ARMENIA: REPORT ON ARMAVIR PROVINCE

APRIL 1999

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SUMMARY
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1. ON MARCH 1-5, 1999, EMBASSY'S BISNIS REPRESENTATIVE GEORGE ISAYAN VISITED THE FERTILE AGRICULTURAL PROVINCE OF ARMAVIR, ARMENIA AND MET WITH MANAGERS OF INDUSTRIAL AND AGRICULTURAL ENTERPRISES AND LOCAL GOVERNMENTAL OFFICIALS. THIS IS ANOTHER IN A SERIES OF REGIONAL TRIPS THAT REACH OUT TO LOCAL COMPANIES THROUGHOUT THE COUNTRY TO PROMOTE THE BISNIS "SEARCH FOR PARTNERS" PROGRAM AND COLLECT INFORMATION ON INVESTMENT AND BUSINESS OPPORTUNITIES FOR U.S. COMPANIES. MOST PROMISING PROSPECTS ARE LISTED IN PARAGRAPHS 10-15 BELOW. END SUMMARY.

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ARMAVIR: GENERAL BACKGROUND
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2. ARMAVIR PROVINCE IS LOCATED IN THE SOUTH-WESTERN PART OF ARMENIA, TO THE WEST OF YEREVAN. THE PROVINCE WAS MAPPED OUT IN DECEMBER 1995 OUT OF THREE FORMER ADMINISTRATIVE REGIONS, ARMAVIR (FORMERLY HOKTEMBERIAN), ECHMIADZIN, AND BAGHRAMIAN. THE PROVINCE HAS A TOTAL AREA OF 477 SQ. MILES AND A POPULATION OF 315,500 INHABITANTS, INCLUDING 123,000 URBAN AND 192,500 RURAL RESIDENTS. IT IS THE SECOND MOST POPULATED AREA IN ARMENIA AFTER YEREVAN, THE CAPITAL. LOCATED IN THE FERTILE, WELL-WATERED ARARAT VALLEY BETWEEN MOUNT ARARAT AND MOUNT ARAGATS, THE PROVINCE HAS A 45-MILE COMMON BORDER WITH TURKEY, WHICH RUNS ALONG THE ARAX RIVER. THE CLIMATE IN ARMAVIR IS SUNNY, DRY, AND CONTINENTAL. THE PROVINCE IS SITUATED 2,700 - 3,200 FT ABOVE SEA LEVEL. MINERAL RESOURCES INCLUDE DEPOSITS OF GYPSUM, TUFA (A LIGHT STONE EXTENSIVELY USED IN CONSTRUCTION), BASALT, AND FOOD SALT. THE ARMENIAN-AMERICAN EXPLORATION COMPANY INC., A SUBSIDIARY OF RAND PAULSON CORPORATION (CALIFORNIA), HAS BEEN EXPLORING FOR OIL AND GAS IN THE WEST AND SOUTH-WEST OF ARMAVIR SINCE 1997. THE WORK DONE BY THE COMPANY INDICATES PROSPECTS FOR THE FURTHER SUCCESSFUL EXPLORATION. THE ARMENIAN NUCLEAR POWER PLANT IS LOCATED IN THE PROVINCE NEAR THE TOWN OF METSAMOR. THE SOVIET-BUILT PLANT WAS SHUT DOWN AFTER THE 1988 GYUMRI EARTHQUAKE AND WAS REOPENED IN NOVEMBER 1995. IT IS SCHEDULED TO BE DECOMMISSIONED IN 2004.

3. THE INDUSTRIAL POTENTIAL OF ARMAVIR IS CONCENTRATED IN THREE MAJOR CITIES: ARMAVIR (THE PROVINCE'S CAPITAL), ECHMIADZIN, AND METSAMOR. THE PROVINCE HAS 40 LARGE AND MEDIUM SCALED INDUSTRIAL ENTERPRISES INVOLVED IN ENERGY, ELECTRONICS, FOOD PROCESSING, CHEMICALS, AND MACHINERY. NINETY-FIVE PERCENT OF THESE HAVE BEEN PRIVATIZED. AS OF DECEMBER 1998 THE AGGREGATE PRODUCTION VOLUME OF THE PROVINCE WAS AROUND $42 MILLION.

4. AGRICULTURE IS THE LARGEST AND FASTEST GROWING SECTOR OF THE PROVINCE'S ECONOMY. EIGHTY PERCENT OF LARGE AND MEDIUM SIZED AGRICULTURAL ENTERPRISES ARE SPECIALIZED IN THE PROCESSING OF FRUITS AND VEGETABLES SUPPLIED BY LOCAL FARMERS. THE PROVINCE PRODUCES 40,000 TONS OF WHEAT, 58,000 TONS OF GRAPES, 23,000 TONS OF POTATOES, 56,000 TONS OF MELONS, AND 200,000 TONS OF FRUITS AND VEGETABLES ANNUALLY. ARMAVIR HAS 133,000 ACRES OF ARABLE LAND INCLUDING 11,800 ACRES OF VINEYARDS, 10,000 ACRES OF ORCHARD LAND, AND 20,300 ACRES OF GRAIN PLOT.

5. INTERNATIONAL TRANSPORTATION INFRASTRUCTURE IN THE PROVINCE INCLUDES THE YEREVAN-ZVARTNOTS INTERNATIONAL AIRPORT WITH ITS NEW INTERNATIONAL CARGO TERMINAL BUILT BY A U.S. CONSTRUCTION COMPANY. THE RAILROAD AND THE HIGHWAY CONNECTING YEREVAN WITH NORTHERN BORDERS OF ARMENIA TRAVERSE THROUGH THE ARMAVIR PROVINCE AND LINK IT WITH GEORGIAN BLACK SEA PORTS OF BATUMI AND POTI. ONCE THE TURKISH-ARMENIAN BORDER OPENS, THE PROVINCE STANDS TO BENEFIT FROM A HIGHWAY LINK TO TURKEY.

6. ARMAVIR IS THE CAPITAL OF THE PROVINCE. IT HAS 46,000 INHABITANTS AND 20 LARGE AND MEDIUM SCALE ENTERPRISES, 80 PERCENT OF WHICH HAVE BEEN PRIVATIZED. AMONG THEM ARE SEVERAL LARGE FOOD PROCESSING COMPANIES. "SARDARAPAT" CANNED FOOD FACTORY IS THE LARGEST IN THE CAUCASUS. IT WAS ONE OF THE MAJOR SUPPLIERS OF CANNED FOOD IN THE SOVIET UNION. THE COMPANY PRODUCES A WIDE RANGE OF CANNED FRUIT AND VEGETABLES, NATURAL JUICES, JAMS, AND MARINADES. THE CANNERY IS LOCATED IN THE CENTER OF THE ARARAT VALLEY AND USES DELICIOUS FRUIT AND VEGETABLES GROWN THERE. THE ARMAVIR BRANDY FACTORY IS THE LARGEST IN ARMENIA AFTER THE YEREVAN BRANDY FACTORY. BOTH FACTORIES HAVE BEEN ACQUIRED BY THE FRENCH PERNOD RICARD COMPANY. ANOTHER LARGE ENTERPRISE IS "MAP" WINERY. IT PRODUCES POPULAR BRANDS OF WINES AND BRANDIES FOR EXPORT TO THE NIS COUNTRIES AND, VERY RECENTLY, TO THE UNITED STATES. THE SIMILARLY-NAMED (BUT INDEPENDENTLY OWNED) "MATP" IS A SUCCESSFUL FURNITURE PLANT. EQUIPPED WITH MODERN ITALIAN MACHINES, IT SELLS VARIOUS TYPES OF FURNITURE IN ARMENIA AS WELL AS IN NEIGHBORING GEORGIA.

7. ECHMIADZIN IS THE LARGEST CITY IN THE PROVINCE. WITH ITS POPULATION OF 65,000, IT IS HOME TO 16 LARGE AND MEDIUM SCALED ENTERPRISES THAT SPECIALIZE IN FOOD PROCESSING, CHEMICALS, AND APPAREL. FOURTEEN OF THESE SME'S HAVE BEEN PRIVATIZED. JRARAT POULTRY FACTORY JSC WITH ANNUAL SALES OF $2.5 MILLION, IS THE LARGEST FACTORY OF ITS KIND IN ARMENIA. THE COMPANY IS INTERESTED IN ESTABLISHING CONTACTS WITH AMERICAN COMPANIES TO UPGRADE EXISTING FACILITIES AND IMPORT NEW TECHNOLOGIES AND EQUIPMENT. THERE IS ALSO A GROWING NUMBER OF SMALL PRIVATE BUSINESSES ENGAGED IN RETAIL TRADING, GASOLINE SUPPLY, AND IN PROVIDING CAR SERVICES. THE CITY HAS 5 ENTERPRISES INVOLVED IN ELECTRONICS. ESTABLISHED TO FULFILL ORDERS FOR THE SOVIET DEFENSE INDUSTRY, MANY OF THEM STOPPED THEIR ACTIVITIES FULLY OR CURRENTLY UTILIZE ONLY A SMALL PART OF THEIR CAPACITIES. ECHMIADZIN, WITH ITS WONDERFUL CHURCHES, HAS BEEN VERY ATTRACTIVE FOR TOURISTS AS A HISTORICAL AND CULTURAL CENTER. THE TOWN IS A 20 MINUTE DRIVE FROM DOWNTOWN YEREVAN, AND IS A POTENTIALLY LARGE MARKET FOR CONSUMER GOODS.

8. THE PROVINCE'S THIRD LARGEST CITY, METSAMOR (12,000 INHABITANTS), WAS ESTABLISHED IN 1968 TO BUILD AND OPERATE THE ARMENIAN NUCLEAR POWER PLANT (ANPP), WHOSE CAPACITY IS 815 MW. CURRENTLY THE PLANT ACCOUNTS FOR 30 - 35 PERCENT OF THE ENERGY PRODUCED IN ARMENIA. SINCE ANPP IS SCHEDULED TO BE DECOMMISSIONED IN 2004, THE ARMENIAN GOVERNMENT AND INTERNATIONAL INSTITUTIONS ARE CONSIDERING PLANS FOR ALTERNATIVE SOURCES OF ENERGY. ONE POTENTIAL PROJECT INCLUDES CONSTRUCTION OF A NEW NUCLEAR POWER PLANT NEAR THE EXISTING ONE.

9. MOST ENTERPRISES OPERATING IN ARMAVIR PROVINCE WOULD LIKE TO ESTABLISH LONG-TERM COOPERATION OR A PARTNERSHIP WITH FOREIGN INVESTORS. SOME OF THEM MAY OFFER INTERESTING INVESTMENT OPPORTUNITIES. THE EMBASSY ENCOURAGES INTERESTED U.S. FIRMS TO CONTACT THESE ARMENIAN COMPANIES DIRECTLY:

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INVESTMENT AND TRADE OPPORTUNITIES
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POULTRY PRODUCTION
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10. (1) JRARAT POULTRY FACTORY JSC

JRARAT POULTRY FACTORY (JPF) WAS ESTABLISHED IN 1976 AS A STATE ENTERPRISE AND WAS TURNED INTO A JOINT STOCK COMPANY IN 1995. THE COMPANY SPECIALIZES IN THE PRODUCTION AND SALE OF HEN EGGS (25 MILLION ANNUALLY) AND POULTRY MEAT (150-200 TONS ANNUALLY). THE TOTAL NUMBER OF CHICKENS IS 170,000. THE COMPANY OWNS 1.7 MLN.SQ.FT. OF PRODUCTION AND STORAGE FACILITIES LOCATED ON THE LAND OF 370 ACRES. JPF EMPLOYS 150 PEOPLE AND HAS A LARGE DISTRIBUTION NETWORK IN ARMENIA. JPF'S BRAND IS VERY POPULAR AMONG THE LOCAL CUSTOMERS AND HOLDS UP TO 40 PERCENT OF THE ARMENIAN MARKET. THE COMPANY'S ANNUAL SALES TOTAL $2.5 MILLION. JPF PLANS TO EXPAND ITS CUSTOMER BASE. FOR THIS PURPOSE, THE COMPANY SEEKS TO PROCURE AND IMPORT U.S.- MADE MODERN PACKAGING AND DEEP FREEZING EQUIPMENT. JPF ALSO INTENDS TO PURCHASE LAYING-CHICKENS. FOR ITS AMERICAN PARTNERS, JPF CAN OFFER A HIGHLY QUALIFIED LABOR FORCE, EXISTING FACILITIES, AND A FINANCIAL INVESTMENT UP TO $500,000. THE COMPANY'S BUSINESS PLAN IS AVAILABLE AND WILL BE SUBMITTED UPON REQUEST. THE COMPANY CAN CONDUCT BUSINESS IN ENGLISH.

CONTACT: MR. AZAT GRIGORIAN, PRESIDENT
ECHMIADZIN REGION, ARMAVIR PROVINCE, ARMENIA
TEL: (374-1) 404-274 OR (374-2) 271-400
FAX: (374-2) 271-400 OR (374-2) 151-550, ATTN: GEORGE ISAYAN, BISNIS

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FOOD PROCESSING
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11. (2) MAP JSC

MAP WAS FOUNDED IN 1944 AND WAS CONVERTED INTO AN OPEN JOINT STOCK COMPANY IN 1995. THE COMPANY SPECIALIZES IN PRODUCING WINES AND BRANDIES, NATURAL FRUIT JUICES, AND CANNED FRUIT AND VEGETABLES. THE COMPANY'S WINERY IS ONE OF THE OLDEST AND LARGEST IN THE COUNTRY. MAP OWNS 3,280 SQ.FT. OF PRODUCTION AND STORAGE FACILITIES ON ITS LAND OF 25 ACRES. THE COMPANY'S FACILITIES ARE LOCATED IN A FERTILE PART OF THE ARARAT VALLEY FAMOUS FOR ITS DELICIOUS FRUIT AND VEGETABLES. MAP'S HIGH QUALITY RAW MATERIAL SUPPLIERS ARE FARMS LOCATED NEAR THE PLANT. THE COMPANY IS SUCCESSFULLY COOPERATING WITH THE U.S. DEPARTMENT OF AGRICULTURE'S REPRESENTATIVE OFFICE IN ARMENIA, WHICH EXTENDED A LOAN TO MAP'S LOCAL GRAPE, FRUIT, AND VEGETABLE SUPPLIERS LAST YEAR. MAP EXPORTS ITS PRODUCTS - RED WINE AND "ARMAVIR" BRANDY - TO RUSSIA, BULGARIA, THE BALTIC STATES, AND TO THE UNITED STATES.

MAP IS LOOKING FOR U.S. JOINT VENTURE PARTNER TO SUPPLY JUICE-PROCESSING AND PACKAGING EQUIPMENT. FOR THIS, MAP CAN CONTRIBUTE ITS FACILITIES AND ITS HIGHLY QUALIFIED, BUT LOW COST STAFF. LARGE FINANCIAL RESOURCES ARE ALSO AVAILABLE AND CAN BE INVESTED IN A JOINT PROJECT.

CONTACT: MR. ALIK PETROSIAN, PRESIDENT
LENUGHI VILLAGE, ARMAVIR REGION, ARMAVIR PROVINCE, ARMENIA
TEL: (374-47) 66-219; (374-1) 406-358 (CELL PHONE)
FAX: (374-2) 151-550 ATTN: GEORGE ISAYAN, BISNIS

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ELECTRONICS
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12. (3) AGHAVNI JSC

AGHVNI WAS ESTABLISHED IN 1969 AND PRIVATIZED IN 1997 AS AN OPEN JOINT STOCK COMPANY. THE COMPANY SPECIALIZES IN PRODUCING RELAYS AND VARIOUS TYPES OF ELECTRICAL-MAGNETIC COUNTERS OF IMPULSES FOR THE TELECOMMUNICATIONS INDUSTRY AND OTHER RELATED SECTORS. AGHAVNI OWNS 3,280 SQ.FT. OF PRODUCTION SPACE. THE COMPANY HAS EXPORTED ITS PRODUCTS TO RUSSIA AND OTHER NIS COUNTRIES. HOWEVER, SINCE THE COLLAPSE OF THE SOVIET UNION, AGHAVNI LOST ALMOST 70 PERCENT OF ITS ORDERS. THE COMPANY EMPLOYS 200 ENGINEERS, TECHNICIANS, AND SUPPORT STAFF.

AGHAVNI SEEKS A U.S. JOINT VENTURE PARTNER/EQUITY INVESTOR TO HELP UPGRADE EXISTING FACILITIES AND TO PROVIDE MARKETING ASSISTANCE FOR EXPORTING TO THIRD COUNTRIES. AGHAVNI OFFERS ALL OF ITS PRODUCTION SPACE, EXISTING EQUIPMENT AND LOW COST LABOR FORCE.

CONTACT: MR. ARMEN GALSTIAN, CEO
12 JIVANU STREET, TOWN OF ARMAVIR, ARMAVIR PROVINCE, ARMENIA
TEL: (374-47) 63-375
FAX: (374-47) 50-814

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ELECTRONICS
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13. (4) RESISTOR JSC

"RESISTOR" WAS FOUNDED IN 1966 AND WAS TURNED INTO AN OPEN JOINT STOCK COMPANY IN 1996. THE COMPANY SPECIALIZES IN THE MANUFACTURING OF RESISTORS. THE COMPANY OWNS PRODUCTION FACILITIES OF 100,000 SQ. FT., WHICH INCLUDE ASSEMBLING UNITS, METAL PROCESSING UNIT, AND STORAGE SPACE. BEFORE THE SOVIET UNION'S COLLAPSE, THE PLANT'S MAIN CUSTOMER WAS THE SOVIET DEFENSE INDUSTRY. SINCE 1992, HOWEVER, THE COMPANY HAS LOST MOST OF ITS ORDERS. CURRENTLY THE COMPANY IS EXPORTING SMALL QUANTITIES TO SEVERAL RUSSIAN ELECTRONIC COMPANIES. RESISTOR EMPLOYS 50 HIGHLY QUALIFIED ENGINEERS AND SUPPORT STAFF. ALL EXISTING EQUIPMENT IS IN GOOD WORKING CONDITION. THERE IS A RESEARCH AND DEVELOPMENT GROUP AFFILIATED WITH THE PLANT THAT HAS INTERESTING PLAN (PROJECT) DESIGNS AND INVENTIONS IN THE AUTOMOTIVE AND ELECTRICAL ENGINEERING SECTORS.

RESISTOR SEEKS A U.S. INVESTOR TO RESTRUCTURE EXISTING PRODUCTION FACILITIES AND IN ORDER TO ASSEMBLE AND EXPORT U.S.- DESIGNED ELECTRONIC DEVICES TO THIRD COUNTRIES. THE COMPANY EXPECTS THE AMERICAN PARTNER TO SUPPLY MODERN TECHNOLOGY AND EQUIPMENT AND TO PROVIDE MARKETING ASSISTANCE. RESISTOR WILL CONTRIBUTE ALL OF ITS FACILITIES, SPACE, AND HIGHLY QUALIFIED, BUT INEXPENSIVE, LABOR FORCE.

CONTACT: MR. YURI ATAYAN, EXECUTIVE DIRECTOR
1 KARCHIKIAN STREET, TOWN OF ECHMIADZIN, ARMENIA
TEL: (374-59) 53-423
FAX: (374-59) 54-501

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APPAREL AND SHOES ACCESSORIES
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14. (5) AMRAK JSC

AMRAK WAS ESTABLISHED IN 1971 AS A STATE ENTERPRISE. IT WAS PRIVATIZED AND CONVERTED INTO A JOINT STOCK COMPANY IN 1996. IT SPECIALIZES IN THE MANUFACTURING OF SUCH HIGH QUALITY ACCESSORIES FOR THE APPAREL AND SHOE INDUSTRY AS ZIPS, BUTTONS, BUCKLES, ETC. AMRAK'S EQUIPMENT INCLUDES JAPANESE AMAGASAKI SEIGAN AND UNIPLAS AND ITALIAN BONETTI, AS WELL AS $4.4 MILLION WORTH OF MACHINES SUPPLIED THROUGH SOVIET FOREIGN TRADE CHANNELS IN 1989-1990. IT HAS A TOTAL CAPACITY OF 200 MILLION BUTTONS AND 5 MILLION ZIPS ANNUALLY. AMRAK HAS A STAFF OF 60 HIGHLY QUALIFIED MANAGERS AND ENGINEERS TRAINED IN JAPAN AND ITALY. THE COMPANY'S PLANT OCCUPIES 12,900 SQ.FT. AMRAK HAS EXPORTED ITS PRODUCTS TO RUSSIA AND OTHER NIS COUNTRIES. CURRENTLY THE COMPANY UTILIZES ONLY A SMALL PART OF ITS CAPACITIES DUE TO THE LOSS OF NIS MARKETS AFTER THE COLLAPSE OF THE SOVIET UNION.

AMRAK SEEKS A U.S. PARTNER TO PRODUCE A WIDE RANGE OF ACCESSORIES UPON ORDER AND ANTICIPATES FROM THE AMERICAN COMPANY MARKETING ASSISTANCE FOR EXPORTING TO THIRD COUNTRIES.

CONTACT: MR. KAJIK KARAPETIAN, CEO
9 23RD STREET, TOWN OF ARMAVIR, ARMAVIR PROVINCE, ARMENIA
TEL: (374-47) 62-212
FAX: (374-47) 50-280

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FURNITURE
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15. (6) MATP JSC

ESTABLISHED IN THE TOWN OF ARMAVIR IN 1995 AS A JOINT STOCK COMPANY, MATP SPECIALIZES IN PRODUCING FURNITURE, WINDOWS, AND DOORS. THE COMPANY'S FURNITURE FACTORY IS EQUIPPED WITH ITALIAN MACHINES PRODUCED IN 1991-1992, NOW ESTIMATED TO BE VALUED AT $10 MILLION. MATP HAS A PRODUCTION AND STORAGE SPACE OF 53,700 SQ.FT. MATP'S MAIN CLIENTS ARE LOCAL TRADING COMPANIES. TWENTY PERCENT OF ITS PRODUCTS ARE EXPORTED TO GEORGIA. MATP CONDUCTS BUSINESS WITH ITALIAN, TURKISH, AND UAE COMPANIES.

MATP IS LOOKING FOR A U.S. COMPANY TO ESTABLISH A JOINT VENTURE TO INCREASE PRODUCTION OUTPUT, TO UPGRADE ITS TECHNOLOGY, AND TO SELL FURNITURE TO NEW MARKETS. MATP IS ALSO INTERESTED IN COOPERATION WITH AMERICAN FIRMS TO IMPORT SUCH MATERIALS FOR FURNITURE MANUFACTURING AS PAINTS, COVERS, GLUE, ETC.

CONTACT: MR. MISAK TER-POGHOSIAN, PRESIDENT
PO BOX 18, TOWN OF ARMAVIR, ARMAVIR PROVINCE, ARMENIA
TEL: (374-2) 282-252, (374-1) 408-507 (CELL PHONE)
FAX: (374-2) 282-252, (374-47) 50-673

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USEFUL CONTACTS
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16. FOR MORE INFORMATION ON BUSINESS OPPORTUNITIES IN THE PROVINCE PLEASE CONTACT:

MR. HENRIK ALEXANIAN, HEAD OF PROGRAMS DEPARTMENT, OR MR. HAKOB HAKOBIAN, HEAD OF MASS MEDIA DEPARTMENT, ARMAVIR GOVERNOR'S OFFICE, TEL: (374-47)
65-547, (374-47) 62-326, FAX: (374-47) 60-856.

U.S. BUSINESS REPRESENTATIVES WISHING TO LEARN MORE ABOUT THE BUSINESS ENVIRONMENT IN ARMENIA ARE ENCOURAGED TO READ THE COUNTRY COMMERCIAL GUIDE (CCG) FOR ARMENIA PREPARED BY THE U.S. EMBASSY IN YEREVAN. THE CCG CAN BE OBTAINED IN A NUMBER OF WAYS. IT IS PUBLISHED MONTHLY BY DEPARTMENT OF COMMERCE ON CD-ROM AND IS ALSO ACCESSIBLE VIA INTERNET. CALL (202) 482-1986 TO ORDER OR FOR MORE INFORMATION. THE CCG IS ALSO AVAILABLE THROUGH THE NATIONAL TECHNICAL INFORMATION SERVICE (NTIS) PUBLISHED BOTH ELECTRONICALLY AND IN HARD COPY FORMAT. PLEASE CALL (800) 553-NTIS TO ORDER OR FOR MORE INFORMATION.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)