Business experts in Armenia have enthusiastically greeted government-initiated measures to spur small and medium businesses in Armenia, however they say more drastic and large-scale steps should yet be taken to reform the field.

Early in 2011 Prime Minister Tigran Sargsyan stated that 5-6 percent growth was expected in the sphere of small and medium enterprises (SME) this year, stressing that “2011 will be an exceptional year in that respect”.

The Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC) has no statistic data yet to illustrate the promised development in this field this year.

SME DNC spokesperson Siarnush Gyurjinyan told ArmeniaNow that during the eight months of 2011 the center has satisfied around 2,300 appeals, among them 13 business plans that the center has guaranteed for financing.

Gyurjinyan says that 15 percent of SME assisted by the center are in Yerevan, with the rest in provinces.

On September 14 the Center CEO Tigran Harutyunyan presented an initiative aimed at SME development, according to which the state will compensate 50 percent of expenses required for export certification of ultra-small company production.

“This is a pilot project, and we are now accepting applications. If the project receives positive responses, it will continue and will expand,” he said.

Gagik Petrosyan, coordinator of business protection network, points out two main improvements in the field that will contribute to its development.

According to Poghosyan, the amendments to the law “On organization and implementation of inspections in RA” and the establishment of Inspection Reform Coordination Council will make the problem solution process in this field more productive.

By the amended law, in particular, a new system of implementing inspections has been introduced, which would limit ungrounded inspections and keep the focus on the highest-risk economic entities.

(Among the inspection bodies there is, for instance, the Sanitary-hygienic station, employees of which might have not only their but their friends’ hair cut or styled for free as part of their “inspection process”at some beauty salon or barber’s shop, ArmeniaNow sources report.)

“There are presently 18 inspection structures in Armenia. A new inspection methodology has been developed due to the legislative changes to make the process much easier for SME,” says Poghosyan.

Poghosyan believes that the significance of the new council lies in the possibility of discussing SME challenges during its sessions.

During the July 29 session 10 issues were discussed related to liquidation procedures, SME rental contracts for premises, classification and differentiation of SME, as well as other procedural issues.

Economic analyst Samvel Avagyan gives positive assessment to the government-initiated measures.

Among the improvements he points out the decree relieving companies with annual circulation of up to 56.5 million drams (around $155,000) from 20 percent VAT starting this year, as well as the expanded authority of the State Commission for Protection of Economic Competition.

Avagyan states another improvement in the field: some of the administrative levers have become less pressing, among them the changed order of submitting tax reports, the simplified process of obtaining licenses or registering new companies, and others, however he adds that it’s yet too early to talk about solid results.

“Because the positions of small businesses had weakened so much over the past decade and, correspondingly, the position of big businesses had gotten so much stronger, that improvements of only nine months cannot immediately yield tangible results,” Avagyan says.

Nonetheless, Avagyan believes that much more could have been done.

“Maybe, also, the steps were not sufficient; perhaps more drastic measures were due, since the start-up conditions are so unequal for small businesses, as opposed to big ones, that competitiveness even under these circumstances is difficult,” he says.

By the law on SME, companies are classified into ultra-small, small and medium enterprises.

Ultra-small enterprises are defined as commercial organizations and private entrepreneurs employing an average of up to 10 people; whereas small businesses employ up to 50, and medium enterprises can have up to 250 employees.