95701 The World Bank Group BEEPS At-A-Glance 2013 Armenia December 2014 Contents Introduction .......................................................................................................................................................... 1 1. Obstacles to Current Operations ................................................................................................................... 2 2. Unofficial Payments and Corruption ............................................................................................................ 4 3. Crime ................................................................................................................................................................. 6 4. Regulations and Red Tape .............................................................................................................................. 7 5. Customs and Cross Border Trade.................................................................................................................. 8 6. Taxation ............................................................................................................................................................. 9 7. Labor and Workforce Development............................................................................................................ 10 8. Firm Financing ............................................................................................................................................... 11 9. Legal and Judicial Issues ............................................................................................................................... 13 10. Infrastructure ................................................................................................................................................ 14 11. Innovation ..................................................................................................................................................... 15 12. Specific Government-Business Interactions ............................................................................................. 16 13. State capture (2005 & 2013) ......................................................................................................................... 18 Sample Summary ............................................................................................................................................... 19 Annex I – Obstacles to Current Operations, Summary ................................................................................ 20 Annex II – Methodological Notes .................................................................................................................... 23 Introduction BEEPS modules. Sample sizes for each indicator are The EBRD-World Bank Business Environment and located in the Annex. Enterprise Performance Survey (BEEPS) is a joint initiative of the European Bank for Reconstruction Data Notes and Development and the World Bank. The BEEPS  This note focuses exclusively on the Main has been carried out in five rounds: in 1999, 2002, BEEPS questionnaires for 2008 and 2005, 2008, and 2012/13 (the latest BEEPS in 2012/13 and presents weighted averages Russian Federation was conducted in 2011/12) and over all firms with non-missing data. covers virtually all of the countries of Central and  See the Annex for descriptions and Eastern Europe and the former Soviet Union, as definitions of the regional and sub-regional well as Turkey. The BEEPS covers a broad range comparators. of issues about the business environment, and this  Regional and sub-regional averages of the note presents some simple indicators for key areas. appropriate country-level estimates for 2008 are included for comparison purposes. The Instrument  The statistical significance of the differences There were some changes in the 2012/2013 in all country level estimates is reported in questionnaire that made it slightly different from Appendix II. 2008 – mostly due to the addition of new questions.  Raw data is available at While some questions were modified in terms of http://www.enterprisesurveys.org/nada/inde wording or response options, this BEEPS at-a- x.php/catalog Glance covers questions that are comparable across periods. The Annex provides additional Authors information on methods of calculation, This note was prepared by Gregory Kisunko (TTL, comparability of indicators and specific differences, Sr. Public Sector Specialist, ESCP4) and Branco if any. Ponomariov (Consultant, ECSP4). Sampling Methodology and Weights Citation The sampling methodology is the same in 2008 and Please refer to the data in all uses as the “EBRD- 2013. The 2013 BEEPS sample for Armenia World Bank Business Environment and Enterprise includes 360 firms. To account for the differences in Performance Survey (BEEPS)”. Standard practice the distribution of the different sectors between the is to use this lengthy citation the first time the 2008 and 2013 samples, in this report all BEEPS is referenced in the document and the frequencies and means reported in this document shorthand “BEEPS” thereafter. are weighted. The weighting variable in both data sets is named wmedian. Disclaimer Sample Sizes for Indicators The findings, interpretations, and conclusions For a number of indicators, the number of firms that expressed in this note are entirely those of the responded to a question is smaller than the overall authors. They do not necessarily represent the country sample size. In most cases, the difference views of the International Bank for Reconstruction is attributable to preceding filter questions. and Development/World Bank and its affiliated Questions for which the smaller number of organizations, or those of the Executive Directors of respondents is due to filtering are marked with a the World Bank or the governments they represent. superscript indicator (1) in Annex II. Other questions have a smaller number of respondents due to the survey instrument, e.g. manufacturing or service BEEPS-at-a-Glance Armenia 1 1. Obstacles to Current Operations 1.1: Obstacles to Current Operations Percentage of firms indicating issues are not a problem 2008 2013 0 25 50 75 100 0 25 50 75 100 Arm Arm CAU 21 CAU 18 Tax rates Tax rates ECA ECA 35 63 Corruption Corruption 41 80 Electricity Electricity Skills and education of 48 Skills and education of 79 workers workers 30 3 Access to finance Access to finance 48 91 Crime, theft and disorder Crime, theft and disorder 38 38 Tax administration Tax administration 39 79 Telecommunications Telecommunications 66 95 Courts Courts 65 56 Access to land Access to land Business, licensing and 64 Business, licensing and 83 permits permits 41 65 Transport Transport 59 88 Labor regulations Labor regulations Customs and trade 43 Customs and trade 57 regulations regulations Practices of informal 34 Practices of informal 79 economy competitors economy competitors 17 49 Political instability Political instability BEEPS-at-a-Glance Armenia 2 1. Obstacles to Current Operations contd. 1.2: Ranking of Problems 2008 and 2013 Relative rank of problems measured by the mean score. The most severe problem ranks number 1, the least 16. Rank in 2008 Rank in 2013 Tax rates 2 1 Corruption 4 6 Electricity 11 11 Skills and education of workers 12 10 Access to finance 5 2 Crime, theft and disorder 10 15 Tax administration 8 3 Telecommunications 9 13 Courts 14 16 Access to land 13 7 Business licensing and permits 16 12 Transport 7 8 Labor regulations 15 14 Customs and trade regulations 6 5 Practices of informal economy competitors 3 9 Political instability 1 4 BEEPS-at-a-Glance Armenia 3 2. Unofficial Payments and Corruption 2.1: Obstacles to Current Operations: Corruption 2.2: Bribe Frequency Percentage of firms indicating corruption is not a problem Percentage of firms saying unofficial payments are frequent 100 2008 100 2008 79 2013 2013 75 63 75 53 50 35 36 50 33 25 25 18 15 13 9 4 3 0 0 Arm CAU ECA Arm CAU ECA 2.3a: Bribe Tax: Reports of 2.3b: Bribe Tax - All Firms 2.3c: Bribe Tax - Firms Reporting Unofficial Payments Bribes as percentage of annual sales Payments Percentage of firms reporting unofficial Bribes as percentage of annual sales payments 100 2008 10 2008 50 2008 2013 8 2013 40 36 2013 75 6 30 50 4 20 15 25 12 16 16 16 8 2 1 1 1 10 5 3 5 3 2 1 1 0 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 2.4: Unofficial Payments: Taxes 2.5: Unofficial Payments: Customs 2.6: Unofficial Payments: Courts Percentage of firms stating bribery is Percentage of firms stating bribery is Percentage of firms stating bribery is frequent in dealing with taxes frequent in dealing with customs/ frequent in dealing with courts imports 40 2008 40 2008 40 2008 2013 2013 2013 30 30 30 20 20 20 15 20 13 12 11 9 9 9 10 6 10 7 7 10 6 7 6 5 5 4 3 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 4 2. Unofficial Payments and Corruption contd. 2.7: Participation in Government Procurement 2.8: Unofficial Payments: Government Contracts - All Percentage of firms that attempted to secure government Firms contracts Percentage of contract value typically paid to secure a government contract 100 2008 20 2008 2013 2013 75 15 50 10 24 21 19 18 25 17 14 5 2 2 0 0 1 1 0 0 Arm CAU ECA Arm CAU ECA 2.9: Unofficial Payments: Government Contracts – Firms reporting payments Percentage of contract value typically paid to secure a government contract 20 2008 2013 15 9 10 10 10 10 7 7 5 0 Arm CAU ECA BEEPS-at-a-Glance Armenia 5 3. Crime 3.1: Obstacles to Current Operations: Crime Percentage of firms indicating crime is not a problem 100 91 93 70 75 48 47 50 39 25 2008 2013 0 Arm CAU ECA 3.2: Payments for Security 3.3a: Security Costs - All Firms 3.3b: Security Costs - Firms Making Percentage of firms that pay for Percentage of annual sales used for Payments security, e.g. equipment, personnel, or security payments Percentage of annual sales used for professional security services security payments 100 2008 10 2008 10 2008 2013 8 2013 8 2013 75 62 59 58 54 44 46 6 6 50 4 4 3 3 3 3 3 3 25 2 2 2 1 2 1 1 2 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 3.4: Losses as a Consequence of 3.5a: Losses as a Consequence of 3.5b: Losses as a Consequence of Crime Crime: Percentage of Annual Sales Crime: Percentage of Annual Sales Percentage of firms that suffered from - All Firms - Firms Experiencing Losses losses as a result of theft, robbery, Estimated losses due to theft, Estimated losses due to theft, robbery, vandalism or arson over the previous robbery, vandalism or arson vandalism or arson 12 months 100 2008 5 2008 15 2008 2013 4 2013 2013 75 10 3 8 7 50 2 4 4 20 5 4 4 25 11 11 14 1 4 1 0 1 0 2 0 0 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 6 4. Regulations and Red Tape 4.1: Obstacles to Current Operations: Business Licensing Percentage of firms indicating business licensing and permits are not a problem 100 88 83 75 75 64 59 45 50 25 2008 2013 0 Arm CAU ECA 4.2a: Time Tax: Distribution of Firms 4.2b: Time Tax - All Firms 4.2c: Time Tax - Firms Spending Percentage of firms that spent no time, Percentage of senior management's Time 25% or less, or more than 25% of time spent dealing with public officials Percentage of senior management's senior management's time dealing with or public services time spent dealing with public officials public officials or public services or public services 100% 4 100 2008 100 2008 12 6 15 13 15 2013 2013 75 75 31 75% 49 50 50 62 59 50% 66 72 25 13 14 12 13 25 16 17 16 17 7 11 12 5 65 0 0 25% Arm CAU ECA Arm CAU ECA 45 24 26 18 17 0% Arm Arm CAU CAU ECA ECA 08 13 08 13 08 13 >25 <=25 No Time BEEPS-at-a-Glance Armenia 7 5. Customs and Cross Border Trade 5.1: Obstacles to Current Operations: Customs Regulations Percentage of firms indicating customs regulations are not a problem 100 80 72 75 57 57 59 50 43 25 2008 2013 0 Arm CAU ECA 5.2: Unofficial Payments: Customs Percentage of firms stating that bribery is frequent in dealing with customs/imports 30 2008 2013 20 15 12 9 10 7 7 5 0 Arm CAU ECA 5.3a: Direct Exports: Distribution of 5.3b: Direct Exports - All Firms 5.3c: Direct Exports - Firms with Firms Percentage of total sales coming from Sales from Exports Percentage of firms that had no sales, direct exports Percentage of total sales coming from 50% or less, or more than 50% of direct exports annual sales from exports 100% 2 1 75 2008 75 4 3 6 6 2008 8 5 6 2013 2013 12 12 50 50 46 43 10 41 40 37 32 75% 25 25 93 96 8 90 4 7 7 3 1 82 82 82 0 0 Arm CAU ECA Arm CAU ECA 50% Arm Arm CAU CAU ECA ECA 08 13 08 13 08 13 >50 <=50 No exports BEEPS-at-a-Glance Armenia 8 6. Taxation 6.1: Obstacles to Current Operations: Tax Rates 6.2: Obstacles to Current Operations: Tax Percentage of firms indicating tax rates are not a problem Administration Percentage of firms indicating tax admnistration is not a problem 100 2008 100 2008 2013 2013 75 75 64 50 50 41 50 44 38 38 33 30 21 18 24 25 18 25 0 0 Arm CAU ECA Arm CAU ECA 6.3: Unofficial Payments: Taxes 6.4: Tax Inspections Percentage of firms stating bribery is frequent in dealing Percent of firms visited by tax officials in the last year with taxes 40 2008 100 2008 79 77 2013 68 2013 30 75 62 58 55 20 20 50 13 9 9 10 6 25 5 0 0 Arm CAU ECA Arm CAU ECA 6.5a: Frequency of Tax Inspections – All firms 6.5b: Frequency of Tax Inspections – Inspected firms Average number of times firms were inspected by tax Average number of times firms were inspected by tax officials in the last year officials in the last year 10 2008 10 2008 8 2013 8 2013 6 6 4 4 3 3 3 3 3 2 2 2 2 1 1 2 2 2 0 0 Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 9 7. Labor and Workforce Development 7.1: Obstacles to Current Operations: Labor Regulations 7.2: Obstacles to Current Operations: Skills and Percentage of firms indicating labor regulations are not a Education of Workers problem Percentage of firms indicating skills and education of available workers is not a problem 100 88 94 100 2008 79 84 69 2013 75 67 75 59 60 50 48 48 50 50 34 25 2008 25 2013 0 0 Arm CAU ECA Arm CAU ECA 7.3: Professionalism of Labor Percentage of employees that have a university degree or higher 100 2008 2013 75 59 61 52 46 50 29 24 25 0 Arm CAU ECA 7.4: Provision of Formal Training 7.5: Percent of Employees Trained Percentage of firms offering training for employees Percentage of employees participating in training Arm 0 25 50 75 100 Arm 0 25 50 75 100 CAU CAU ECA ECA 23 30 Production 2008 25 36 Permanent Employees 18 2008 33 35 Non-Production 2008 22 27 34 14 Production 2013 68 62 Permanent Employees 15 2013 46 35 Non-production 2013 35 42 BEEPS-at-a-Glance Armenia 10 8. Firm Financing 8.1: Obstacles to Current Operations: Access to 8.2: Adequacy of Firm Finances Finance Percentage of firms stating they did not apply for a loan Percentage of firms indicating access to finance is not a because it was not needed problem 100 2008 100 2013 76 75 75 65 68 69 67 71 49 50 50 30 33 37 33 25 25 2008 3 2013 0 0 Arm CAU ECA Arm CAU ECA 8.3: Purchasing on Credit 8.4a: Purchases Made on Credit - 8.4b: Purchases Made on Credit - Percentage of businesses purchasing All Firms Firms Purchasing on Credit input materials paid for on credit Percentage of purchases of input Percentage of purchases of input materials paid for on credit, for all firms materials paid for on credit 100 100 2008 100 2008 2013 2013 75 63 65 75 75 61 57 50 41 45 50 40 39 50 44 48 45 45 39 38 25 2008 25 18 21 17 17 25 2013 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 8.5a: Credit Extensions to Clients: 8.5b: Credit Extensions to Clients - 8.5c: Credit Extensions to Clients - Distribution of Firms All Firms Firms Extending Credit Percentage of firms that had no sales Percentage of sales to customers sold Percentage of sales to customers sold on credit, 50% or less, or more than on credit on credit 50% of annual sales made on credit 100% 100 2008 100 2008 13 9 23 18 2013 2013 33 75 75 65 75% 30 46 56 35 49 53 49 31 45 50 38 50 39 33 30 50% 32 21 24 25 16 25 27 60 0 0 25% 53 51 43 Arm CAU ECA Arm CAU ECA 34 27 0% Arm Arm CAU CAU ECA ECA 08 13 08 13 08 13 >50 <=50 No sales BEEPS-at-a-Glance Armenia 11 8. Firm Financing contd. 8.6: Sources of Firm Financing Percentage of firm financing coming from sources other than internal funds or retained earnings 2008 2013 Arm 0 25 50 Arm 0 25 50 CAU CAU ECA ECA 22 10 Banks: private and state- Banks: private and state- 21 15 owned owned 23 15 3 7 Non-bank financial Non-bank financial 2 3 institutions / Other institutions / Other 3 4 3 1 Trade credit from suppliers Trade credit from suppliers 3 1 or customers or customers 5 5 8.7: Loan Applications Percentage of firms indicating the following options as the main reason the firm did not apply for a loan 2008 2013 0 25 50 0 25 50 6 18 Application procedures too Application procedures too 5 9 complex complex 6 5 13 13 Unfavorable interest rates 14 Unfavorable interest rates 16 15 16 4 1 Collateral reqs too high 7 Collateral reqs too high 1 4 3 0 0 Did not think it would be Did not think it would be 1 1 approved approved 1 1 Arm Arm 1 4 CAU CAU Other 4 Other 4 ECA 6 ECA 4 BEEPS-at-a-Glance Armenia 12 9. Legal and Judicial Issues 9.1: Obstacles to Current Operations: Courts 9.2: Use of Courts Percentage of firms indicating courts are not a problem Percentage of firms that have been to court in the past three years 100 95 97 100 2008 79 2013 75 66 63 75 46 50 50 22 19 26 24 25 25 18 2008 11 2013 0 0 Arm CAU ECA Arm CAU ECA 9.3: Fairness and Impartiality of Courts 9.4: Expeditiousness of courts Percentage of firms indicating that court system is fair, Percentage of firms indicating that court system is quick impartial and uncorrupted 100 2008 100 2008 2013 2013 75 75 67 60 50 41 39 41 50 43 43 43 34 35 30 25 25 25 0 0 Arm CAU ECA Arm CAU ECA 9.5: Ability to enforce court decisions 9.6: Unofficial Payments: Courts Percentage of firms indicating that court system is able to Percentage of firms stating bribery is frequent in dealing enforce its decisions with courts 100 2008 20 2008 74 2013 2013 75 69 67 15 56 55 11 49 50 10 7 6 6 25 5 3 4 0 0 Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 13 10. Infrastructure 10.1: Obstacles to Current 10.2: Obstacles to Current 10.3: Obstacles to Current Operations: Electricity Operations: Telecommunications Operations: Transport Percentage of firms indicating Percentage of firms indicating Percentage of firms indicating electricity is not a problem telecommunications is not a problem transport is nota problem 100 100 100 80 79 81 73 70 74 75 75 75 65 66 60 54 50 54 51 50 41 42 40 50 39 50 41 25 2008 25 2008 25 2008 2013 2013 2013 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 10.4: Experienced Power Outages 10.5a: Sales Lost due to Power 10.5b: Sales Lost due to Power Percentage of firms experiencing Outages - All Firms Outages - Firms Experiencing power outages over the last 12 months Losses due to power outages as a Losses percent of total annual Losses due to power outages as a sales percent of total annual sales 100 2008 15 2008 20 2008 2013 2013 2013 75 15 10 50 41 43 39 38 10 32 6 25 5 5 5 25 5 3 4 2 2 1 1 1 0 0 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 10.6 Use of Email Communication Percentage of firms using email to communicate with clients or suppliers 100 89 81 84 76 73 75 54 50 25 2008 2013 0 Arm CAU ECA BEEPS-at-a-Glance Armenia 14 11. Innovation 11.1: New Product/Service Development Percentage of firms that have developed new products or services in the past three years 100 2008 2013 75 63 46 51 50 25 25 13 7 0 Arm CAU ECA 11.2: Research and Development Activities Percentage of firms that have spent funds on research and development in the past three years 100 2008 2013 75 50 23 22 25 15 9 3 3 0 Arm CAU ECA BEEPS-at-a-Glance Armenia 15 12. Specific Government-Business Interactions 12.1: New Electrical Connection 12.1a: Electrical Connection Wait 12.1b: Electrical Connection - Bribes Percentage of firms that applied in the Time Percentage of firms indicating that an last two years Average number of days informal payment was expected 100 2008 120 2008 100 2008 2013 2013 2013 75 90 75 50 60 48 50 35 25 10 12 13 10 30 16 12 25 13 10 11 2 6 5 6 0 0 1 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 12.2: New Water Connection 12.2a: Water Connection Wait 12.2b: Water Connection - Bribes Percentage of firms that applied in the Time Percentage of firms indicating informal last two years Average number of days payment was expected 100 2008 120 2008 100 2008 2013 2013 2013 75 90 75 50 60 50 32 26 25 10 30 14 13 13 25 8 5 8 5 9 5 8 4 7 7 2 0 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 12.3: Construction Permits 12.3a: Construction Permit Wait 12.3b: Construction Permit - Bribes Percentage of firms that applied in the Time Percentage of firms indicating an last two years Average number of days informal payment was expected 100 2008 200 2008 100 2008 2013 160 2013 2013 75 75 120 50 78 79 50 80 25 15 16 18 14 39 19 21 21 17 25 26 21 23 25 14 9 6 40 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 16 12. Specific Government-Business Interactions contd. 12.4: Tax Inspections 12.4a: Number of Inspections / 12.4b: Tax Inspections – Bribes Percentage of firms indicating they Meetings with Tax Officials Percentage of firms indicating an were inspected Average number for the last year informal payment was expected 100 2008 15 2008 100 2008 79 77 68 2013 2013 2013 75 62 75 58 55 10 50 50 5 3 3 3 25 2 3 25 12 13 2 9 8 4 4 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 12.5: Import License 12.5a: Import License Wait Time 12.5b: Import License – Bribes Percentage of firms that applied in the Average number of days Percentage of firms indicating an last two years informal gift was expected 100 2008 100 2008 100 2008 2013 2013 2013 75 75 75 50 50 50 25 25 25 9 10 8 5 7 7 9 10 8 5 7 7 6 8 10 7 1 0 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA 12.6: Operating License 12.6a: Operating License Wait 12.6b: Operating License – Bribes Percentage of firms that applied in the Time Percentage of firms indicating an last two years Average number of days informal gift was expected 100 2008 120 2008 100 2008 2013 2013 2013 75 90 75 50 60 50 23 22 30 27 26 25 17 15 15 30 20 17 13 25 10 11 11 9 9 4 1 0 0 0 Arm CAU ECA Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 17 13. State capture (2005 & 2013) 13.1a: Private payments/gifts or other benefits to 13.1b: Private payments/gifts or other benefits to parliamentarians to gain advantages parliamentarians to gain advantages Percentage of respondents indicating gifts/payments Percentage of respondents indicating gifts/payments have have "no impact" "moderate", "major", or "decisive" impact 100 100 2005 78 79 79 77 2013 75 62 75 49 50 50 2005 21 25 25 25 11 11 13 9 2013 0 0 Arm CAU ECA Arm CAU ECA 13.2a: Private payments/gifts or other benefits to 13.2b: Private payments/gifts or other benefits to government officials to gain advantages government officials to gain advantages Percentage of respondents indicating gifts/payments Percentage of respondents indicating gifts/payments have "no impact" have "moderate", "major", or "decisive" impact 100 100 2005 73 77 77 77 2013 75 60 75 46 50 50 27 25 2005 22 25 14 11 12 14 2013 0 0 Arm CAU ECA Arm CAU ECA 13.3a: Private payments/gifts or other benefits to 13.3b: Private payments/gifts or other benefits to local local government officials to gain advantages government officials to gain advantages Percentage of respondents indicating gifts/payments Percentage of respondents indicating gifts/payments have have "no impact" "moderate", "major", or "decisive" impact 100 100 2005 77 78 75 75 2013 75 75 59 48 50 50 23 27 25 2005 25 12 10 14 14 2013 0 0 Arm CAU ECA Arm CAU ECA BEEPS-at-a-Glance Armenia 18 Sample Summary Unweighted distribution of firms: 2008 Industry Sample composition (Armenia) 2013 Industry Sample composition (Armenia) Other Services Other Services 4% Construction 4% Construction 8% 7% Transport Transport 7% 6% Hotels & Hotels & Restaurants Restaurants 9% 10% Manufacturing Manufacturing Wholesale & 31% 31% Wholesale & Retail 41% Retail 42% 2008 Industry Sample composition (ECA) 2013 Industry Sample composition (ECA) Other Services Other Services Construction Construction Transport 2% 1% 9% 9% 5% Transport 5% Hotels & Hotels & Restaurants Restaurants 4% 4% Wholesale & Retail 36% Manufacturi Wholesale & ng Retail Manufacturing 45% 40% 40% Sector 2008 Sample Description 2013 Sample Description Construction Construction Construction Hotels/Rest Hotels and restaurants Hotels and restaurants Manufacturing Manufacturing Food, Textiles, Garments, Plastics and rubber, Chemicals, Non-metallic mineral products, Basic metals, Metal fabrication, Machinery and equipment, Electronics, Other manufacturing W&R Wholesale and retail trade Wholesale, Retail Transport Transport, storage and communication Transport, storage and communication Other Svc Other services Information technology BEEPS-at-a-Glance Armenia 19 Annex I – Obstacles to Current Operations, Summary AI.1: Obstacles to Current Operations Percentage of firms indicating issues are a “moderate”, “major”, or “very severe” obstacle to doin g business 2008 2013 0 25 50 75 100 0 25 50 75 100 Arm Arm CAU 70 CAU 73 Tax rates Tax rates ECA ECA 55 27 Corruption Corruption 41 13 Electricity Electricity Skills and education of 39 Skills and education of 16 workers workers 58 35 Access to finance Access to finance 43 5 Crime, theft and disorder Crime, theft and disorder 49 54 Tax administration Tax administration 41 10 Telecommunications Telecommunications 25 4 Courts Courts 31 34 Access to land Access to land Business, licensing and 16 Business, licensing and 13 permits permits 47 26 Transport Transport 25 8 Labor regulations Labor regulations Customs and trade 47 Customs and trade 36 regulations regulations Practices of informal 58 Practices of informal 15 economy competitors economy competitors 75 40 Political instability Political instability BEEPS-at-a-Glance Armenia 20 Annex I – Obstacles to Current Operations contd. AI.2a: Obstacles to Current Operations 2008: Response Distributions Percentage of firms indicating each response option ("no obstacle", "minor obstacle", "moderate obstacle", "major obstacle", "very severe obstacle") 2008 Tax Rates Courts Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 21 10 31 23 15 Arm 66 10 9 6 9 CAU 24 14 31 20 11 CAU 63 13 13 6 5 ECA 18 16 26 25 15 ECA 46 17 16 12 9 Corruption Access to Land Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 35 10 16 17 22 Arm 65 5 10 12 9 CAU 36 14 22 15 13 CAU 51 7 14 20 9 ECA 33 15 18 17 17 ECA 55 11 12 12 10 Electricity Business Licensing and Permits Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 41 18 16 12 13 Arm 64 20 10 4 2 CAU 42 15 11 18 13 CAU 59 17 16 6 2 ECA 40 14 11 17 19 ECA 45 21 18 10 6 Skills and Education of Labor Transport Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 48 13 16 14 9 Arm 41 12 21 13 13 CAU 48 14 16 15 7 CAU 54 12 16 11 7 ECA 34 16 20 19 11 ECA 51 16 15 10 8 Access to finance Labor Regulations Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 30 12 25 21 12 Arm 59 15 18 4 4 CAU 33 14 23 23 7 CAU 67 15 13 4 1 ECA 33 19 24 16 9 ECA 50 21 19 7 3 Crime, Theft, and Disorder Customs and Trade Regulations Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 48 8 12 17 14 Arm 43 9 21 11 16 CAU 47 13 14 18 8 CAU 57 12 16 8 7 ECA 39 17 16 15 12 ECA 59 15 13 8 5 Tax Administration Practices of informal economy competitors Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 38 13 28 10 11 Arm 34 9 17 20 21 CAU 44 18 22 9 6 CAU 39 13 15 20 13 ECA 33 22 24 13 8 ECA 35 17 20 15 13 Telecommunications Political instability Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 39 20 14 14 13 Arm 17 8 22 24 29 CAU 54 16 11 13 7 CAU 37 11 15 21 16 ECA 50 14 13 11 12 ECA 29 15 20 18 18 BEEPS-at-a-Glance Armenia 21 Annex I – Obstacles to Current Operations contd. AI.2b: Obstacles to Current Operations 2013: Response Distributions Percentage of firms indicating each response option ("no obstacle", "minor obstacle", "moderate obstacle", "major obstacle", "very severe obstacle") 2013 Tax Rates Courts Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 18 9 35 24 13 Arm 95 1 3 0 0 CAU 41 12 24 17 6 CAU 97 1 1 1 0 ECA 30 15 26 19 10 ECA 79 7 8 4 2 Corruption Access to Land Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 63 10 14 8 6 Arm 56 10 30 4 1 CAU 79 8 6 5 2 CAU 73 8 14 3 1 ECA 53 12 14 11 9 ECA 75 8 8 5 3 Electricity Business Licensing and Permits Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 80 7 5 5 3 Arm 83 4 9 3 2 CAU 73 7 7 9 4 CAU 88 3 6 2 1 ECA 60 12 9 11 9 ECA 75 10 9 4 2 Skills and Education of Labor Transport Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 79 5 9 5 2 Arm 65 9 18 5 3 CAU 84 5 5 5 1 CAU 74 9 9 6 2 ECA 60 12 13 10 5 ECA 66 13 11 6 3 Access to finance Labor Regulations Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 3 62 10 16 9 Arm 88 4 7 1 1 CAU 37 32 10 15 6 CAU 94 2 3 1 0 ECA 49 18 17 11 6 ECA 69 14 11 4 2 Crime, Theft, and Disorder Customs and Trade Regulations Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 91 3 3 1 2 Arm 57 7 17 11 8 CAU 93 2 2 1 1 CAU 80 5 8 5 3 ECA 70 12 9 5 4 ECA 72 11 10 5 3 Tax Administration Practices of informal economy competitors Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 38 7 25 15 15 Arm 79 5 6 4 5 CAU 64 9 14 8 5 CAU 65 11 13 6 4 ECA 50 15 20 10 6 ECA 48 16 16 12 8 Telecommunications Political instability Obstacle: No Minor Moderate Major V. Severe Obstacle: No Minor Moderate Major V. Severe Arm 79 11 7 2 1 Arm 49 11 21 13 7 CAU 81 7 5 6 2 CAU 56 9 12 14 9 ECA 70 10 8 7 4 ECA 46 12 17 13 11 BEEPS-at-a-Glance Armenia 22 Annex II – Methodological Notes  The 2008 and 2013 rounds of the BEEPS consisted of three parts: the Main BEEPS sample was drawn from a universe of eligible firms in manufacturing and retail/wholesale industries with five or more full time employees located in major urban centers. The Manufacturing Module refers to additional questions asked only of firms in the manufacturing sector. The Services Module refers to additional questions asked only of firms in the services sector.  ECA and sub-regional averages are computed from country level estimates, with each country having an equal weight. The table below presents the country composition of the ECA region and the four sub-regions. The ECA average (ECA) includes Caucasus Central Asia Western Western European all 29 countries: (CAU) (CAS) Balkans (WBL) FSU (WFS) Union (E11) Albania (Alb), Armenia (Arm), Armenia Kazakhstan Albania Belarus Bulgaria Azerbaijan (Aze), Belarus (Bel), Azerbaijan Kyrgyzstan Bosnia & Moldova Croatia Bosnia and Herzegovina (BiH), Georgia Tajikistan Herzegovina Ukraine Czech Republic Bulgaria (Bul), Croatia (Cro), Czech Uzbekistan FYR Macedonia Estonia Republic (Cze), Estonia (Est), FYR Kosovo Hungary Macedonia (Mac), Georgia (Geo), Montenegro Latvia Hungary (Hun), Kazakhstan (Kaz), Serbia Lithuania Kosovo (Kos), Kyrgyz Republic Poland (Kyr), Latvia (Lat), Lithuania (Lit), Romania Moldova (Mol), Montenegro (Mon), Slovak Republic Poland (Pol), Romania (Rom), Slovenia Russia (Rus), Serbia (Ser), Slovak Republic (Slk), Slovenia (Sln), Tajikistan (Taj), Turkey (Tur), Ukraine (Ukr), and Uzbekistan (Uzb). NOTE: Russia and Turkey are not included in any of sub-regions, while being included in the ECA average. Croatia joined the EU in 2013. However, for comparison purposes Croatia is included in the EU-11 sub-regional comparison in 2008 as well, even though it was not yet an EU member at that time. Accordingly, Croatia is also not included in the WBL sub-regional estimate, even though it still belonged in this group of countries in 2008.  Missing values: The instrument for both years include coding for Don’t Know (DK), Not Applicable (NA), and Refuse to Answer (REF). These responses were recoded into missing values before producing any of the estimates in this report.  Changes in the survey instrument: There are minimal differences in some questions wording and response options across the two years. Such differences are explained in the notes to individual charts and are flagged in table AII as appropriate.  Branching / filtering questions: For a number of indicators, the number of firms that responded to a question is smaller than the overall country sample size. In most cases, the difference is attributable to preceding filter questions. Questions for which the smaller number of respondents is due to filtering are marked with a superscript indicator (1).  Survey module-specific questions: Other questions have a smaller number of respondents due to the survey instrument, e.g. manufacturing or service modules. If a question applies to different subset of firms based on BEEPS module, this is explicitly indicated in the corresponding note for each particular chart and also flagged in table AII.1 with a superscript indicator: ( a) if the question applies only to the Service Module respondents and (b) if the question only applies to the Manufacturing Module respondents only. BEEPS-at-a-Glance Armenia 23 Outlier observations The BEEPS survey contains some open-ended questions (e.g. percentage of time senior management spends on dealing with regulations, amounts as percentage of annual sales typically paid as bribes, or the result of crime, power outages; it also includes items asking how many days do firms typically wait to obtain various permits or state services). In the vast majority of cases respondents have provided plausible values, however there is a limited number of outlier observations with extremely high values (e.g. losing 100% of sales to crime or power outages, or being visited hundreds of times by tax officials). Although in some cases the scenarios reflected in such responses may be plausible, and the incidence of such observations is negligible, there is no practical way to verify with certainty, as well as to distinguish from possible data entry errors. Nevertheless, to avoid biasing the estimates, the following decision rules are used in this report to recode outlier values into missing values:  “Bribe tax” (question J7.a & b) excludes observations reporting 100% or more of annual sales typically paid as bribes  “Kickback tax” (question J6) excludes observations reporting 100% or more of gove rnment contract value typically paid as bribes  Payments for security (question I2.a & b) excludes observations reporting 100% or more of annual sales paid for security  Losses as a result of crime (question I4.a & b) excludes observations reporting 100% or more of annual sales lost to crime  Number of tax visits/meetings (question J4) excludes observations reporting more than 365 visits/meetings (the maximum length of the time period the question refers to)  Wait time for new electrical connection (question C4) , wait time for new water connection (question C13) , wait time for new construction permit (question G3), wait time to obtain an import license (question J11), and wait time to obtain an operating license (question J14) all exclude observations reporting more than 730 days (the maximum length of the time period the question refers to) Rounding For legibility, all data labels in the charts are rounded to the nearest whole number. Users should be particularly aware of rounding when working with charts representing small subsets of firms or small absolute values (e.g. charts 2.3b, 2.3c, etc.) as in such cases the rounding error may obscure significant relative differences. Statistical significance Not all changes between the 2008-2013 estimates are statistically significant. Table AII.1 provides rudimentary assessment of whether the changes in the estimates between the two periods are statistically significant. The significance estimates are obtained by merging the 2008 and the 2013 data sets and running a bivariate linear regression for every variable in the report, using the year binary variable as an independent variable coded 1 if the year is 2013, and 0 if 2008. The means comparison is performed for the variables as operationalized in the BEEPS report, if different from the raw variable. For example, in table AII.1 compares the proportion of respondents answering that tax rates is “not an obstacle” across the two years as a vbinary variable, not the overall distribution of original responses (5 point Likert scale). When rigorously assessing statistigal significance is of special concern, further analysis should be performed as appropriate, taking into account the different measurement scales (nominal, ordinal, interval), the sample sizes for the different variables, etc., and chosing specifically designed tests. Notes for individual charts Chart 1.1 2008 and 2011 used scale with five points including: “no obstacle”, “minor obstacle”, “moderate obstacle”, “major obstacle” and “very severe obstacle” as valid responses. The values in this chart represent the proportion of respondents indicating that an issue is “no obstacle” to current operations. The questions on telecommunications as an obstacle was only asked of the service sector respondents in 2008, but of all sectors in 2013. BEEPS-at-a-Glance Armenia 24 Chart 1.2 The rankings of obstacles in both years are based on the mean score across all firms in each country for each indicator for the respective year. The 5 response options (“no obstacle”, “minor obstacle”, “moderate obstacle”, “major obstacle”, and “very severe obstacle”) are coded with values “0”, “1”, “2”, “3”, and “4” respectively in the data sets for both years. These values were averaged at the country level for each separate issue, whereas a higher mean indicates relatively greater severity of an issue. Thus, for each year, the most severe obstacle, or that with the highest mean score is ranked number 1, the least severe, or that with the lowest mean score is ranked 16. Chart 2.2 In both years, the respondents were asked to estimate how often is the statement “It is common for firms in my line of business to have to pay some irregular “additional payments or gifts” to get things done with regard to customs, taxes, licenses, regulations, services etc.” true on a 6 point Likert scale: “never”, “seldom”, “sometimes”, “frequently”, “very” and “always”. This chart represents the set of respondents answering any of the highest 3 options, e.g. “frequent”, “very frequent”, or “always”. In 2008, option 5 is labeled “usually”; In 2013 it is “very frequently”. Chart 2.3 (a-c) Respondents in both years could indicate the cost of unofficial payments/bribes either as a percent of annual sales (question J7 (a)) or as an absolute amount (question J7 (b)). For those respondents who indicated a specific value (i.e. total cost of bribes), the percentage of annual sales was obtained by dividing the reported total cost of bribes by the firm’ s total annual sales (question D2, total firm sales for the preceding year). The resulting proportion of sales spent on bribes was then combined with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the proportion of annual sales expended on bribes for all firms (Chart 2.3b), firms reporting no payments are recoded into firms spending 0% of annual sales on bribes (for these questions, J7 a &b, no actual recoding needed to be made as the codes for “no payments were made” are already set as “0”). To calculate the averages for firms reporting payments (Chart 2.3c), only observations reporting payments higher than “0” are included. Chart 3.3 (a-b) Respondents in both years could indicate the cost of security payments either as a percent of annual sales (question I2 (a)) or as an absolute amount (question I2 (b)). For those respondents who indicated a specific value of security cost, the percentage of annual sales was obtained by dividing the reported total security costs by the firm’s to tal annual sales (question D2, total firm sales for the preceding year). The resulting proportion of sales spent on security was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the average security payments as a percentage of annual sales for all firms (Chart 3.3a), respondents who had indicated that they have not paid for security (question I1) were recoded into firms spending 0% of their annual sales on security. To calculate the security costs as a percentage of annual sales for firms making security payments, the averages only for firms answering “Yes” to question I2 were computed. Chart 3.5 (a-b) Respondents in both years could indicate the estimated losses as a result of crime either as a percent of annual sales (question I4 (a)) or as an absolute amount (question I4 (b)). For those respondents who indicated a specific value, the percentage of annual sales was obtained by dividing the reported total losses as a result of crime by the firm’s total annual sales (question D2, total firm sales for the preceding year). The resulting value of crime-related losses as a percentage of annual sales was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the losses of crime as percentage of annual sales for all firms (Chart 3.5a), respondents who had indicated that they have not experienced any losses as a result of crime (question I3) were recoded into firms experiencing 0% losses as a result of crime. To calculate the losses as a consequence of crime as a percentage of annual sales for firms experiencing losses (Chart 3.5b), the averages only for firms answering “Yes” to question I3 and reporting more than 0% in losses in question j4 were computed. Chart 7.4 The question regarding formal training provided to employees was only asked in the Manufacturing Module in 2008, while in 2011 the question is present in all modules. Chart 7.5 For both years the question is only asked in the Manufacturing Module. BEEPS-at-a-Glance Armenia 25 Chart 8.4 The response options changed slightly across cycles on the question regarding sources of firm financing. In 2008 and 2013 six response options were presented, but the composition of the response options has changed. Due to the structure of the question and multiple response options, the total value of the responses does not equal one hundred percent. The question focuses on sources of financing other than internal funds or retained earnings. In order to compare responses across cycles, some 2008 response options were combined to match as closely as possible the 2013 responses. Specifically, Borrowing from Banks, private or state owned is provided as a single answer option in 2013, while the 2008 questionnaire lists private and state owned banks as separate answer options. Accordingly, to compute this variable in the 2008 data set it is necessary to combine the responses to questions K5 (b) and K5 (c), while in the 2013 data set the variable values are stored in a single column (ECAk5bc). Similarly, borrowing from money lenders, friends and relatives, or bonds were provided as separate answer options in 2008 and as a single answer option in 2013. Chart 8.6 In 2013, the survey question specifically and separately asks for financing coming from “Non -bank financial institutions…” [k5e] and “Other (moneylenders, friends, relatives, bonds etc.) ” [k5hdj]. In 2008, there is no separate response option for “non-bank financial institutions”, which is instead listed in “Other (moneylenders, friends, relatives, non-banking financial institutions etc.)” [k5hdej]. To make the comparison possible, the 2013 response options are merged into one by combining k5e and k5hdj. Chart 8.7 The survey question provides 8 total response options: no need for a loan, complex application procedures, unfavorable interest rates, too nigh collateral requirements, insufficient size of loan or maturity, it is necessary to make informal payments, did not thin it would be approved, and “other”. For this chart, responses “size of loan or maturity are insufficient” and “it is necessary to make informal payments” are recoded into “other”. Charts 9.3-9.5 The response scale for the questions on the court system include 4 response options: “strongly disagree”, “tend to disagree”, “tend to agree” and “strongly agree”. Charts 9.3-9.5 represent the shares of respondents answering either “tend to agree” or “strongly agree” for each of the questions. Chart 10.5 (a-b) Respondents in both years could indicate the value of losses as a percent of annual sales or as an absolute amount. For those respondents who indicated a numeric value, the percentage of annual sales was obtained by dividing the reported losses due to power outages by the firm’s total annual sales (question D2, total firm sales in preceding year). The resulting proportion of sales lost due to power outages was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the percentage of sales lost for all firms (Chart 10.5a) all valid values – including “0” were used, and firms who did not experience power outages (i.e. answered “No” to question C6) were recoded into firms experiencing 0% losses. To calculate the average percentage of sales lost for firms experiencing losses (Chart 10.5b), only non-“0” values for firms who had experienced power outages were used. Chart 11.1 The question regarding new product/service development was modified slightly in its wording from 208 to 2013. In 2008, firms were asked if they introduced new products or services, whereas in 2013 they were asked if they introduced new or significantly improved products or services. Chart 11.2 In 2008, firms were asked if they spent funds on research and development activities “during the last financial year”; in 2013 they were asked the same question but the reference period given was “during the last three years”. Charts 12.1-12.6b The charts on the wait times to obtain different government services (12.1a, 12.2a, 12.3a, 12.4a, 12.5a, 12.6a) represent the summary estimates data after recoding outlier observations into “missing” (see the section “Outlier observations” above). The data summaries for all other charts in this section (i.e. service usage incidence and bribe request incidence) are reported without making any modification to the data. Chart 13 (a-b) The questions on “state capture” were not asked in 2008, thus a comparison with the 2005 data is provided instead. To make the 2005 sample as comparable with the 2013 sample as possible, observations meeting the following criteria must BEEPS-at-a-Glance Armenia 26 be excluded from the 2005 data: a) firms with less than 5 employees, b) ISIC codes not included in the 2008/13 samples, and c) 100% state-owned firms. The response options for this question are “no impact”, “minor impact”, “moderate impact”, “major impact” and “decisive impact”. Chart 13.a represents the proportion of fi rms reporting that unofficial payments/private gifts to the three types of government actors had “no impact” on their establishment. Chart 13.b represents the proportion of firms who answered “moderate impact”, “major impact”, or “decisive impact”. Chart AI.1 In 2008 and 2011, all questions pertaining to ‘Obstacles to Current Operations’ used a 5-point Likert scale (“no obstacle”, “minor obstacle”, “moderate obstacle”, “major obstacle” and “very severe obstacle”). The data shown above is a sum of the responses indicating an individual issue as a “moderate obstacle”, “major obstacle” and “very severe obstacle” . The question regarding telecommunication as an obstacle was asked of all respondents in 2011, but only of service sector respondents in 2008. Variable Names, Survey Questions and Sample Sizes for Corresponding Charts The ‘Survey Question’ column in table AII represents the question number as it appears on the actual survey protocol. In the majority of cases, the corresponding actual variable name in the data set is simply a modified version of the question label: lower case, and no dot. For example, the variable name in the data set corresponding to survey question ‘E.30’ (“Practices of Informal Economy Competitors […]“ is ‘e30’, while the variable name corresponding to question ‘ J.6a’ (“Over the last year, had your establishment attempted to secure […] is found in the data set as ‘j6a’. The survey question column presents the questions as they appear on the 2012/13 surveys. If the matching question in the 2008 is labeled differently, the 2008 question is provided [in brackets] after the 2013 question. If a chart is based on a combination of questions (e.g. J.7, ‘bribe tax’, where respondents could indicate the amount of bribes usually paid either as a percentage of sales or as an absolute sum, recorded in two corresponding variables respectively), all letters signifying these response options are provided separated by comma (e.g. ‘J.7a, b’, rather than as J.7a and J.7b.) In some cases (e.g. ‘K5’ – Sources of firms financing), a single variable is denoted through a combination of letters (e.g. ‘hdej’). In these cases, there is no comma between the letters and they represent a direct match to the variable name in the data set (e.g., ‘k5hdej’). Some variable names (but not the question numbers and labels) are prefixed with ‘ECA’ in the data set. All su ch question labels are prefixed with ’ECA’in the table below. If an estimate is based on a reduced sample due to preceding branching question, this is indicated in the table and in the notes with a superscript indicator (1). If a question applies only to one of the survey modules, this is also marked in the notes to the table. BEEPS-at-a-Glance Armenia 27 AII.1 Sample sizes (valid n) and question numbers for the survey items Survey 2008-2013 Chart Chart Title 2008 2013 Question* change** P [Total N] 380 390 id value Sig. 1.1 Problems Doing Business - - Tax Rates 376 389 J.30a 0.00 *** Corruption 331 385 J.30f 0.00 *** Electricity 374 389 C.30a 0.00 *** Skills and education of workers 356 388 L.30b 0.00 *** Access to finance 360 390 K.30 0.00 *** Crime, theft and disorder 340 390 I.30 0.00 *** Tax administration 376 389 J.30b 0.00 *** Telecommunications a 134 389 C.30b 0.00 *** Courts 236 384 H.30 0.00 *** Access to land 299 351 G.30a 0.00 *** Business, licensing and permits 301 387 J.30c 0.00 *** Transport 371 358 D.30a 0.00 *** Labor regulations 366 390 L.30a 0.00 *** Customs and trade regulations 193 352 D.30b 0.00 *** Practices of informal economy competitors 349 386 E.30 0.00 *** Political instability 327 346 J.30e 0.00 *** 2.2 Bribe Frequency 349 343 ECAQ.39 0.00 *** 2.3a Bribe Tax - Incidence 257 362 J.7a, b 0.00 *** 2.3b Bribe Tax - All firms 257 362 J.7a, b 0.00 *** 2.3c Bribe Tax - Firms reporting payments 77 10 J.7a, b 0.50 NS 2.4 Unofficial Payments: Taxes 352 339 ECAQ.41c 0.00 *** 2.5 Unofficial Payments: Customs 301 335 ECAQ.41a 0.36 NS 2.6 Unofficial Payments: Courts 317 332 ECAQ.41b 0.18 NS 2.7 Participation in Government Procurement 375 379 J.6a 0.00 *** Unofficial Payments: Government Contracts - All 2.8 56 17 J.6 firms 1 0.97 NS Unofficial Payments: Government Contracts - Firms 2.9 12 1 J.6 making payments 1 0.48 NS 3.2 Payments for Security 378 389 I.1 0.00 *** 3.3a Security Costs - All firms1 350 304 I.2a, b 0.00 *** 3.3b Security Costs - Firms reporting payments1 229 37 I.2a, b 0.21 NS 3.4 Losses as a Result of Crime - Incidence 379 388 I.3 0.12 NS 3.5a Losses as a Result of Crime - All firms 1 374 386 I.4a, b 0.15 NS Losses as a Result of Crime - Firms experiencing 3.5b 7 4 I.4a, b losses 1 0.26 NS 4.2a Time Tax - Distribution of firms 304 350 J.2 - - % firms spending no time 304 350 J.2 0.00 *** % firms spending <=25% 304 350 J.2 0.00 *** % firms spending >25% 304 350 J.2 0.97 NS 4.2b Time Tax - All Firms 304 350 J.2 0.00 *** BEEPS-at-a-Glance Armenia 28 4.2c Time Tax - Firms Spending Time 169 20 J.2 0.27 NS 5.3a Direct Exports - Distribution of firms 380 390 D.3c - - % firms with no export sales 380 390 D.3c 0.02 ** % firms with less than 50% sales from direct 380 390 D.3c 0.17 NS exports % firms with more than 50% sales from direct 380 390 D.3c 0.04 ** exports 5.3b Direct exports - All firms 380 390 D.3c 0.04 ** 5.3c Direct exports - Firms with sales from exports 19 7 D.3c 0.23 NS 6.4 Tax Inspections 377 375 J.3 0.44 NS 6.5a Frequency of tax inspections - All firms 377 375 J.3 & J.4 0.01 *** 6.5b Frequency of Tax Inspections - Inspected firms 304 306 J.4 0.01 ** 7.3 Professionalism of Labor 354 340 ECAQ.69 0.06 * Provision of Formal Training: Permanent Employees 7.4 119 383 L.10 b, 2008 only 0.02 ** 7.5 Percent of Employees Trained: Production1, b 13 7 L.11a b 0.00 *** Non-Production1, b 12 7 L.11b b 0.15 NS 8.2 Adequacy of Firm Financing1 309 312 ECAK.17 [K.17] 0.41 NS 8.3 Purchasing on Credit 379 344 K.1c [K.1d] 0.19 NS K.1c [K.1d & 8.4a Purchases Made on Credit - All firms 374 344 K.1e] 0.18 NS Purchases Made on Credit - Firms Purchasing on 8.4b 145 132 K.1c [K.1e] credit 0.58 NS 8.5a Credit Extensions to Clients 375 345 K.2c - - % of firms with no sales on credit 375 345 K.2c 0.00 *** % firms with <=50% sales on credit 375 345 K.2c 0.88 NS % firms with >50% sales on credit 375 345 K.2c 0.00 *** 8.5b Credit Extensions to Clients - All firms 375 345 K.2c 0.00 *** 8.5c Credit Extensions to Clients - Firms Extending Credit 181 106 K.2c 0.00 *** 8.6 Sources of Firm Financing1, c 137 46 - - K.5bc Banks: private and state-owned 137 46 d 0.25 NS [ECAK.5b, c] K.5e, hdj e Non-bank financial institutions / Other c 137 46 0.03 ** [K.5hdej] Purchased on trade credit from suppliers or 137 46 K.5f 0.01 *** customers 8.7 Loan Applications1 309 312 ECAK.17 [K.17] - - Application procedures too complex 309 312 ECAK.17 [K.17] 0.77 NS Unfavorable interest rates 309 312 ECAK.17 [K.17] 0.11 NS Collateral Requirements too high 309 312 ECAK.17 [K.17] 0.00 *** Did not think it would be approved 309 312 ECAK.17 [K.17] 0.91 NS Other 309 312 ECAK.17 [K.17] 0.44 NS 9.2 Use of Courts 380 387 ECAQ.31e 0.07 * 9.3 The Court System is Fair, Impartial, Uncorrupted 332 275 H.7a 0.00 *** 9.4 The Court System is Quick 330 274 ECAJ.1b 0.00 *** 9.5 The Court System is Able to Enforce its Decisions 320 275 ECAJ.1c 0.00 *** 10.4 Experienced Power Outages 380 386 C.6 0.00 *** 10.5a Sales Lost due to Power Outages - All firms 1 331 380 C.9a, b 0.90 NS Sales Lost due to Power Outages- Firms 10.5b 57 19 C.9a, b Experiencing Losses 1 0.04 ** BEEPS-at-a-Glance Armenia 29 10.6 Use of Email Communication 379 390 C.22a 0.00 *** 11.1 New Product/Service Development c 380 390 H.1 [ECAO.1] 0.00 *** 11.2 Research and Development Activities c 380 390 H.6 [ECAO.3] 0.00 *** 12.1 New Electrical Connection 378 387 C.3 0.01 *** 12.1a Average wait time - number of days1 49 18 C.4 0.03 ** 12.1b Informal gift or payment was expected1 40 32 C.5 0.00 *** 12.2 New Water Connection 380 387 C.12 0.04 ** 12.2a Average wait time - number of days1 30 16 C.13 0.18 NS 12.2b Informal gift or payment was expected1 24 21 C.14 0.46 NS 12.3 Construction Permits 380 387 G.2 0.00 *** 12.3a Average wait time - number of days1 44 7 G.3 0.00 *** 12.3b Informal gift or payment was expected1 35 7 G.4 0.00 *** 12.4 Tax Inspections 377 375 J.3 0.44 NS 12.4a Average number of tax inspections/meetings1 304 306 J.4 0.01 ** 12.4b Informal gift or payment was expected1 233 296 J.5 0.00 *** 12.5 Import License 378 380 J.10 0.00 *** 12.5a Average wait time - number of days1 45 10 J.11 0.01 ** 12.5b Informal gift or payment was expected1 38 13 J.12 0.06 * 12.6 Operating License 378 383 J.13 0.01 *** 12.6a Average wait time - number of days1 64 20 J.14 0.00 *** 12.6b Informal gift or payment was expected1 52 24 J.15 0.00 *** 13 State Capture f Q.44 - - ECAQ.44a 13.1 Parliamentarians 251 321 [Q.44a] 0.00 *** ECAQ.44b 13.2 Government officials 252 318 [Q.44b] 0.00 *** ECAQ.44c 13.3 Local/Regional officials 254 318 [Q.44c] 0.00 *** NOTES: *2008 survey question number provided [in brackets] if different from 2013 ** NS p>0.1, *** p<0.01, ** p<0.05, * p<0.1 1 Reduced sample size due to preceding filtering question. a Service module respondents only in 2008, all respondents in 2013 b Manufacturing module respondents only in 2008, all respondents in 2013 for question L10. Questions L.11a and L.11b are asked of Manufacturing module respondents only both in 2008 and 2013. c Slight change in wording/response options between 2008 and 2013. See individual chart notes in Annex I d k5b and k5c need to be combined in the 2008 data to be compatible with 2013 (k5bc) e k5e and k5hdj need to be combined in the 2013 data to be compatible with 2008 (k5hdej) f 2005 data BEEPS-at-a-Glance Armenia 30