If investors have business projects that will benefit tourism in Armenia, the Armenian Government and the World Bank are here to support them on multiple levels. Regional Post Caucasus talked about this program to Anahit Voskanyan, who is a Tourism Product Development Advisor at the Armenian Economy Ministry’s Tourism Committee.
Text : Gayane Harutyunyan
Tourism development for investments
Armenia, despite its rich cultural and historical heritage, beautiful landscapes, and attractions, still has a vast untapped potential for tourism. Noticing the correlation of business and investments with the enhancement of the overall economic potential, in 2016, the World Bank started the Local Economy and Infrastructure Development Program (LEID). The Tourism Committee of Armenia on behalf of the Ministry of Economy was responsible for the content of the program and the Armenian Territorial Development Fund took over the practical aspects of the program, such as the examination of investment sub-projects, their implementation, as well as the procurement, financial and guarantee management operations.
“The implementation phase has started in 2018 and within the scope of this program, currently, there are over 40 investment projects having the goal to create a favorable environment, infrastructure, and communication which would attract the private sector to come and establish businesses in particular locations,” says Anahit Voskanyan. “In other words, they will increase both the infrastructural and institutional capacities for enhancing the support of tourism sector to the local economy.”
One such example is the reconstruction of Kumayri Historical and Cultural Museum-Reserve, the oldest part of Gyumri, Armenia’s second-largest city. Since the inception of the project, six streets in the Reserve were reconstructed, and seven more are on the way, preserving the historical, authentic architecture of this district. These transformations are an advantage that can grab the attention of potential investors.
Another component of the program was the restoration of the historic center of Goris. The LEID program initiated 3 projects, two of which are already implemented, and the third one will start soon. The windows, gates, and roofs of 36 houses were replaced in accordance with the typical Goris architecture fashion. The riverbed of Vararak flowing through the city was cleaned along with adjacent streets and sidewalks.
Old city of Goris
There are dozens of similar elements within the project, the key idea, however, is that these components do not create businesses but launch touristic activities that would play pivotal roles for potential investors and the private sector in general.
The program has fostered a packaged approach, which means, among other things, that the main aim of improving the Kumayri Reserve is not only to create favorable conditions for the private sector but also to make the tourists stay longer at that destination. For this reason, the program works on creating clustered experiences. Going back to the example of the Shirak region, the overall project involves Gyumri-Marmashen-Dashtadem destinations. This means, for instance, that a tourist spends some 4-5 hours in Marmashen, then travels to nearby Gyumri for an overnight stay and a tour, then visits Dashtadem the next day. The same clustered pattern was adopted in the Gegharkunik Region involving the village of Tsaghkunk. “The main idea is not to create tourist attractions, but to develop routes, with multiple destinations and consequently, places for the tourists to spend their money,” says Ms. Voskanyan.
Kumayri Reserve, Gyumri
Public and Private Investments
The program has another component aimed particularly at investment from the public and private sectors. Generally, if someone makes an investment of 400,000 dollars and more at any place in Armenia (Armavir and Yerevan are not included in the LEID Project)…, within the project, the government invests the ¼ of the amount invested by the company in a form of ensuring the communication infrastructures. For example, if the route from the main highway is in bad condition, the state repairs or constructs it, or ensures electricity and internet access, provides water and gas supply, etc. It is important to note that the overall governmental support does not exceed one-quarter of the invested amount.
One beneficiary of this program is the Tufenkian hotel that is being built in Areni village. The government supports the latter project by linking the premise’s sewer, gas pipes, and electricity supply network to the trunk lines. The Ministry of Economy also actively supports potential investors during the application period, making sure that in case of eligibility, the investor is all set up for the program. “The 400,000 threshold might seem high, however, the specialists explain that in the case of smaller investments, the business doesn’t create a sufficient number of jobs for the local communities,” Ms. Voskanyan explains.
Soft Components
The third part of the program is the soft component, which involves unmeasurable elements such as marketing activities. After the COVID situation and the war in Artsakh, a need for a new marketing image of Armenia arose, positioning it as a safe tourist destination. For the upcoming 1-2 years over a 1-million-dollar budget is allocated for this purpose.
The second direction is the establishment of destination management models for Destination Management Organizations (DMO). Local tourism became very active during the lockdown, however, there was a lack of travel culture and the tourist attractions soon were dotted with growing piles of garbage. “All this showed the need to properly manage those sites and the program has allocated a separate budget for this,” says Ms. Voskanyan, adding that four different models have been selected, to be applied at 86 most popular local destinations in the near future.
The program is set to end in 2023, but the specialists note that LEID has expanded throughout the past years and many more components joined the program; thus it might take longer, in order to cover a larger segment of issues and opportunities related to both tourism and investment. The program has improved numerous locations in Armenia, repaired the roads leading to Tatev Monastery, Stepanavan Dendropark, Lanjazat, and Garni’s “Stone Symphony”, and there are many more projects already accomplished, still in the making, or soon to start.
