US embassy cable - 05YEREVAN1968

UNCLAS SECTION 01 OF 02 YEREVAN 001968 
 
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: ECON, ETRD, KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT:  ARMENIA COMMERCIAL NEWS SUMMARY: 
OCTOBER 2005 
 
------- 
SUMMARY 
------- 
 
1.  This cable summarizes press reporting on commercial 
developments in Armenia for October 2005.  Major 
headlines include: 
 
-- Synopsys Inc. signs agreement to acquire HPL 
Technologies Inc.; 
 
-- Vanadzor Chemical Factory reopens; 
-- Armenia becomes 64th member of the Asian Development 
Bank; 
 
-- Glassware factory reopens in Byureghavan; 
 
-- Armenia pays off debt to Russia; and 
 
-- September 2005 economic data. 
 
END SUMMARY. 
 
--------------------------------------------- ------- 
SYNOPSYS SIGNS AGREEMENT TO ACQUIRE HPL TECHNOLOGIES 
--------------------------------------------- ------- 
 
2.  Synopsys Inc., a semiconductor design software 
company, signed an agreement to acquire HPL 
Technologies Inc., working in yield management software 
and test chip solutions.  Both companies have 
subsidiaries in Armenia, Synopsys Armenia and HPLA, 
respectively.  Since its establishment in 1995, HPLA 
has been one of the largest IT companies in Armenia. 
Synopsys Armenia began operations in Yerevan 
approximately one year ago and, as of July 21, 2005, 
Synopsys Inc. had invested approximately USD 270 
million in Armenian operations.  As a result of the 
merger of their parent companies, the Armenian 
subsidiaries plan to merge later this year.  By 
acquiring HPL products and engineers (most of whom are 
based in Armenia), Synopsys Inc. hopes to become a 
world leader in Design for Manufacturing (DFM) 
solutions for the semiconductor industry. 
 
--------------------------------- 
VANADZOR CHEMICAL COMPLEX REOPENS 
--------------------------------- 
 
3.  The Vanadzor Chemical Complex "Prometey Khimprom," 
which includes a chemical plant, a synthetic fiber 
plant and a thermal power station, reopened on October 
20 after being closed for six years.  The plant 
produces synthetic corundum and has an estimated annual 
output of 40 tons, valued at approximately USD 7.7 
million.  The plant operators import raw material for 
the corundum production from Ukraine and plan to market 
the product in South-Eastern Asia.  A new calcium 
carbide production department, using raw materials 
imported from China, is scheduled to open in November 
2005.  Newspaper reports indicate that companies from 
Ukraine and Thailand have agreed to purchase 12 and 15 
thousand tons of carbide per month from the plant.  The 
director of the complex hopes to partially reconstruct 
the plant's thermal power station to ensure 
uninterrupted power supply for plant operations. 
 
--------------------------------------------- 
ARMENIA 64TH MEMBER OF ASIAN DEVELOPMENT BANK 
--------------------------------------------- 
 
4.  In late September, Armenia became the 64th member 
of the Asian Development Bank (ADB) and subscribed to 
10,557 shares of the bank's capital stock.  The ADB's 
authorized capital stock is 3,509,728 shares equivalent 
to USD 51.6 billion.  Established in 1966, the ADB has 
focused primarily on reducing poverty in Asia and the 
Pacific.  Last year, the ADB approved USD 5.3 billion 
in loans and USD 196.6 million in technical assistance 
to support its developmental mission. 
 
---------------------------------------- 
GLASSWARE FACTORY REOPENS IN BYUREGHAVAN 
---------------------------------------- 
 
5.  A British businessman of Armenian descent has 
pledged to invest USD 100 million to restart a 
crystal/glass factory in the town of Byureghavan, 20 
kilometers north-east of Yerevan.  Byureghavan was 
renowned for glassware production before the fall of 
the Soviet Union.  Minister of Trade and Economic 
Development Karen Chshmarityan told members of the 
press that the plant will be fully operational by the 
end of the month.  According to the Minister, the plant 
has already received orders for glass containers from 
both domestic and foreign buyers and annual post- 
reconstruction output is expected to reach between USD 
50-70 million. 
 
------------------------------- 
ARMENIA PAYS OFF DEBT TO RUSSIA 
------------------------------- 
 
6.  As widely reported by the local media, Armenia has 
repaid all of its outstanding debt to Russia.  The 
final payment of USD 1.8 million covered outstanding 
interest from earlier loans.  In 2002, Armenia 
transferred to Russia five of its largest state-owned 
companies as part of debt-for-equity swap whereby 
Russia agreed to write off the vast majority of 
Armenia's USD 100 million debt.  The enterprises 
included in the agreement were the Hrazdan thermal 
power plant, the Mars electronics and robotics plant 
and three research-and-production companies. 
 
---------------------------- 
SEPTEMBER 2005 ECONOMIC DATA 
---------------------------- 
 
7.  According to National Statistical Service data, 
Armenia's real GDP grew in January-September 2005 by 
11.6 percent year-on-year to USD 3.2 billion. 
Industrial production increased by 6.2 percent during 
January-September 2005 to USD 1 billion.  Agricultural 
output grew by 9 percent to USD 706 million, and 
construction volume increased by 34 percent to USD 579 
million.  Armenia's foreign trade from January to 
September 2005 increased by 32.2 percent to USD 1.9 
billion.  In January-September 2005, exports amounted 
to USD 687 million, and imports USD 1,248 million, with 
a foreign trade deficit of USD 561.30 million. 
 
EVANS