Azerbaijan Export and Investment Promotion Foundation

AZERBAIJAN: BUSINESS AND INVESTMENT OPPORTUNITIES

SNAPSHOT

Azerbaijan Export and Investment Promotion Foundation

Establishment:

28 May 1918

Independence:

18 October 1991

Area:

86.6 thsd km2

Population:

9.48 million

Official Language:

Azerbaijani

Government system:

Presidential Republic

Membership in:

UN, Council of Europe, OSCE, OIC

Highlights: 1st democratic republic in the Islamic world 1st Opera in the Islamic world Women voting rights in 1918 (Italy - 1946; Switzerland - 1971; France – 1944) Currency:

Manat: 1 AZN = 0.95 USD

Azerbaijan Export and Investment Promotion Foundation

CHARACTERISTICS OF ECONOMY Characteristics of economy

Azerbaijan Export and Investment Promotion Foundation

ECONOMY IN BRIEF

GROWTH IN LAST 10 YEARS GROSS DOMESTIC PRODUCT

FOREIGN DIRECT INVESTMENT

FOREIGN TRADE

2014

75,2 bln. USD

8,0 bln. USD

31,0 bln. USD

2010

52,9 bln. USD

3,3 bln. USD

28,0 bln. USD

2005

12,2 bln. USD

4,2 bln. USD

8,5 bln. USD

Source: State Statistics Committee of Azerbaijan, Central Bank of Azerbaijan

E C O N O M I C D I V E R S I F I C AT I O N

Azerbaijan Export and Investment Promotion Foundation

Structure of GDP

Diversification of economy and 43

development of non-oil sectors are 59

key strategic priority 32 68

of economic policy

34 66

2003 2004

48 52

57 43

2005 2006

non-oil Non-oil GDP, growth %

14

14.9

oil

49

47

52

57

61

2009 2010 2011 2012 2013 2014

5.7 5.3 10

11.4 9.4

8

2

2007 2008

51

11.9

10

4

41

15.9

13.6

12

6

40

49

48

51

Foreign investments in non-oil sectors, bln. USD

18 16

60

53

39

8.3

7.9

4.6 3.5

9.7 7

0.3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

4.8

3

2.4

3.2

0

4.5

0.5

0.8

1.3

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Azerbaijan Export and Investment Promotion Foundation

C O M P ET I T I V E N E S S

Global Competitiveness Report 2014-2015 1st among CIS countries (7 times running, 40th among 140 countries Major indicators: Inflation – 1st Macroeconomic environment – 10th Government budget balance – 16th General government debt – 14th Labour market efficiency – 30rd Capacity for innovation – 43rd Technological readiness – 56th

The report assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.

D O Ibusiness N G B U S I environment NESS REPORT Favorable

Azerbaijan Export and Investment Promotion Foundation

Doing Business Report 2015 In the 10th of the best reformers! 15th among the 50 most successful countries in reducing the distance from the "forward line" for the period since 2005. Some indicators: Company Registration - 12 Registration of real estate - 10 Enforcing Contracts - 31 Paying Taxes - 33 In the Global Competitiveness Index 2014-2015: Hiring and firing - 8 The burden of government regulation - 21 Protecting investors - 25

Azerbaijan Export and Investment Promotion Foundation

S T R AT E G I C G E O G R A P H Y

SUPSA

ISTANBUL

ERZURUM

TANAP

CEYHAN

TBILISI

KARS

BAKU

Azerbaijan Export and Investment Promotion Foundation

B U S I N E S S C L I M AT E

Developed legal framework Top reformer of business regulations worldwide according to the WB Doing Business reports 2009 and 2015

Easy business start-up One-stop-shop system for business registration requiring 2 business days for start-up

Competitive tax regime E-tax system. Corporate tax – 20%, VAT – 18%, Simplified tax – 4% or 2%. Tax holidays for agriculture, industrial and technological parks

Government e-services 454 e-services by state authorities

Azerbaijan Export and Investment Promotion Foundation

I N V E S T M E N T C L I M AT E

Welcoming policy National regime for foreign investors with no restrictions for any type of foreign investment and no local content requirement

Guarantees for investors Guarantees against adverse changes in the legislation, nationalisation and requisition. No restrictions for repatriation of profits

Legal framework Sophisticated domestic legislation in addition to the international mechanisms for protection and promotion of foreign investment (New York and Washington Conventions, 46 BITs and 45 DTTs)

Institutional support mechanisms AZPROMO, Azerbaijan Investment Company, One-stop-shops at industrial and technology parks

L I B E R A L I N V E S T M E N T C L I M AT E Liberal investment climate

Azerbaijan Export and Investment Promotion Foundation

1995-2014

Non-oil sector

Domestic

62 %

104,7 bln. USD

Total Investments 199.4 bln. USD Oil sector

Foreign

38 %

94,7 bln. USD

Azerbaijan Export and Investment Promotion Foundation

A G R I C U LT U R E A N D F O O D

Climatic zones/types – 9 out of 11 existing in the world and fertile land

Tax breaks and subsidies Strong comparative advantage in exporting fresh fruits, vegetables and processed foods in the region JVs in greenhouse production of fresh fruits and vegetables

JVs in production of processed foodstuffs

JVs in beverage production

Azerbaijan Export and Investment Promotion Foundation

TOURISM

Unique geografic and climatic conditions

Continuously increasing number of foreign and domestic tourists Foreign tourists according to travel objectives: leisure and recreation (30,8%), business (29,1%), treatment and religious (2,7%), other (37,4%) Organisation of joint international events

Cooperation in tourism education

Investment in tourism facilities by Czech companies

Azerbaijan Export and Investment Promotion Foundation

ICT

ICT – one of the fastest developing sectors. Large scale projects implemented (e.g. satellites, fibre-to-home, popular PC) Income from the sector exceeds 2 bln USD (almost 6 times growth within 5 years)

70% + internet users

High demand for IT products High Tech Parks: Production of IT equipment, software, establishing regional data centers Establishing Czech IT companies in Azerbaijan

Azerbaijan Export and Investment Promotion Foundation

ICT: H i g h Te c h P a r k A z e r b a i j a n

Total area: 5 thsd m2 in Baku and 50 ha on the Pirallahi island Administration: "High-Tech Park" under management of Ministry Communications and High Technologies Benefits: Tax and customs privileges for a period of 7 years

Investment Package 1: Investments in real estate

Investment Package 2: Technology Transfer

Investment package 3: Startups and venture capital funds

Azerbaijan Export and Investment Promotion Foundation

INDUSTRY

Share in GDP: 41,5%

Intensive industrialisation policy: State programme on the development of industry in the years of 2015-2020 Growth of industrial production since 2003: 2,7 times

Investments into fixed capital: 10 bln USD (2013) – 53.3% is foreign investment Mining (72,7%), manufacturing (21,4%), electric energy, gas and steam (5,2%), water and waste management (0,7%) Manufacturing: food industry (37,8%), petrochemicals (36,4%), machinery and equipment (7,7%), metallurgy (5,6%), construction materials (5,4%)

Azerbaijan Export and Investment Promotion Foundation

SPECIAL ZONES Special zones

Sumqayit chemical industrial park

Balakhani Eko-industrial park Mingachaur industrial park High tech park Agro parks

Azerbaijan Export and Investment Promotion Foundation

CHEMICAL INDUSTRY

Large producer of petrochemical products

Priority: Sumgait Chemical Industrial Park

Fertilizers and other agrochemicals

Pharmaceuticals: insulin, medical disposable syringes and systems, antibiotics

Formaldehyde, melamine, soda, chlorine, olefiant gas, PVC, acyclic alcohols

Synthetic motor oils, oil and air filters for cars, geotextiles, car tires, household chemicals

Azerbaijan Export and Investment Promotion Foundation

ENVIRONMENT AND WA S T E T R E AT M E N T

Waste management and recycling, rehabilitation of contaminated lakes and lands

Priority project: Balakhani Eco-Industrial Park

Priority areas: Recycling and reuse Recycling and reuse: plastics, tire/rubber, electronics, accumulators, non-ferrous metals, cabels and specific types of domestic waste Production of road asphalt and water proofing materials utilising industrial waste

Seawater desalination plant

Azerbaijan Export and Investment Promotion Foundation

T H A N K Y O U F O R T H E AT T E N T I O N !

Azerbaijan Export and Investment Promotion Foundation

AZPROMO Baku Business Center 32, Neftchilar ave., Baku, Azerbaijan www.azpromo.az www.b2b.az

Tel.: (+99412) 598 01 47/48; Fax: (+99412) 598 01 52 [email protected]