Editorial Note: For the past 19 years that Armenia has been independent, many Diasporan Armenians have embarked on projects to help strenghten its economy. Regretfully, more often than not, they’ve been cheated, robbed and left the country in disappointment. A few even lost their lives. Needless to say, the economy is the backbone of any independent state. When it falters, so does the country. A week economy is also a major cause of emigration. The next interview sheds some light why foreign (Armenian or other) investment in Armenia is lagging. It’s a pity that the short term gains of uscrupulous individuals is outweighing the long term benefits of the state and the population at large.
By Elita Babayan
ArmInfo’s exclusive interview with Christian Gelici, German-Armenian WKS Armenia Director General WKS Armenia – is the Armenian subsidiary of German WKS Textile Solutions, part of German Huniel Group
Mr. Gelici, the Armenian Economy Ministry told ArmInfo that WKS Armenia is expected to open a new textile factory on the basis of the old plant “Electron” in Vanadzor.
As far as we know, reconstruction of the factory should have been launched already.
If opening of the new textile factory on the basis of the former ”Electron” plant in Vanadzor depended mostly on WKS Armenia, the factory would have been put into operation already, I assure you. It would become one of the biggest factories and not only in the region and would employ over two thousands of people in the country. However, after privatization 51% of the factory’s shares were distributed among privates and the remaining 49% was owed by the government. We had an arrangement with the government for trust management of the 51% stake.
Thanks to the government’s efforts, we achieved an agreement with the director of the “Electron” factory who promised to acquire all the 51% shares and transfer them to us. Of course, we paid both for the services of the director and the whole process of the factory’s liquidation. At the very beginning of the negotiations the factory was more or less subject to modernization, whereas now it has been fully ruined, more precisely, devastated by the shareholders and is no longer subject to reconstruction. Only the walls are still standing there.
Have you applied to the government for resolution of this problem?
In October 2009 we applied to the government for suspension of the factory’s demolition and the German party even threatened to freeze the project. The government demanded that demolition is stopped but the process is still continued. The government as the holder of the 49% stake in the factory could ban illegal actions by the privates, but didn’t! The leadership of the German WKS Textile Solutions has decided to freeze this project and it is not known when it will be resumed. After it all, Economy Minister of Armenia Nerses Yeritsyan took the liberty to call me and our German company unserious partners.
I have brought you all the facts. Choose for yourself who is unserious our company or the Economy Ministry of Armenia.
I have no right to blame the government for this situation. I do not blame the president either. He has the same problems as any other businessman in Armenia. I employ hundreds of people and there are irresponsible employees among them who constantly violate the labor discipline. Our president and prime minister face the same problem and many of their people just do not deserve their positions.
What is the way out of the situation? How to settle the problem?
I welcome Prime Minister Tigran Sargsyan’s position who has repeatedly tried to submit a bill on the state property privatization program to the parliament saying that the enterprises privatized in early 90s must be returned to the government if not used. Yet 15 years ago I asked for one of such plants for temporary use and not for privatization by our company, but my request was rejected. No one needs these plants today and no one is going to launch production at these plants for lack of sales markets. However, sales markets can be found if desired. But there is no desire, unfortunately, because it is much easier to devastate than create something new. Besides me, many other foreign businessmen Armenians by origin repeatedly tried to develop the light industry sector in Armenia, but all they left. Why?
They were deceived and even cleaned out.
A few months ago we planed to set up an Association of Armenian Diaspora Representatives in Armenia. The association could become a peculiar bridge linking two extremely different wings of the Armenian people: the Armenians of Armenia and Diaspora. If we want our Motherland to prosper and it we want to introduce our production in the global market and be competitive, our people should, first of all, unite around these goals. The problems of our country will not be finally resolved by Russia, America or through opening of the border with Turkey. Armenians worldwide must unite to settle these problems.
We planned also to create an Association in the sphere of light industry to unite entrepreneurs engaged or willing to be engaged in the sphere and develop it.
Did you give up your plans to unite into associations?
There are several reasons. First, this plan must be coordinated with the government and local businessmen, which will take rather long time. There is another serious problem: local industrial enterprises lack infrastructure meeting the requirements of foreign businessmen. Imean the state of industrial equipment and buildings. In addition, local businessmen lack the culture of business communication so far.
Perhaps, this is the most serious problem.
An exhibition had been recently held in Yerevan under slogan “Support Local Producers”. Our company also participated in the event and in the Roundtable organized on sidelines of the exhibition. I voiced the problems of local businessmen and the necesity of infrastructures for doing business. For their turn, representatives of the economy ministry of our country offered a program of light industry development and the project of free economic zone in Gyumri has become one of this program’s components. I visited Gyumri and made sure that nothing specific has been done under the given project yet, whereas at the exhibition the economic power representatives were speaking of the final stage of that program. I do not think that industry is developed by empty rhetoric.
As far as we know you are going to implement a number of big investment projects in the sphere of light industry and machine building.
German Huniel Group having 27 billion US dollars annual turnover is making big investments in textile industry and in motor-car industry.
I offered some businessmen engaged in German automobile industry to move their production to Armenia and have achieved certain serious arrangements with several of them. I will not name those businessmen but I can say that they are going to make big investments in Armenia if the Association of Diaspora Representatives is established to control over financial flows.
WKS Armenia is a tolling operation company. Why the company’s production has not been introduced in the local market yet?
The company is producing uniforms made of expensive raw-materials imported from Germany. In fact, the production is too expensive for the local market. However, in 2011 we are likely to open the first WKS Armenia brand fashion shop. We plan regional expansion in future.
Clothes are imported in Armenia mostly from Turkey, China, and Dubai which is, to put it mildly, far behind fashion trends. We want to offer our citizens high quality cloths and follow the global fashion trends. WKS Armenia shops will offer products made in Armenia. I hope we will activate the factory in Amasia besides the one in Yerevan.
Would you please tell a little more about that factory? How many jobs will it open?
The new textile factory in Amasya will allow opening nearly 150 jobs. It is the largest factory in the region of Shirak. Head of the State Revenue Committee Gagik Khacha-tryan provided us with the premises for the factory. But we did not avoid problems there either. We were seriously short of human resources. Gyumri Employment Center could not help us settle that problem. It has turned out that in the country with so big number of the unemployed few people want to work. Most of the unemployed prefer being on the dole in the amount of 18,000 drams and earn a bit on the side. People working at almost all the enterprises in the region are not registered officially, which is violation of the law and the State Employment Center is well aware of that.
Have you settled the problem with human resources after all?
Yes, and we did that independently without support of the state structures. If a foreign businessman has a problem with any state structure in Armenia, he has to apply to the prime minister to settle it. The prime minister, for his part, charges relevant department to settle the problem. But, even in this case one cannot be sure in settlement of the problem.
Back to the new project of factory, how much have you invested in this project? What production volumes do you plan for the first year of activity?
We plan monthly production capacity of nearly 18,000 units of garment.
In two-three years we will double this figure. Within the first months the factory will make men’s shirts. In future, we will produce other garments for men and women. I’d like to say to our government, in particular, Economy Minister Nerses Yeritsyan that we are a serious company that will not rest on its laurels. The next step will be acquisition or construction of a factory in Charentsavan.