Home page    » ECONOMY    » Investment climate in Azerbaijan   

Investment climate in Azerbaijan

  


align=

Attracting of foreign investments at country economy is one of the important composition parts of the strategy of economical development determined by Azerbaijan Government. For recent periods political stability and economical development in the country have increased interest of foreign states to long-terming investing in Azerbaijani economy. 
So far important laws had been passed and a legal base was created in connection with protection of rights and interests of investors in republic, inviolability of property,  creation of the similar conditions for business of  local and foreign entrepreneurs,   using the earned profit without obstacles. At present there are two laws regulating the investment activities in the Azerbaijan Republic: The Law of Azerbaijan Republic on investment activity” approved by the President of the Azerbaijan Republic on Jan 13, 1995 , under No 952 and “The law of Azerbaijan  Republic on protection of foreign investments”  approved by  the President of the Azerbaijan Republic on Jan 15, 1992 , under No 57. 
Moreover Azerbaijani Government had signed agreements with some foreign states on elimination of double taxation, promotion of and mutual protection of investments.
All restrictions related to converting of profit in foreign currencies, transferring to abroad, or reinvesting were liquidated, the combined rate of exchange has formed on the basis of principles of market economy. These actions had further increased the interest of the international financial institutions, foreign investors and economical organizations in Azerbaijan.
At present actions are carried out in connection with continuing of the economical reforms in the country, improving further the business environment, developing of non-oil sector along with oil sector. To attract investments in to economy of Azerbaijan Republic the policy of “open gates”  is implemented  here by government.
The process of integration of Azerbaijan to the world economy has received intensive character within last years. During 1995-2011th years more than 60% , i.e. about 63 billion from 119 billion of investment directed in the economy of the country was foreign investments. If the volume of the foreign investments in the 1995-2002th years has been 9 billion dollars, this figure has been increased by 6 times in 2003-2011 and reached 54 billion dollars. 
But 25.5 billion dollars directed at economy of the country during 1995-2011 was of non-oil sector and of 37.5 billion dollars of oil sector.  
Main branches attracting JV and foreign investment establishments, carring out activity in non-oil sector industry are construction, transport and trade. 
Businessmen from Turkey have 27. 6% of share in the creation of full foreign investment and JV enterprises. This figure is 11.7 % on UK, 6.8% on Russia, 5,9% on the USA and 2,9% on Germany. 

 Volume of investments directed at country economy (in million USD)

 

1995-2002

2003-2011

1995-2011

(total)

Total investments

12473,6

106247,8

118721,3

Domestic investments

3353,9

52443,2

55797,1

Oil sector

902,5

9024,1

9926,5

Non-oil sector

2451,7

43419,2

45870,6

Foreign investments

9119,8

53804,5

62924,2

Oil sector 1

6105,3

31333

37438,3

Non-oil sector2

3014,4

22471,5

25485,9


Volume of investments directed at oil and non-oil sectors of the country economy (in million USD)

1995-2002

2003-2011

1995-2011

(total)

 

Oil sector

7007,8

40357,2

47364,6

 

Non-oil sector

5466,1

65890,7

71356,5

 


Foreign investments directed at economy of country (in mln. USD)

1995-2002

2003-2011

1995-2011

(total)

Total foreign investments

9119,7

53804,5

62924,2

Financial credits

1652,3

14684,4

16336,7

From them credits to oil sector

0,0

727,8

727,8

Direct investments

7467,4

34264,2

41731,6

Oil bonus

0,0

192,8

192,8

Portfolio investments

0,0

781,7

781,7

Other investments

0,0

3881,4

3881,4


The system of One window
The President of the Azerbaijan Republic has signed Decree On Actions for provision of organization of “one window’ principle in activities of business subjects” dated Oct 25, 2007 in order to take the necessary measures for accelerating of the development of entrepreneurship in the country, increasing the favorability of business environment and simplifying the procedures of starting of business in the country.  According to Decree the only registration organ on “one window” principle was determined as Ministry of Taxes of the Azerbaijan Republic and this system has begun to works since 1st of January of 2008. Procedures to start business were reduced from 15 after application of the system of One window in Azerbaijan and the time spend for it  and has been reduced from 30 days to 3 days.   
Businessmen can carry out the exchange of documents with tax bodies and banks using the Internet Tax Dept (www.e-taxes.gov.az). Moreover No 195 telephone information services were established to answer the questions of businessmen, its acceptance and operative consideration.   
All juridical persons being engaged with commercial activities must register self in the Ministry of Taxes according to the system of One window.  
In order to improve the business environment in the Azerbaijan Republic, increasing the state care in this area some organizations function for these purposes:     
Azerbaijan Investment Company
Azerbaijan Investment Company was established in 2006 for regulation of state policy in supporting of development of business from one center, to provide investment attractiveness of the republic.  Basic duty of the company is to provide the promotion of the investments to the country economy, try to eliminate problems in this field. The purpose of investment activity of the company is mainly to acquire the stakes of JSC and other commercial entities in authorized capital, acting in non-oil sector of the country, as well as their shares and facilitate the long term investing. 
AZPROMO - Azerbaijan promotion fund of export and investments has been created in 2003 for development of the local production and export potential of the country, to encourage the investments attraction. The Fund does important works in dialogue of state –private sector with playing the bridge role among investors, local producers and government. AZPROMO helps to foreign investors in defining of the areas for investment projects, fighting with local bureaucracy and simplifying their coming to Azerbaijan. Local establishments benefit from foreign market surveys and consulting services of the AZPROMO, too.

Advantages of Azerbaijan for foreign investors: 
1. Favorable condition for foreign investments:
- the highest per capita direct foreign investment indicator in the region.
- Legal guarantees for investors. 
2. Developing rapidly and open economy:
- 26.4 %s annual growth of the GDP
- Annual growth of 19.8 %s of the turnover of foreign trade.
- Average import tariff degree: 5. 7%
3. Wide opportunities in non-oil sector:
- High growth in 5 last  years in the areas of most economical activities: Industry - 7.5 times, construction - 3.8 times, trade - 3.5 times, transport and communication - 2.9 times, social services - 2.8 times, agriculture - 2.1 times.
- Tax concessions to producer of agriculture products
4. Natural reserves: Minerals and fertile soil:
5. Suitable strategical position:
- Direct access to the Central Asian and Caspian region.
- Participation in international trade initiatives (Silk Road, North-South corridor) 
- Expanding Europe factor and joining to the policy of the New neighborhood.
1. Competitive local worker force
Speedy socio-economic development of Azerbaijan, measures implemented for the purposes to improve the business environment in the country etc achievements are always highly evaluated by authoritative international organizations. 
In the Doing business, 2012 report of the World Bank and International Finance Corporation Azerbaijan has taken the 66th place among 183 countries.   Azerbaijan, as well has entered the leaders group among countries of world on parameters to begin to business, simplicity of registering of the property. The country was in one line with developed states in areas of getting credit, carrying out of the works and in some other areas, too.
According to Doing business, 2012 report the best indicator in Azerbaijan is in the registration of the property.  So, according to prepared report among 183 countries Azerbaijan is in the 9th place on 10 different parameters because of the registration of the real estates. At the same time 4 procedures are required in Azerbaijan for transferring of the property, which takes 11 days with expenses of 0.2 percentages of the value of the property. It is one of the best indicators in the region. Let us inform for comparison that in the Eastern Europe and Central Asian, where Azerbaijan is related, the average indicator  on transfer of the property is 37, in neighboring Turkey – 44 days, in  Russia- 45 days, in Bulgaria- 66 days, in Romania- 70 days, in Iran – 163 days, in Ukraine- 166 days.  
According to the rating to begin business Azerbaijan is 18th among 183 countries. The country requires 6 procedures to begin the business. The number of the days is 8, expense demanded for beginning to business makes 2.7% of the per capita capital. Minimum capital is not being required at that. This indicator of Azerbaijan is better in comparison with Central and Eastern European countries . Because 11 days are required to begin business in these countries. As well these is less  number of the procedures demanded to begin the business in Azerbaijan in comparison with countries.
The state of Azerbaijan economy has been valued by international rating agencies, too. So, Standart & Poor’s rating agency had raised long-term sovereign credit of  Azerbaijan in the foreign and local currency in December 2011 to BBB- level and so investment  rating has been given to Azerbaijan. Agency, also had raised for one step the rating of short-term sovereign credit of Azerbaijan to A-3 level in the foreign and local currency from (the) B level. At the same time Fitch Ratings agency has kept the rating of long-term sovereign investment of Azerbaijan with positive prognosis in the local and foreign currency at the BBB- level. But Moody’s agency has changed prognosis on (the) sovereign rating in the level of Ba1 from “stable to positive   concerning to Azerbaijan.
All of these show once again that Azerbaijan is always in the focus of attention of leading investors of the world as developed country.



Oxunub: 152692



Azərbaycan Televiziyaları
İnternet Radio