1. Vard Mikaelyan Ministry of Transport and Communications 1 e-Commerce perspectives in Armenia

2. Vard Mikaelyan Ministry of Transport and Communications 2 Introduction Integration in growing e-Commerce community, existing problems and possible solutions

3. Vard Mikaelyan Ministry of Transport and Communications 3 Topics of Discussion Absence of appropriate Armenian laws Taxation problems for e-Commerce Customs problems Language problem Terminology problem

4. Vard Mikaelyan Ministry of Transport and Communications 4 Laws Old Soviet model, based on the idea, that it is possible to check everything – a lot of paper work. Cryptography, digital signature, need to define possible encryption system (DES, original system, other). Laws are in the development process, the Parliament imports foreign laws from various countries, mainly from Russia where e– Commerce is also in its early stage.

5. Vard Mikaelyan Ministry of Transport and Communications 5 Taxation After each transaction it is necessary to sign a transaction act between seller and buyer. There is a need for personal identification number for each taxpayer. The system that will assign these numbers is in the development process. Absence of credit cards in real life – Armenian Card System (ARCA) will be implemented in 2003 at best. The lack of credit history system for clients causes the use of ATM cards (Automatic Teller Machine) only. There are problems with opening of bank accounts in foreign countries, as for local tax inspection it is very hard to receive any information about account. Double taxation with other countries - Armenia has few agreements to prevent double taxation.

6. Vard Mikaelyan Ministry of Transport and Communications 6 Customs Necessary to declare the information exchange over the border for each received payment. Extremely high prices for international mail delivery services (DHL, FedEx, EMS).

7. Vard Mikaelyan Ministry of Transport and Communications 7 Language Presence of two alternative coding systems for the Armenian alphabet. One is currently used, the new one may be approved in 2003.

8. Vard Mikaelyan Ministry of Transport and Communications 8 Terminology Non Armenian words for definition of the new products. Russian words are used for heavy industry and English words - for computers and the INTERNET, hence extremely hard to create a real working search engine. Official Armenian terms sound artificial and not usable, i.e. they are formally correct, but inconvenient for everyday use. Meanwhile all reports to governmental bodies are filed in Armenian, including reports within e-Commerce activities (bills, invoices etc.).

9. Vard Mikaelyan Ministry of Transport and Communications 9 Communications Strong monopoly of local operator – main idea of this monopoly if you wish inexpensive local communication price, please pay too much for international communications (INTERNET is international communication). Tariff rebalancing is still at its start-up phase. Necessary to develop new investment strategy for communications.

10. Vard Mikaelyan Ministry of Transport and Communications 10 In Real Life All changes are necessary to do step by step – it will take lot of time. First Armenian ISP to operate e-shop was "Arminco". They have started e- shop at the end of 1996 with only one item on sale – Tour Armenia Guide. E- Shop was in English due to foreign clients.

11. Vard Mikaelyan Ministry of Transport and Communications 11 Conclusion E-commerce has the possibility to develop in Armenia, but the cost per item would be higher, compared to ordinary retail shop. Existing E-shop www.zigzag.am for local market is in English, it has small audience, and lacks real-time credit card processing. (We admit this e-shop is one of the first steps toward further progress in e-Commerce).www.zigzag.am Another essential problem we are facing with is the insufficient IT proficiency within government and private sectors of Armenia.

12. Vard Mikaelyan Ministry of Transport and Communications 12 Suggestions National strategy of e-Commerce is in the development process and certain efforts are undertaken towards establishing strong legislative base in IT sector. Without this strategy national e- Commerce will come too late.

13. Vard Mikaelyan Ministry of Transport and Communications 13 Define and adopt of the concept of information law Adopt consequent legal acts on - - information, protection of information, encryption, identification of information due the level of access - classification of information a. with mandatory provision of access (laws, court resolutions, official appointments, tender announcements, etc.) b. with indefinite access status (need to be defined and then posted/not posted) c. with an identification as a state secret or confidential (need to circulate within special closed network) Applying of results – gradually, in line with the definition of access priviligies Benefits will emerge within 5 -10 years with further enhancement of possible solutions.

14. Vard Mikaelyan Ministry of Transport and Communications 14 Contact details Vard Mikaelyan Informatization Department E-mail: inform@cominf.am