Armenia’s Compliance Conundrum: Balancing Regulations and Competitiveness
As Armenia continues to open up its economy to foreign investment, the country is facing a delicate balance between ensuring compliance with regulations and maintaining a competitive edge for domestic businesses. This article will explore the challenges of balancing regulatory requirements with competitiveness in Armenia’s construction industry.
Licensing Requirements for Foreign Designers and Contractors
One key area of concern is the licensing process for foreign designers and contractors. According to Armenian law, all individuals and companies engaging in operations within the country must obtain a license if they plan to conduct activities such as:
- Elaborating engineering sections of urban planning documentation
- Assessing urban planning documentation
- Executing construction works
- Conducting technical quality control of construction
Failure to comply with this requirement can result in severe penalties, including administrative fines of up to 300,000 Armenian drams and even criminal liability.
Public Procurement Processes
In contrast, public procurement processes in Armenia are designed to be transparent and open to all entities, including foreign companies. While the government may accept exceptions related to national security concerns, there is no legal provision that favors local businesses.
Key Protections for Fair and Open Competition
- The Law on Procurement requires adherence to principles such as competitive, transparent, proportional, public, and non-discriminatory organization of the process with standardized regulations.
- Contracts concluded through illegal means, such as bribery, can be declared void by a court upon application by the aggrieved party.
Bribery Remains a Concern
Despite these efforts, bribery remains a significant concern in Armenia’s construction industry. Contracts concluded through illegal means, such as bribery, can be declared void by a court upon application by the aggrieved party. Furthermore, individuals found guilty of bribery or other corruption-related offenses can face criminal liability, including imprisonment for up to 12 years.
Lack of Employee Reporting Requirements
However, Armenian law does not require employees of project teams to report suspicion or knowledge of bribery.
Challenges for Foreign Contractors
Armenia’s open-door policy towards foreign investment means that there are no legal obstacles preventing foreign contractors from doing business in the country. However, technical or professional challenges may arise, and foreign contractors should be aware of these potential hurdles.
Conclusion
As Armenia continues to navigate its complex regulatory landscape, it is essential for businesses operating in the country to understand the compliance requirements and ensure they are meeting them. Failure to do so can result in severe penalties, while compliance can provide a competitive edge and help build trust with local authorities and stakeholders.