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TRADE WINDS|DIPLOMATICA
Investment opportunities abound in Azerbaijan
By Farid Shafiyev
In a recent article about Azerbaijan’s
capital, Baku, New York Times travel
writer Kathleen Kingsbury lauds
its “magnificent European-style Beaux-
Arts mansions, built by the city’s first oil
barons a century ago,” which, she says,
sit next to the newly-constructed “Guggenheim
Bilbao-style Museum of Modern
Art” and dozens of new hotels, futuristic
malls and arcades.
This depiction typifies modern Azerbaijan,
which will celebrate the 20th anniversary
of its independence from the Soviet
Union this fall. The glorious past of the
first oil boom in the 19th Century is often
compared to the second oil boom which independent
Azerbaijan is now experiencing.
Over the past several years, Azerbaijan,
famous worldwide as an oil-producing
country, has continued its economic
growth despite the global financial crisis.
However, over the past 10 years, the government
has been carrying out reforms to
develop the non-oil sector aimed at the diversification
of the economy, thus creating
an auspicious condition for the production
and exportation of other products.
The government has taken a number
of steps aimed at the reduction of the
country’s dependence on oil revenues
and avoidance of the so-called “Dutch
disease,” which describes the negative
consequences that can accompany large
increases in a country’s income.
Non-oil exports, which have special
significance for the country, increased by
more than 16 percent in 2010. Currently,
the goods exported by Azerbaijan comply
with EU requirements. Major fast-growing
non-oil export products include fruit juices
(especially pomegranate juice), canned
products (jams and fruits), fishery (caviar),
mineral waters, hazelnuts, tea, olive oil,
furniture and carpets. These products are
in very high demand and sold at competitive
prices in international markets.
Azerbaijan is a country of wide investment
opportunities. Today, the country is
the regional leader not only in terms of
overall economic growth, but in its foreign
direct investments (FDI) attraction as well.
Within the last 15 years, $95 billion (USD)
has been invested in our economy, more
than half by foreign investors. Foreign
direct investments outside the oil and gas
sector currently are mainly in construction,
services, transport, telecom and
manufacturing. The main advantages of
doing business in Azerbaijan include such
important factors as political and financial
stability, favourable geographical location
and relevant FDI legislation.
The 2005 issue of Trade & Investment
(published by the United Nations Conference
on Trade and Development) named
Azerbaijan No. 1 globally in its FDI inflow
Azerbaijan continues to enjoy economic
growth in spite of the global financial crisis.
performance index. Azerbaijan is also a
front-runner in the Extractive Industries
Transparency Initiative, which sets a
global standard for transparency in oil, gas
and mining, and received the UN Public
Service Award in June 2007. In 2008, the
World Bank named Azerbaijan the world’s
leading reformer of business regulations.
In 2010, the World Economic Forum called
Azerbaijan a leading information and
communications technology user among
Eurasian countries. In January, the government
launched an unprecedented campaign
against corruption.
Bilateral business ties between Azerbaijan
and Canada have intensified considerably
over recent years but there’s
still plenty of potential. Bilateral trade
between the two countries increased from
US$20 million in 2004 to close to $1 billion
in 2008. Last year, trade reached $332.35
million, with exports to Canada at $317.07
million and imports at $15.28 million.
Our primary trade consists of Azerbaijani
crude oil exports to Canada. From Canada,
Azerbaijan primarily imports manufacturing
and construction equipment,
industrial and engineering technology,
electricity meters, gas turbines, medicine
and food industry items such as tools for
processing and harvesting.
In September 2004, the two countries
signed a convention on abrogation of
double taxation in respect to income and
property taxes and prevention of tax evasion.
At present, we are negotiating a foreign
investment promotion and protection
agreement.
The government of Azerbaijan attaches
great importance to developing bilateral
cooperation in various fields, especially
in the non-oil sector, including information
and communications technology
(ICT), renewable energy sources and the
knowledge-based sector. ICT is the No.
2 recipient (after the energy sector) of
foreign direct investment. Promising areas
of economic cooperation also exist in
infrastructure development and agriculture,
including food processing and seed
production. Agriculture is one of the important
sectors of Azerbaijan’s economy,
employing about 35 percent of the labour.
Cotton is Azerbaijan’s leading crop, together
with grapes (for wine production),
fruits, vegetables and tobacco.
There are plenty of opportunities for
cooperation in tourism. Located at the
crossroads of many civilizations, dotted
with mosques, churches, synagogues
and Zoroastrian temples, Azerbaijan attracts
many visitors. The shores of the
Caspian, the mountains, forests, rivers,
springs, lakes, summer recreation areas
and historical monuments are headline
tourist attractions. CTV recently featured a
unique oil spa — Naftalan — which cures
skin diseases and arthritis. Azerbaijan has
built its first ski resort and the government
is looking for investment in many touristoriented
projects.
The embassy has detailed information
on potential investment projects in various
sectors of Azerbaijan’s economy, as well
as information about priority investment
areas, which we regularly share with Canadian
businesses. We welcome Canadian
business people to visit our country, seize
the investment opportunities and witness
Azerbaijan’s growth with us.
Farid Shafiyev is Azerbaijan's ambassador
to Canada. Reach him at azerbaijan@
azembassy.ca or 613-288-0497.
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