On February 19, 2019, at a cabinet session, Armenian Prime Minister Nikol Pashinyan issued instructions to make an inventory for the ongoing situation of investment proposals (projects).

On May 18,  2019, Minister of the Economy Tigran Khachatryan said in his report to the prime minister on the matter that there are 56 investment projects in all, of which 38, totaling $1.2 billion, are considered realistic and that 18, totaling $1.5 billion are still in the early stage of review.

Hetq requested the ministry of Economy to present projects that Government considers as investments. To this end we requested to present information on those investment proposals (project) with the following components.

• The field and the description of the project.
• Initial and total investment amount
• Profitability of the project: determined as Net Present Value (NPV), Internal Rate of Return (IRR) and/or other valuation technic.
• Payback period of the project.
• Estimated number of people to be employed at the beginning and thereafter.
• Estimated volume of produced goods and services for the first five years.
• Information about project investors - country, company, owner.
• The method of participation by the state in the project (if any): tax incentives, infrastructure construction, state-financed participation and/or other assistance.
• Other available information.

It is worth mentioning that these are the least necessary components that should be part of any investment project for it to be classified as such.

The Ministry of the Economy, in its response, noted: "The Ministry of Economy of Armenia does not act as the initiator or developer of these projects. Thus, it is not entitled to provide details about private companies that contain commercial secrets. Part of the information requested by you is not at the disposal of the ministry, and/or often there was no need for such indicators to be calculated by private initiators."

In this regard, it should be noted that although the Ministry of Economy states that it does not possess a part of the information sought by Hetq (not mentioning what part of the information it refers to), nevertheless, this circumstance did not prevent the ministry from classifying those programs as investments and make statements in total numbers. 

As we have noted, any realistic investment project contains the above information requested by us, and non-consideration of those (according to the Ministry of Economy ... “often there is no need to calculate such indicators by private initiators") signals that these projects are not feasible.

Regarding the information contained in commercial secrets, it should be noted that according to the RA Civil Code, "information is a business, commercial or banking secret, if it has a real or potential commercial value by virtue of being unknown to a third party, there is no legal opportunity to obtain it freely, and the information holder takes measures to maintain confidentiality.” And it is obvious that the components of the information requested by us cannot hold real or potential commercial value.

At the main time, the Ministry of Economy in reply to our request also noted the following: "Touching upon the investment proposals inventoried by the Ministry of Economy of the Republic of Armenia, we state that at the present the ministry conducts monitoring of 59 investment projects totaling $ 2.8 billion proposed by both foreign and local investors. Of these, 42 are projects with realistic or short-term investment potential (about $1.1 billion), and 17 are projects that can realize investments in the initial or long-term (about $ 1.7 billion).

The projects are mainly focused on manufacturing (14 projects - $1,025 million), construction (14 projects - $699 million), energy (5 projects - $435 million USD), tourism (5 projects -  $207 million, infrastructure (4 projects - $170 million), information technology (4 projects - $54 million), and other sectors. 

In this regard, it should be noted that when investors speak about investment projects, when they calculate the value of an investment, it’s the Net Present Value (NPV) they’re referring to. It’s one of the indicators we asked the ministry to provide.  Consequently, if the Ministry of the Economy talks about 59 projects with an investment value of $2.8 billion, it could only come up with such data by having the NPV of each project. Consequently, it is unclear why the ministry did not provide us projects it considers as investments and at least this indicator for each of those. 

Of note is that on May 18 of this year the Minister of the Economy announced the existence of 38 realistic projects totaling $1.2 billion.  And on July 9, in response to our above-mentioned inquiry, he noted 42 realistic projects worth around $ 1.1 billion in total. As While the number of programs has increased by 4, the total investment value has fallen by 0.1 billion (which equals to $100 million). 

At the same time, the ministry mentioned 17 preliminary or long-term investment projects, estimated at $1.7 billion in total investment value. And on May 18, the RA Minister of Economy in his statement mentioned 18 investment projects worth $ 1.5 billion in the early stage of discussion. It appears the number of projects has decreased by one and the total investment value has increased by 0.2 billion ($200 million) instead of decreasing.

Considering the aforementioned, including the substance of the letter of the Ministry of the Economy, it can be concluded that the ministry is either covering up investment projetcs or it doesn’t possess the data on those. However, this does not prevent the ministry officials to consider those proposals as investments and make statements on those with total numbers and values.

Hovhannes Avetisyan is an expert in public finance management.

Top Photo: Minister of the Economy Tigran Khachatryan / © Press Service of the Government