US embassy cable - 04YEREVAN2485

UNCLAS SECTION 01 OF 03 YEREVAN 002485 
 
SIPDIS 
 
COMMERCE FOR 3150/PBRADLEY/BSMITH 
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE 
EMBASSIES - PLEASE PASS FCS 
DEPT FOR EUR/CACEN, EB/CBA 
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER 
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO 
 
E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) ARMENIA: REPORT ON TAVUSH PROVINCE 
 
 
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SUMMARY 
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1.  In October 2004, Embassy's BISNIS representative 
visited the Tavush province of Armenia to explore 
investment and trade opportunities for U.S. companies 
and to expand U.S. - Armenian commercial ties.  He met 
with the province's business leaders and government 
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" and 
"Trades and Tenders" programs and collect information 
on investment and commercial opportunities for U.S. 
companies.  Best prospects are listed in paragraphs 14- 
16 below.  End Summary. 
 
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TAVUSH: GENERAL BACKGROUND 
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2.  Tavush province is located in the North-Eastern 
part of Armenia.  The total area of the province is 969 
sq. miles.  According to the Tavush Governor's Office, 
the province's population is 134,000, including 49,000 
urban residents and 85,000 rural residents.  The 
province shares a border with Azerbaijan to the East 
and Georgia to the North. 
 
3.  The climate in Tavush is mild continental, with 
average maximum temperatures of 90 degrees Fahrenheit 
in summer and 50 degrees in winter, and minimum 
temperatures of 68 degrees Fahrenheit in summer and 23 
degrees in winter.  The region's altitude ranges from 
980 feet to 9,200 feet. 
 
4.  Tavush's mineral resources include a wide range of 
building materials including basalt, granite, 
quartzite, and marble, as well as bentonite, mineral 
paints, semiprecious stones, coal, dolomite and gyps. 
 
5.  Tavush's industrial potential is concentrated in 
the four largest cities, the capital Ijevan, Dilijan, 
Berd and Noyemberyan.  The province's large and medium- 
sized enterprises are involved mainly in building 
materials, woodworking, rug manufacturing and food 
processing industries.  All of the former Soviet 
factories in this region have been privatized.  The 
province's industrial production in 2003 totaled 
approximately USD 7 million, while agricultural 
production grossed USD 47 million. 
 
6.  Food processing is one of the fastest growing 
sectors of the province's economy.  Tavush has a long 
history of wine making.  The region's vineyards are 
located at an altitude of 2,300-3,900 feet.  The Ijevan 
Wine Factory was established in 1976 as a small 
processing enterprise and was converted into an open 
joint stock company in 1995.  The factory is equipped 
with modern grape processing and wine bottling lines 
imported from Germany.  The winery's products include 
several types of wines, including red dessert wine, 
semi-sweet wine, white table wine, red table wine, and 
rose table wine.  The company exports its products to 
the United States, Russia, and Japan.  The company 
received both financial and technical assistance from 
the U.S. Department of Agriculture's Marketing 
Assistance Project Office in Yerevan. 
 
7.  The Bentonite Joint Stock Company was established 
in 1973 and privatized in 1996.  It specializes in the 
production of bentonite powder used for oil-well 
drilling, molding and rubber manufacturing.  Bentonite 
deposits are located very close to the plant. 
Bentonite JSC exports its products mainly to CIS 
countries.  Companies from Poland and Switzerland have 
expressed interest in purchasing Bentonite's products. 
Bentonite's new owner (the Moscow-based company Okro 
Okroyan) and management have ambitious plans to 
increase the company's exports as well as upgrade 
existing production and processing lines. 
 
8.  The province's leading industrial enterprise is the 
Ijevan Rug Factory, which was established in 1964 and 
privatized in 1995.  The factory produces a wide range 
of wool rugs.  During Soviet times it was one of the 
largest rug producers and exporters.  Since 1981 the 
factory has been the only exporter of wool rugs from 
the former Soviet Union to Arabic countries, China and 
Eastern Europe.  The factory is equipped with German 
made machines and is able to manufacture approximately 
13 million sq. feet of rugs annually.  Currently the 
factory does not utilize its full capacity.  Production 
and sales have been growing, however, since the local 
bank recently acquired a stake in the company. 
 
9.  Dilijan-MIGE JSC operates a mineral water bottling 
plant in the resort town of Dilijan.  The company is 
owned by Mikhail Bagdasarov, an Armenian-Russian 
businessman.  Most of the company's production is 
exported to CIS countries, the Middle East, and the 
U.S.  Currently, the company is upgrading the existing 
equipment to increase the plant's capacities. 
 
10.  Dilijan's Impulse plant was founded in 1967 
specializing in the production of communication 
equipment ordered by the Soviet Defense Ministry.  In 
1995 the plant was turned into a state-owned joint- 
stock company.  In 2002 it was privatized by Yerevan- 
based Radiotechnika LLC, the owner of several 
production plants as well as large trade centers 
throughout Armenia.  After a significant renovation of 
the plant's facilities it plans to establish a 
production of truck semi-trailers as well as an 
assembly line for consumer electronics. 
 
11.  Tourism is an attractive sector for investments in 
Tavush province.  The resort town of Dilijan is located 
in the mountainous part of the province near several 
old monasteries.  During Soviet times it was one of the 
most famous tourism centers in Armenia.  The city has 
numerous spas and health centers.  Recently Armenian- 
American businessman James Tufenkian initiated the 
Dilijan city center development program with an 
investment of more than USD 500,000.  The development 
program includes the construction of a 24-room hotel, 
restaurants, stores, and small studios and showrooms 
where Armenian art and crafts will be exhibited. 
 
12.  Tavush province is a transit point for road and 
rail traffic to and from Georgia.  The largest Armenian 
customs post is located at the village of Bagratashen 
on the Georgian border.  Near the village there is a 
popular wholesale open-air market for consumer goods 
and food products.  A large number of Armenian and 
Georgian small- and medium-sized vendors trade at this 
market where they can take advantage of a customs 
exemptions for the goods they personally carry across 
the border. 
 
13.  Most enterprises operating in Tavush have 
potential and need to establish long-term cooperation 
or a partnership with foreign investors.  The Embassy 
encourages interested U.S. firms to contact the 
Political-Economic Section of the Embassy or the BISNIS 
Trade Specialist for Armenia Ellen House by phone at: 
(202) 482-2284 or e-mail at Ellen_House@ita.doc.gov. 
 
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TRADE OPPORTUNITIES 
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RUG MANUFACTURING 
 
14. (1) COMPANY: IJEVAN RUG FACTORY (IRF) 
 
IRF was established in 1964 as a state-owned 
enterprise.  It was fully privatized and converted into 
a joint stock company in 1997.  The company produces 
various sizes of wool rugs.  IRF imports raw materials 
mainly from Turkey and Russia.  The company seeks an 
established U.S. supplier of raw materials, including 
wool yarn, polyamide yarn, linen, and cotton yarn.  The 
projected annual demand for these products is 3,000 
tons. 
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INVESTMENT OPPORTUNITIES 
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AUTOMOTIVE 
 
15. (2) COMPANY: IMPULSE 
 
Dilijan's Impulse plans to produce truck semi-trailers. 
Impulse seeks a U.S. partner that would provide 
financing and new technologies.  Impulse will 
contribute its production space, inexpensive labor 
force as well as partial financial investment.  The 
total project cost is estimated at USD 500,000. 
 
16. (3) COMPANY: IJEVAN MECHANICAL PLANT 
 
Ijevan Mechanical Plant (IMP) was established in 1951. 
In 1995 in was privatized and turned into an open joint- 
stock company.  The plant specializes in the production 
of small-sized farming equipment, including 
cultivators, mowing-machines, and plows.  The company 
would like to become a distributor of a U.S. 
manufacturer of small- and medium-sized farming 
equipment.  IMP also seeks to establish a joint venture 
with an American company to begin production of 
equipment for farmers, including cultivators and 
mowers. 
 
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USEFUL CONTACTS 
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17.  For more information on business opportunities in 
Tavush province, please contact: 
 
Ijevan Business Promotion Center 
Mr. Arthur Tsutsulyan, Director 
5 A. Melikbekyan Street 
Ijevan, 377260 
Tavush province 
Armenia 
Tel/fax: (374-63) 34-409 
E-mail: Ijevan_BPC@rambler.ru 
 
Dilnet Business Support Center 
Mr. Ashot Hovhannisyan, Director 
80 Myasnikyan Street 
Dilijan 
Tavush province 
Armenia 
Tel/fax: (374-68) 07-250 
E-mail: dilnet@freenet.am 
 
Tavush Governor's Office 
Mr. Ararat Gasparyan, Economic Department 
Tel: (374-63) 31-697 
 
George Isayan, BISNIS Representative 
American Embassy, Yerevan 
18 Baghramian Ave. 
Yerevan-19 
Armenia 
Tel: (374-1) 524-840 
Fax: (374-1) 520-800 
E-mail: isayangx@state.gov 
www.bisnis.doc.gov 
www.bisnis-eurasia.org 
 
EVANS