Wednesday, November 2, 2011

SME Development Council Holds Second Session

Second session of the SME Development Council, chaired by Prime-Minister T.Sargsyan, was held today in the Government of Armenia.

It did not take long for the work, initiated by the SME Development Council, to bring its first fruits. Based on the discussions between the officials and business circles during the SME Development Council first session, a few issues hindering doing business in Armenia have now been resolved.

Secretary of the Council, Deputy Minister of Economy Karine Minasyan presented the progress achieved after the first Council meeting. She mentioned that to secure implementation of the protocol directions of Small and Medium Entrepreneurship Council first meeting on 27.07.2011, the following actions were carried out to resolve three issues:

A. the state registration process for business entities has been simplified, and the private enterprises are provided their registration number for making social insurance payments at the state registry office immediately upon registration there, without wasting time on visiting other offices. At the moment, the principle of “one window” of legal entities' state register doesn’t apply to getting registration number in social insurance fund, which means that advantages of "one window" concept are not used completely. However, starting from January 2012 the situation will change, and business owners will not need to spend additional time and effort to get registration number in the social insurance fund. This has been achieved through the RA Government Law N 1122-N, accepted on August 4, 2011.

B. registration of real property lease for business purposes has been simplified, and as of January 2012 the rental procedure will not need to be registered at the notary's office. In addition, the cost for renting an office will be fixed at 25,000 AMD instead of per square meter calculation, as it is done at present. The RA Law “On making amendments in the RA Law “On state registration of property rights” eliminated the provision of notary validation of leasing contracts, thus establishing one-window principle, which functions at the RA State Cadastre Committee. At the same time a unified payment for leasing contract registration has been determined.

C. the cost of acquiring of e-signature for small businesses after July 2012 will go down by three times, from 15,000 AMD to 5,000 AMD. Considering limited financial possibilities of micro and small enterprises, the payment established for purchasing electronic signature hinders the entrance of those entities into the system of electronic management, which will be a must after 2013.

The discussion during the session into considering of options on facilitation of doing business for small and micro small enterprises. In particular, T.Sargsyan noted that fees charged by the Center for Accountancy Assistance for providing accounting services to those entities could be reduced (currently they pay 50,000 AMD monthly, which is a burden for micro small enterprises) while simplified statement forms should be developed, as well as the number of necessary accounting documents could be decreased, to make the overall process both simpler and cheaper. T.Sargsyan assigned to the Small and Medium Entrepreneurship Development National Center to discuss this issue with the Center for Accountancy Assistance, which is providing services to legal entities, and propose solutions during the next Council session

The representatives of business communities raised three issues concerning facilitation of business for SMEs. In particular, they focused on creation of equal opportunities both for local producers and importers, mainly in situations where the cost of imported products is lower than that of locally produced goods. Next issue for discussion was simplification of procedures of registry of lease of real property for business purposes in State Cadastre.

On top of this, they raised the issue of elaboration of a protocol for putting into practice collective load transportation mechanism which will greatly reduce the export expenses for small and medium enterprises.

T.Sargsyan welcomed those suggestions and assigned the Secretariat of the Council to elaborate government decisions for the last two issues in the shortest possible timeframe, as they can be resolved without any legislative changes.