PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Public Disclosure Copy Report No.: PIDC2287 Project Name Trade Promotion and Quality Infrastructure (P146994) Region EUROPE AND CENTRAL ASIA Country Armenia Sector(s) Other domestic and international trade (40%), General industry and trade sector (40%), SME Finance (20%) Theme(s) Export development and competitiveness (50%), Micro, Small and Medium Enterprise support (25%), Other Private Sector Development (25 %) Lending Instrument Investment Project Financing Project ID P146994 Borrower(s) Ministry of Economy Implementing Agency Ministry of Economy Environmental B-Partial Assessment Category Date PID Prepared/ 19-Nov-2013 Updated Date PID Approved/ 27-Nov-2013 Disclosed Estimated Date of Public Disclosure Copy 25-Mar-2014 Appraisal Completion Estimated Date of 29-May-2014 Board Approval Concept Review Track II - The review did authorize the preparation to continue Decision I. Introduction and Context Country Context Armenia is recovering from the sharp contraction experienced during the crisis. In spite of the recent recovery; however, persistent unemployment and poverty still remains. Total unemployment stood at 18% in 2012, significantly above the regional average. This project aims to support the Government of Armenia as it facilitates the development of a sustainable growth model that creates jobs and increases competitiveness. As a small, landlocked country in a difficult geopolitical position, where domestic demand is dampened by unemployment and low wages, it will be critical to develop a high-value added export basket with products and services that are competitive in global markets. Furthermore as an open economy, the enterprise Page 1 of 4 sector needs to produce goods and services that can also compete with foreign goods and services in their domestic market. Public Disclosure Copy Sectoral and Institutional Context The project is expected to lead to strengthened institutional capacity for carrying out investment attraction and export promotion efforts; and an upgraded National Quality system which provides modern and accessible services to enterprises. The primary beneficiaries of the project will be the enterprise sector, particularly SMEs. The Ministry of Economy, the National Metrology Institute, the National Institute for Standardization and the Accreditation Center are also expected to be major beneficiaries. Relationship to CAS The proposed project is consistent with the Country Partnership Strategy (CPS) for FY14 –FY17. Specifically, the project will cover the CPS pillars of Supporting Competitiveness and Job Creation. The project will support economic growth by upgrading key services in investment, export promotion and quality infrastructure which facilitate trade for exporters and promote FDI in tradable sectors.It will also support the restructuring of the enterprise support agencies, in order to improve public sector efficiencies and create an effective institutional framework. In line with the new corporate strategy, the project will work under the One World Bank Group umbrella. The project builds on previous and ongoing Bank projects including the Development Policy Operation (DPO), the first series of which is going to the Board in November 2013. The DPO will support: i) amending the insolvency legislation to enable out-of-court arbitration, corporate and debt restructuring, and enterprise refinancing, ii) enhancements to the legal and regulatory framework for secured transactions, including an internet-accessible electronic register for movable and immovable collateral, and iii) the creation of a one-stop shop as part of a collaborative, integrated border management approach. The Long Term Finance project which is going to the Board in March 2014 will facilitate the provision of long term loans for capital investments and working capital financing for exporters. The project also leverages IFC activities Public Disclosure Copy supporting the business environment in areas such as inspections. II. Proposed Development Objective(s) Proposed Development Objective(s) (From PCN) The project’s objective is to increase the efficiency and effectiveness of the government’s interventions to support the competitiveness of Armenian enterprises. The project is focused on helping the entities that have been charged with supporting Armenian enterprises to upgrade their quality - so that they are able to compete at home and abroad - to fulfill their mandate. The primary beneficiaries of the project will be the enterprise sector, particularly SMEs. The Ministry of Economy, the revamped enterprise support agency, the National Metrology Institute, the National Institute for Standardization and the Accreditation Center are also expected to be major beneficiaries. The administrator to be selected to administer matching grants component will also benefit from the technical assistance and know-how to manage these activities. Key Results (From PCN) Progress toward the PDO would be accessed through the following indicators: • Increase in % of FDI flow into Armenia mediated by Investment agency • International recognition of calibrations, certifications and accreditations issued by National Quality bodies. Page 2 of 4 • Improved service delivery by National Quality bodies as measured by surveys • Increase in technology absorption of beneficiary firms as measured by quality certifications Public Disclosure Copy III. Preliminary Description Concept Description The proposed project will have three main components: Component 1 seeks to strengthen the institutional framework which supports of investment and export promotion. Component 2 aims to support the Government of Armenia with the modernization of the National Quality Infrastructure. Component 3 seeks to upgrade technological capabilities and expanding market access for enterprises. A Project Management Unit (PMU) will be responsible for all the day-to-day project implementation activities. This component will finance consultants employed as part of the PMU, training, office equipment and incremental operating costs. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Public Disclosure Copy Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ V. Financing (in USD Million) Total Project Cost: 40.00 Total Bank Financing: 40.00 Financing Gap: 0.00 Financing Source Amount Borrower 0.00 International Bank for Reconstruction and Development 40.00 Total 40.00 VI. Contact point Page 3 of 4 World Bank Contact: Feyi Boroffice Public Disclosure Copy Title: Private Sector Development Specialist Tel: 458-7316 Email: fboroffice@worldbank.org Borrower/Client/Recipient Name: Ministry of Economy Contact: Vahram Avanesyan Title: Minister of Economy Tel: 374-10-52-61-34 Email: vavanesyan@mineconomy.am Implementing Agencies Name: Ministry of Economy Contact: Vahram Avanesyan Title: Minister of Economy Tel: 374-10-52-61-34 Email: vavanesyan@mineconomy.am VII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Public Disclosure Copy Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Page 4 of 4