Azerbaijan Country PresentationAzerbaijan Export and Investment Promotion
Foundation
BasicsAzerbaijan 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, Non-Aligned
Movement, OIC
Highlights:
1st democratic republic in the Islamic world
1st Opera in the Islamic world
Women voting right in 1918
(while in Italy - 1946; Switzerland - 1971; France – 1944)
Currency: Manat: 1 AZN = 1.27 USD
Characteristics of economy
ECONOMIC STABILITY
FAVOURABLE BUSINESS AND INVESTMENT
CLIMATE
PRIVATE SECTOR
CLEAR VISION FOR FUTURE
Azerbaijan Export and Investment Promotion
Foundation
Economic stability: Macroeconomy
Azerbaijan Export and Investment Promotion
Foundation
7.3 8.713.2
21
33.1
48.944.3
52.9
66 68.773.6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Nominal GDP, bln USD
2nd fastest growing economy among
179 countries for GDP per capita growth in
2001-2010
Source: The Economist
9th among 148 countries in terms of
stability of macroeconomic environment
Source: World Economic Forum
1.62 2.04 2.44.4
7.4
18.56 20.3
29.1
40
4650
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Strategic currency reserves, bln USD
Economic stability: Diversification
Azerbaijan Export and Investment Promotion
Foundation
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Non-oil Oil
Structure of GDP
14.9
13.6
8.3
11.9
11.4
15.9
3.2
7.99.4
9.7
10
0
2
4
6
8
10
12
14
16
18
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Non-oil GDP growth, %
0.3 0.50.8
1.3
2.4
3.53
4.6 4.5
5.75.3
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Foreign investments in non-oil sectors, bln. USD
Diversification of economy and
development of non-oil sectors are
key strategic priority
of economic policy
Economic stability: Competitiveness
GLOBAL COMPETITIVENESS REPORT 2014-2015
108
85
82
76
69
53
50
47
45
43
42
41
38
35
29
Kyrgyzstan
Armenia
Moldova
Ukraine
Georgia
Russia
Kazakhstan
Malta
Turkey
Poland
Latvia
Lithuania
Azerbaijan
Spain
Estonia 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.
1st among CIS countries (6 times running), 38th among 144 countries
Other indicators (place among 144):
Inflation – 1st
Macroeconomic environment – 9th
Government budget balance – 15th
General government debt – 12th
Labour market efficiency – 33rd
Capacity for innovation – 43rd
Technological readiness – 56th
Economic stability:Sovereign debt ratings
Azerbaijan Export and Investment Promotion
Foundation
Rating agency Term Rating Outlook
Long Term – Foreign Currency BBB- Stable
Short Term – Foreign Currency A3
Long Term – Local currency BBB-
Short Term – Local Currency A3
Long Term – Foreign Currency BBB- Stable
Short Term – Foreign Currency F3
Long Term – Local currency BBB-
Long Term – Foreign Currency Baa3 Stable
Long Term – Local Currency Baa3
Business enabling environmentAzerbaijan Export and Investment Promotion
Foundation
Reformist business environment
Firm legal basis and continuous improvement of
business legislation
Top-reformer of business regulations according to Doing Business Report
2009
Decrease of red tape, simplifying business
permitting and licensing systems
One-stop-shop for business
registration
One of the easiest start-up procedures in the world
2 days for business registration
Internet registration of individual entrepreneurs
and local commercial legal entities
Competitive tax system
E-filing and e-payment
Corporate tax – 20%;
VAT – 18%;
Simplified tax – 4% and 2%
No agriculture tax
Tax holidays for residents of industrial and high-tech
parks
User-friendly government services
428 e-services by state authorities
Web portal on business permissions and licenses
(www.icazeler.gov.az) and B2B facilitation (www.b2b.az)
One-stop-shop services by ASAN Service Centers
(State Agency for Public Service and Social
Innovations)
Business enabling environmentAzerbaijan Export and Investment Promotion
Foundation
WB Doing Business Report 2014
15th among the 50 economies narrowing the distance to frontier the most since 2005. The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005.
Economy Rank
Georgia 8
Kazakhstan 50
Bulgaria 58
Italy 65
Turkey 69
Azerbaijan 70
Romania 73
Czech Republic 75
Croatia 89
Russia 92
Ukraine 112
70th among 189 countries
Some sub-indicators:
Starting a business– 10th
Registering property – 13th
Investor protection – 22nd
Enforcing contracts – 28th
Getting credit – 55th
In Global Competitiveness Index 2013-2014 (rank/148):
Hiring and firing practices – 8th
Burden of government regulation – 21st
Strength of investor protection – 25th
Liberal investment climateAzerbaijan Export and Investment Promotion
Foundation
Welcoming policy National regime for foreign investors
No restrictions for any type of foreign
investment
Incentives for foreign investors
Guarantees
Guarantee against adverse changes in the
legislation, nationalisation and
requisition
No discrimination policy
Guarantee of compensation of
damages and repatriation of profits
Sophisticated legal base
Law on Investment Activity and Law on
Protection of Foreign Investments
Party to New York (1958) and Washington
(1965) Conventions
46 bilateral investment treaties
45 double taxation treaty
Institutional support
Azerbaijan Export and Investment Promotion
Foundation (AZPROMO)
Azerbaijan Investment Company
National Fund for support of
Entrepreneurship
Total Investments
187.6 bln USD
Domestic
99,4 bln USD
Foreign
88,2 bln USD
Non-oil sector
62 %
Oil sector
38 %
1995-2014
Liberal investment climateLiberal investment climateAzerbaijan Export and
Investment Promotion Foundation
1995-2014
Private sector:Entrepreneurship
Azerbaijan Export and Investment Promotion
Foundation
Private sector development through
privatisation, liberalisation, land
reforms and modernisation of business
regulations
Role of private sector in the economy:
GDP: 81.5%
Employment: 74%
Tax proceeds: 71.9%
Trade and services: 99.7%
Agriculture: 99.4%
Industry: 87.3%
Transport: 77.7%
ICT: 76.6%
Construction: 76%
In the period of 2003-2012:
Number of commercial entities increased by
2.33 times
Number of legal entities increased by 1.3 times
Number of individual entrepreneurs increased
by 2.8 times
Azerbaijan 2020: the vision of the future
Azerbaijan Export and Investment Promotion
Foundation
Objectives for economy:
GDP will increase twice
GDP per capita will reach 13,000 USD
Azerbaijan will become a full member of the group of “countries with high average income”
Azerbaijan will reach the highest positions in the group of “countries with high human development”
(according to the human development classification of the UN Development Programme)
Export-oriented economic model
Volume of per capita non-oil export will reach 1,000 USD
Innovation based efficient economy with increased productivity
Increased competitiveness through diversification, improved structure and strengthened
macroeconomic stability
Average annual growth of non-oil GDP will be more than 7%
Food industry/agricultureAzerbaijan Export and Investment Promotion
Foundation
Climatic zones/types – 9 out of 11 existing in the world and fertile land
Largest employer with up to 40% of employed workforce
Tax breaks and subsidies
Strong comparative advantage in exporting fresh fruits and vegetables
Import substitution and export orientation
Access to the regional markets: GSP, and FTAs with the CIS countries
Focus on productivity, competitiveness and marketing
TourismAzerbaijan Export and Investment Promotion
Foundation
Unique geografic and climatic conditions
In 2013 number of tourists increased by 3.9 times in comparison with 2003
World Tourism Organisation: Azerbaijan is top 2nd in terms of the growth of tourist inflow in percentage ratio (+27% in 2012)
Tourism related expenditures of foreingers: in 2003 - $0.577 bln and in 2013 increased by 2.8 times up to $1.6 bln.
Focus on establishment of modern tourism infrastructure, restoration of historical, cultural and natural sites and marketing
Potential for the development of almost all types of tourism
The largest project: winter-summer tourism complex in Shahdag – to be completed in 2016 and able to welcome 10 000 tourists
ICTAzerbaijan Export and Investment Promotion
Foundation
Average annual growth rate at 20-25% in the last 10 years
80% of income in ICT belongs to private sector, while mobile telephony and IT are completely private
Around 2.5 bln USD invested in ICT in the last 10 years, 72% of which accounts for private sector and foreign investments
70% of population uses internet, 50% uses broadband internet
Space industry started with the launch of the first national satellite in February, 2013
First among CIS States on share on internet users according to the WEF Global Information Technology Report 2013
Recent projects: High technologies park, ICT Development Fund, IT University
IndustryAzerbaijan Export and Investment Promotion
Foundation
Share in GDP: 46.3%
Intensive industrialisation policy: increase of 262% since 2005
Investment (2013): total $9.5 bln – 53.4% foreign, 46.6% domestic
Priorities on heavy industry, mechanical engineering, agroindustry, construction materials, chemicals, alternative energy, light industry
Establishment of industrial parks: chemicals, waste recycling
Focus on establishing supply chains and clusters as a driving force for industrial development
New industrial parks to be established
Special zonesAzerbaijan Export and Investment Promotion
Foundation
Total area: about 300 ha
Administration:“Sumgait Chemical Industrial Park” LLC under management of Ministry of Economy and Industry
Priority products: chemicals used in agriculture, construction, packaging and automotive industries
Infrastructure: All utilities are provided by plug-and-play concept
Tax holidays (corporate, property and land taxes and VAT on imported equipment) for 7 years
Key advantage: Availability of in-door raw materials, increasing domestic demand and close proximity to regional markets
Sumgait Chemical Industrial Park (SCIP)
Special zonesAzerbaijan Export and Investment Promotion
Foundation
Balakhani Eco-Industrial Park
Total area: 7 ha
Administration: “Tamiz Sheher” OJSC under management of Ministry of Economy and Industry
Priority areas: Recycling of plastics, tire/rubber, electronics, accumulators, non-ferrous metals, cabels and specific types of domestic waste
Infrastructure: Offices, training centers, laboratory, All utilities are provided provided by plug-and-play concept
Tax holidays (corporate, property and land taxes and VAT on imported equipment) for 7 years
Key advantage: Proximity to city waste landfill site, Material Recovery (waste sorting) Facility and modern Waste-to-Energy Plant
Thank you for the attention!Azerbaijan Export and Investment Promotion
Foundation
Azerbaijan Export and Investment Promotion Foundation (AZPROMO)
Baku Business Center
32, Neftchiler ave., Baku, Azerbaijan
www.azpromo.az
www.b2b.az
Tel.: (+99412) 598 01 47/48; Fax: (+99412) 598 01 52