activity in Armenia as well.

With participation of the company, a bill was drafted and submitted to the government for consideration. On May 25, 2011, the parliament of Armenia passed the Law “On Free Economic Zones”, and President of the Republic of Armenia Serzh Sargsyan signed the Law on June 28, 2011.

According to the Article 1 of the Law, the latter regulates the legal relationships arising during the establishment, organisation and liquidation of free economic zones.

What is FEZ

Establishment of the legal framework enabled Sitronics Armenia to apply to the government to become organizer of the first FEZ in the country. The government adopted a relevant decision on February 2, 2012. The company had to hurry with this, since the Law says if the free economic zone fails to start operating within one year after adopting the decision of the Government on the establishment of а free economic zone, the decision of the Government on the establishment of a free economic zone shall be revoked. The first FEZ will start operating by the end of 2012 on the territory of RAO Mars factory (56000 sq.m.) and Yerevan Computer R&D Institute (YCRDI) (27000 sq.m.). Since 2008, these are managed by Sitronics. Russia represented by the Federal Agency for State Property Management is the owner of these companies. Article 3 of the Law specifies that the Free Economic Zone is the special area, which is deemed to be beyond the customs area of the Republic of Armenia and wherein entrepreneurial activities are carried out in accordance with the specifics of this Law. Also, different operational types of free economic zones may be established in the territory of the Republic of Armenia.

Armenian government puts special requirements to the managing company

The free economic zone should qualify for the following requirements: be equipped with facilities for bringing in cargo transportation means, including railway transport; be demarcated with a border in compliance with the technical requirements to the borderline approved by the government; be provided with the conditions necessary for carrying out customs control and customs formalities by customs officers. In addition, FEZ should have facilities for free movement of goods within the free economic zone; be equipped with safety, first-aid and anti-fire systems; have uninterrupted water supply and wastewater collection system, energy supply, gas supply, solid waste disposal and at least a telephone line and internet as means of communication; be equipped with appropriate means of complying with sanitary and hygienic norms; have a quarantine service area. Also, it must be provided with logistics equipment for preservation of goods as well as with communication and other means necessary for the loading, unloading, transportation and storage facilities. Therefore, Organiser of a free economic zone is the legal person established (founded) by the government or selected upon the decision of the government, with the sole aim of organising a free economic zone that ensures the creation of infrastructures necessary for carrying out activities in the free economic zone and the rendering of services. “The total investments make up $10 mln; so far, $2.5 mln were invested, another $5 mln will be added shortly,” Sitronics Armenia CEO Armen Khachatryan said. The company is going to manage the FEZ for 10 years; in case it succeeds in this, the period may be extended for another 10 years, Khachatryan mentioned. 

Armenian government puts special requirements to the operating company

Operator of a free economic zone (the Operator) is the commercial legal person, individual entrepreneur or a branch registered in the Republic of Armenia that performs entrepreneurial activities solely in the free economic zone in accordance with the Law, as well as the representation of a foreign organisation holding a respective authorisation issued by the government and a respective contract signed with the Organiser. According to the Article 10 of the Law, the obligations of Operators are as follows: to construct in the area of the free economic zone in accordance with the plan approved in advance, by agreeing it with the Organiser; to comply with the requirements of the legislation of the Republic of Armenia with regard to pursuing activities in the free economic zone and those of the procedure for operation of the free economic zone; to comply with the safety rules of the free economic zone, the requirements defined by the authorisation and to fulfil other obligations as defined by the contract. The key requirement is export-oriented production. There is a wide range of activities varying from electronics production, biotechnology, and pharmaceutics to industrial design and telecommunications.

 

 


 

 

 

 

 

 




Residents have following opportunities:

  • To minimize the expenses connected to the export and import custom duties, which results in a competitive price of production
   

   
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G. Manukyan