Azerbaijan’s rising star in the constellation of international business heralds more than just the reintroduction of a reliable oil-producing partner on the eastern bulwark of Europe. The country is buzzing with FDI-related projects, ranging from agriculture to logistics to telecoms and, given its regionally strategic location and unique culture, opportunities for a variety of investors can be expected to emerge in the foreseeable future.

Azerbaijan’s people, known as businessmen since the times of Alexander the Great, have emerged from Soviet rule well-educated and globally aware yet eager to temper modernisation with a centuries-old respect for tradition. Their respect has its rewards: historical products such as brandy, silk and hazelnuts are still exported and a wealth of ancient and medieval sites are drawing increasing numbers of tourists to the country every year.

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With greater movement of people and goods, both the transport and construction industries are booming. Azerbaijan’s logistical needs are different than they were in the 20th century, and projects from oil pipelines to roads to warehousing are geared towards expanding its dominant position in the region.

Foreign investment into Azerbaijan’s infrastructure is seen as both a necessity for the country’s development and as an opportunity in its own right. Electric power, telephone lines and roads all suffered under Soviet-era neglect, especially in rural areas, and companies that develop these sectors will open up tourism possibilities in a region of incredible diversity. Nine different climates, from sub-tropical to alpine, coexist within Azerbaijan’s borders, and most region await development. Mineral resources are also abundant, and the government is committed to a balance between all industries.

Azerbaijan has been ranked number one in inflow FDI Performance Index for 2004 by the United Nations Conference on Trade and Development World Investment Report, 2005. There are subtler signs of how seriously the country takes the $25bn in FDI that has flowed in over the past decade, mostly into oil exploration. Important reforms in the business sector started in 1994, when president Heydar Aliyev strove to lead his newly reborn land forward and inked the first deal with international corporations. Major discussions between the government and the business community in 2003 led to further changes and boosted FDI inputs considerably. The founding of government agencies such as the State Oil Fund and the Azerbaijan Export & Investment Promotion Foundation in 2003 demonstrates a commitment to using the wealth to the fullest possible extent throughout the country. Azerbaijan is building on its Caspian Sea location with plenty of opportunities for investors in all areas from infrastructure to logistics.

Sustained development

Sustaining and broadening Azerbaijan’s foreign investment attractiveness is a primary goal of the Minister of Economic Development Heydar Babayev. The ministry is working closely with international organisations to facilitate reforms in the country. Mr Babayev also heads the TACIS National Coordinating Unit, which works with the ministry to streamline business regulation. Along with many other international organisations, the EU is actively supporting the reform process through its TACIS programme.

Azerbaijan Export and Investment Promotion Foundation (AZPROMO) was established by the Ministry of Economic Development of Azerbaijan in 2003 and is the sole agency officially tasked with the promotion of foreign investment into the non-oil economy of the country and with the support to Azerbaijani exporters. TACIS has supported AZPROMO through projects since August 2005 in order to contribute to the sustained development of the economy of the country.

The EU’s involvement in Azerbaijan has covered transport, agriculture and engineering education projects, leveraging the country’s natural assets of location, land and people. Baku boomtown

Mention Baku and one’s first thoughts are of oil. The city is well known as the birthplace of the international petroleum industry, and the 21st century is Baku’s second petroleum-driven economic surge. Today’s multinational corporations include some that started as small engineering firms, which made their names in Baku in the 1860s with the likes of the Nobel brothers. The city retains its 19th-century mansions and its oil is still a magnet, but mobile phone towers and a modern, international airport are other indications that the country is facing firmly forward.

As the only metropolis and capital on the Caspian Sea, Baku commands the lion’s share of FDI into Azerbaijan. Long a centre for exchange, it is also the base of the petroleum and chemical industries. Modern Baku sprang from ancient roots and the old walled city, and tourists are now finding the charm that traders have seen for a millennium.

While oil money has garnered the public’s attention, projects to modernise Baku are continually coming on line. Heydar Aliyev International Airport is the focus of British investment plans for a cargo terminal, the city’s harbour is dominated by the shipping cranes that make this the multi-modal centre of the Caspian Sea. Swiss and French investors are among those to have put finds into beverage production and construction material. An upgrade is planned for container servicing and the sector offers an important transit node for goods coming west from China through central Asia and then on via Tbilisi to the Black Sea.

Naturally, the banking sector is located in Baku. Financial services are in high demand, and the market is maturing quickly. There is room for well-known institutions with a presence in the international trade finance market, and those with experience in agriculture and textiles will find ready partners.

Azerbaijan’s position at the crossroads of Europe, central Asia and the Middle East ensure that the tradition of tolerance is still maintained. Baku has a lower crime rate than most western capitals, and centuries of Islamic heritage have instilled a deep-seated understanding of the value of personal relationships in business. Expect your Azerbaijani partners to get to know you before getting down to the finer details of business.

Award-winning city

Looking out over the harbour from the fortress walls, you can see Baku changing, with everything from infrastructure improvements to new housing and business centres, port facilities to petrochemical works being built or renovated on a constant basis.

With €4bn in foreign investment in 2005 alone, it is no surprise that fDi named Baku the 2006/2007 City of the Future in eastern Europe.

Azerbaijan’s modern economic sunrise started with multinational petroleum firms in 1994, and its leaders have ensured that light sweet crude has flowed as smoothly as possible. But this new dawn will enable people worldwide, in sectors as diverse as agriculture and tourism, to take part

 

 

AZERBAIJAN FACTFILE:

Population: 8,436,000

Capital: Baku

GDP: $13bn (2005)

GDP growth rate: 26.4%

Number of tourists in 2005: 1,261,686

Main sectors of industry: Oil, chemistry, agriculture, tourism

 

CONTACTS: www.azpromo.org

Azerbaijan Export & Investment Promotion Foundation (AZPROMO), Attn: Anar Guiliyev, Elshan Kurbanov.

E-mail: aguilyev@azerinvest.com, office@azerinvest.com

Tel: (99412) 5980147, (99412) 5980148