Healthy financial-banking sector formed in Armenia - Raffy Semerdjian’s interview
YEREVAN, JUNE 6, ARMENPRESS. A group of investors from the United Arab Emirates (UAE) will arrive in Armenia in upcoming months - Raffy Semerdjian, member of the Council of European League for Economic Cooperation (Brussels), Vice-President of Armenia-UAE Business Association, Management Mix Consulting and Investment Company President, said.
He gave an interview to Armenpress talking about the Armenian-UAE partnership and financial-banking issues.
-Mr. Semerdjian, what prospects do you see for the development of Armenia’s financial system?
-Firstly, I want to say that financial system is based on economic system. If we generally talk about economy or financial development, we need to first of all refer to the role of the state.
To what extent we would like the state engagement in economy, whether the state’s role must be more or less. As I am from liberal school, I prefer that the state creates competitiveness field and encourages it. As Armenia has few resources, the economic units have very limited experience, the oldest companies have history of 20-25 years, therefore, it is important for the state to have role in certain strategic fields. For instance, Air France, which belongs to one of the state structures in France. My proposal is that the state must boost investments, establish some companies, to make the activity of those companies successful, and then to privatize.
As for the financial system, we see that over the past 10 years the banks’ management is governed in a very good way, the capital of banks reached 30 billion, a healthy financial-banking sector. The main structural problems in the banking sector will remain the deposits being as few. Today, except from the Central Bank’s reserves which comprise over 1.8 billion, the deposits of all banks in total comprise over 4-5 billion. This is very little, trust must increase. The state also must promote this process and turn it into a policy.
-You earlier said that if 1 out of 10 Armenians living abroad opens account in Armenia’s bank, there will be a strong banking system in Armenia soon. Your proposal, seems, was accepted by the Diaspora Ministry. Is there any progress in that process?
-The proposal remained theoretical, there must be the one who will move forward that idea. The Government must develop policy on that path and set a priority. I haven’t seen a progress on this path yet. It’s necessary to organize a flow of capital, rather than that of people in Armenia. Of course, we see that some people come and buy lands, houses here, but this must be turned into a policy which will positively affect the financial-economic system.
-Public’s trust is one of the key factors for the development of banking system. Do you see public’s trust towards banks in Armenia?
-Of course, the public’s trust is the No1 issue. Here the Government, banks play significant role. I am quite satisfied, majority of banks manage to inspire trust to people very well. If we manage to sell the idea that Armenia’s banks can be trusted, and engage capital, it will be very good. For that purpose, the Government, banks must work to increase that trust.
-During the financial crisis Armenia’s banking system showed stability. To what extent can it be a guarantee for foreign investors?
-Yes, Armenia’s banks really showed stability. I want to note that foreign investors, especially major ones, will prefer to work through their banks. Of course, while carrying out their activities in Armenia they need to have their accounts here. In other words, I don’t see a problem here since majority of Armenia’s banks do not face problems, they are being managed very good, and I am convinced that investors in Armenia should work also with the Armenian banks.
-Mr. Semerdjian, recently Armenia’s Government is carrying out works at various directions aimed at attracting investments. How would you assess this work?
-I think the efforts made are still at initial stage, and I hope the newly-appointed government will spare no efforts on this path. I believe that the leadership of the Development Foundation will turn that work into a policy. We have also proposed new model to them. For instance, there can be offices in Europe, US, Middle East with a concrete mission – to attract investments to Armenia. In terms of attracting investments efforts are being made, however, they are not turned into a policy yet. I think privileges must given also to those investment programs which will provide with jobs.
-Armenia’s Government targeted the market of the United Arab Emirates among other countries. In what directions Armenia can be interesting for UAE investors?
-Almost two years ago visits at professional level to the UAE launched. Already the first steps are taken. At the moment, small investments are being made in real estate market, for the next stage it is expected to implement agricultural programs. There is already a concrete cooperation deal in food industry. The UAE is more interested in agriculture sector, hotel economy, industry. It is expected to boost tourism flow, over the past two years we realize a positive progress. I want to add that business groups from UAE arrive in Armenia once or twice a month. We are going to organize a conference in July or October. 20 UAE investors will arrive in Armenia, and we will visit with them concrete places to show them our programs and the economic opportunities. As you see, works are being done on this path, and we know that people want to very quickly see the results, but 5-10 years are needed to see results in industry field, so we need to be more patient.
Interview by Anna Gziryan