Armenia’s new mandatory stamping program for packaged water, set to take effect on May 1, 2024, aims to establish product traceability from production to sale. Introduced by the State Revenue Committee (SRC), this initiative is intended to enhance product control. However, several challenges could impact the program’s effectiveness and success.
The mandatory stamping requirement imposes additional costs on producers and importers, who now must invest in implementing the DataMatrix stamping system. This could present a significant financial burden, particularly for small and medium-sized enterprises, potentially raising the final price of products for consumers. Given that similar requirements have previously been introduced for tobacco and alcohol, which faced notable challenges, there is a risk that businesses may struggle to comply with this new requirement as well.
The SRC’s E-Mark system is designed to monitor product circulation. However, questions remain about the technological reliability of this system. Previous technical failures in similar systems have demonstrated that Armenia’s IT infrastructure can struggle to handle large-scale data management. If the E-Mark system fails to operate effectively, the entire initiative could face obstacles, as reliable traceability and monitoring are essential for achieving the program’s goals.
Complex and costly mandatory stamping systems can increase the risk of corruption, with some businesses potentially attempting to bypass the stamping costs through bribery. Additionally, stringent control requirements may discourage businesses from operating legally, pushing some to resort to the black market to avoid the complications associated with compliance.
While the program is presented as a consumer protection initiative, it could actually have the opposite effect by increasing product prices. Rising costs may reduce consumer purchasing power, especially in the context of Armenia’s existing inflation pressures. The program’s complexity may also encourage the spread of illegal, unstamped products in the market, which could be sold at more affordable prices but lack the safety and quality assurances intended by the SRC.
Mandatory stamping for tobacco and alcohol products was introduced with similar goals, but reports indicate that not all producers and vendors are fully compliant. The issues seen in these earlier programs could reoccur with packaged water if monitoring measures are not adequately enforced.
Although the mandatory stamping program for packaged water aims to strengthen product traceability and regulation, it poses challenges that may reduce its effectiveness. Increased costs for businesses, technological issues with system reliability, and the risk of corruption could undermine the program’s goals. If compliance becomes too burdensome, consumers may face price hikes or see a rise in illegal products in the market.
The SRC and government could consider simplifying the process and reducing burdens on businesses, potentially implementing innovative approaches to ensure a balance between cost and efficiency in achieving product traceability.
