The Armenian government introduced a new regulatory framework on November 21 to revamp the process for registering and operating duty-free shops. The decision outlines a prequalification system that requires entities aspiring to own and operate duty-free shops to meet strict criteria. This marks a significant shift from the existing approach, where only tenants or owners of customs-controlled zones were eligible to establish such operations.
The reform introduces a competitive element, with a newly established commission tasked with evaluating applications based on predefined prequalification standards. This evaluation ensures that only the most capable entities proceed to compete for the limited spaces within customs-controlled areas. The reform also opens the door for greater competition and transparency, breaking away from the exclusivity enjoyed by leaseholders under the prior system.
Key Changes Introduced:
Prequalification Standards: Applicants must meet detailed criteria to enter the registry of potential duty-free shop operators, ensuring higher quality and accountability in operations.
Competitive Bidding: Following prequalification, entities will compete through a transparent process to secure rights for operating in the customs-controlled areas.
Accountability and Oversight: The reform aims to enhance the monitoring of duty-free shop operations and improve financial reporting systems.
This shift in regulatory philosophy is expected to address past inefficiencies and create a fair competitive environment, encouraging better service quality and compliance. It also aligns with international practices where duty-free operations are often subject to rigorous competitive processes.
The reform demonstrates the government’s focus on promoting efficiency, transparency, and economic fairness within a strategically important sector. By introducing these changes, the Armenian government not only strengthens regulatory oversight but also signals its commitment to aligning with global business standards in the duty-free retail industry.
The introduction of prequalification standards and competitive bidding may inadvertently favor larger, well-resourced companies, potentially sidelining smaller local businesses that lack the financial or administrative capacity to meet stringent criteria. Adding layers of prequalification and competition may result in excessive bureaucracy, which could slow down the application and approval process, deterring potential investors. While the reforms aim to enhance transparency, the process of evaluating and selecting qualified entities through a commission could introduce risks of favoritism or opaque decision-making if not carefully monitored.
Critics might argue that focusing on revenue generation through competitive bidding places undue emphasis on profitability, potentially neglecting the broader socioeconomic benefits of promoting diverse ownership in the duty-free sector. Although aligning with global business standards is a stated goal, critics may question whether the reforms adequately consider the unique economic, cultural, and geopolitical context of Armenia, which may require tailored approaches rather than blanket adoption of international models.
IA policy is only as strong as its enforcement. If there are gaps in monitoring or implementation, the intended outcomes of transparency and fairness may not be achieved, leading to skepticism about the effectiveness of the reform.
