amcham azerbaijan annual report 2008-2009

Table of Contents2 Introduction4 AmCham Structure6 Membership12 Membership List22 Committees30 Projects36 Government Relations42 Events48 Miscellaneous

INTRODUCTIONThe American Chamber of Commerce in Azerbaijan is a private, non-profit businessassociation supporting and promoting the interests of business in Azerbaijan. Establishedin 1996, AmCham is composed of over 210 members and associates active in everysector of the Azerbaijani economy. We represent 80% of all foreign, as well as a significantportion of local investment, in Azerbaijan. Through our industry sector committees, ourmembers are able to share information, raise issues of common concern and proposepossible solutions. As AmCham members, companies and organizations have access to avast network of business information and contacts, in Azerbaijan and in the US.An active and positive influence in Azerbaijan, we conduct our mission with integrityand respect for the country, observing all local laws and insisting on the highest ethicalstandards in all relationships and transactions.AmCham exists because what we do matters to our member companies, we have madeit our priority to understand the issues facing our members and to be the voice of thesecompanies in trying to impact key decision makers and legislation impacting foreigncompanies in Azerbaijan. No other non-government organization in Azerbaijan has thisniche focus which makes us unique and relevant.AmCham iscomposed of over210 members andassociates active inevery sector of theAzerbaijani economy2

www.amchamaz.orgWhat is AmCham?Founded in 1996210+ Members80 % of total foreign investmentPrimary voice of businessPromoting American, Azerbaijani andmultinational companiesHigh level of professional experienceand expertiseRepresenting leading companies inEnergy, Banking, ICT, Legislative/ FinancialConsulting, Professional Services,Education, Real Estate Development,Health, Transportation, Travel andProduction fieldsAdvocate for an optimal business climatefor both foreign and local companiesoperating in AzerbaijanFacilitating knowledge exchange on timelyand relevant topics amongst its membersAdvocate for anoptimal businessclimate for bothforeign and localcompanies operatingin Azerbaijan3

AMCHAM STRUCTUREBoard of DirectorsDaniel MatthewsPresidentBaker &McKenzieStanley EscuderoVice- PresidentShieldbearerIlgar VeliyevVice- PresidentErnst & YoungMaksud MirzoyevVice- President (up to 2010)McDonald’sAlum BatiBoard MemberWicklow Corporate ServicesSeymur KhalilovBoard MemberBPMovlan PashayevBoard MemberPricewaterhouse CoopersBob DastmalchiBoard MemberChevronTeyba GuliyevaBoard Member (from 2010)Societe GeneraleWayne WalzBoard MemberNobel OilBakhtiyar MammadovBoard MemberHalliburtonDonald LuEx- Officio Board MemberUS Embassy4

www.amchamaz.orgStaffNargiz Nasrullayeva-MudurogluExecutive DirectorAysel SuleymanovaMember Relations and PRManagerAylan AghamaliyevaAdministrative AssistantZaur KerimovAccountantFatima IbrahimovaMember Relations and PRManager (up to 2010)CommitteesViladi ManiyevBanking, Finance and InsuranceCommitteeWolfgang GroegerTravel, Hospitality and TourismCommitteeUlduz TaghiyevaHuman Resources and LabourCommitteeIgor YakovenkoInformation & CommunicationTechnologies CommitteeHasan GouliyevTax and CustomsCommitteeDerek ParsonsHealth, Safety and EnvironmentCommittee5

MEMBERSHIPWhy join?AmCham membership is open to both major corporations and small businesses that sharea common interest in the mission of the Chamber.www.amchamaz.orgKey member benefit – best networkingopportunities in Azerbaijan!As a member of AmCham, your company has access to a vast network of businessinformation and contacts in Azerbaijan, the US Government, as well as valuableinformation on US businesses across Europe through ECACC (European Council ofAmerican Chambers of Commerce) and US Chamber of Commerce. AmCham keepsits members up to date on the current situation and latest changes in the legislationas well as general state of business in Azerbaijan.AmCham works to facilitate regular and open dialogue between our membersand key decision makers, voice members’ concerns and contribute to developingsustainable solutionsAmCham offers extensive and credible connections in the business arena. Youcan use this network to connect, communicate and stay on top of issues thatimpact your businessesFrom exclusive, targeted marketing opportunities to special events organizationand company promotion AmCham makes our members’ needs a priority. It is agood business decision that will add value to your business.6

www.amchamaz.orgAdditional Member BenefitsAnnual National Employee Salary SurveyQuarterly Inflation SurveyAmCham Membership DirectoryAmCham Resource LibraryEventsAnnual National Employee Salary SurveyConducted for the past ten years AmCham National Employee Salary Survey is now thelargest in the country continuing to be very useful for the entire business communityin Azerbaijan. The survey gives a detailed report on terms of employment and benefitsprovided by the leading foreign and local companies and organizations operating inAzerbaijan as well as remuneration figures for more than a hundred different positions.See more about the survey in our projects section, or visit our website:www.amchamaz.orgQuarterly Inflation SurveyThe Consumer Price Index (CPI) is designed to measure the change in the average level ofprices paid for consumer goods and services by private households. AmCham members findit useful in setting pay increases, product prices, etc. The CPI can also be used to determinethe value of a sum of money from the past at today’s level.See more about the survey in our projects section.AmCham Membership DirectoryUpdated constantly, the online membership directory is a complete listing of AmChammember companies and organizations with a description of their activities with up-to-datecontact information and resource data. Using a special “Members only” section of AmChamwebsite members can access and browse the Membership Directory choosing companiesaccording to sectors and reaching their contact info in one click as well as constantly updatetheir company information so that other members get their up-to-date contacts immediately.AmCham Resource LibraryAs a member, you have full access to our resource library, which has information on businesspractices and trends, local legislation, current committee work and other valuable information.Resources include:AmCham White PapersAmCham Annual ReportsIMPACT Azerbaijan Quarterly Magazine“Doing Business in Azerbaijan” guidesBusiness briefs and tax&legal alerts from the leading consulting firmsPlease visit our website for more detailed information.7

Additional Member BenefitsEvents:Your Chance to Get Involved and NetworkAs a member, you are invited to attend a variety of events throughout the year, all plannedto help your business develop. These include mixers for networking, luncheons forlearning, networking and promoting, charity sponsorships for high profile visibility andsocial contributions.See our “Events” section for more details.An Opportunity to Shape the FutureAmCham supports the collective interests of our members by proposing changesto improve the business environment for both local and international companies inAzerbaijan. Members represent their companies on committees in the areas of Taxand Customs, Banking, Finance and Insurance, Human Resources/Labor, IT, HSE andTravel, Tourism and Hospitality and forums for expressing member views on issues andproblems. Suggestions are compiled and submitted to the relevant ministry, and often goon to become a law. AmCham’s committees have contributed to the process of amendingseveral key Azerbaijani laws, achieving a more conducive environment in which to dobusiness. Working within these committees gives your company the opportunity to makea real contribution to the future of business in Azerbaijan.AmCham’s committees havecontributed to the processof amending several keyAzerbaijani lawsPromotional & Sponsorship OpportunitiesAmCham members collectively represent a desirable target market for a variety of goodsand services. With many different types of events taking place throughout the year, weprovide numerous opportunities to make sure your company gets noticed at events, inthe newsletter, online and during AmCham promotions. If you are interested in becominga sponsor, please contact AmCham at +99412 497 13 33 orchamber@amchamaz.org8

www.amchamaz.orgMembershipOur mission is to promote the business interests of our members by working to improvethe business climate in Azerbaijan and by providing services to our members. We currentlyhave over 210 members and associates and the number is increasing.Membership of the Chamber is composed of Members and Associates.Member Companies of the Chamber are legal entities, with registered offices in Azerbaijan,doing business in Azerbaijan, and interested in the purposes for which the Chamberis organized. Member Companies are entitled to vote, i.e. they have a right to vote andnominate themselves for election to the Board of Directors. The given advantage is the greatopportunity to get in close contact with the Government, attend meetings with correspondingstate authorities, participate in Chamber's decision making, promote your business moreefficiently and attend various events on the Government level. AmCham Board of Directors isthe Supreme Body of the Chamber. Other benefits include: larger representation of RegularMember companies in our publications; Regular members have complimentary attendanceto our monthly luncheons (1 person per company); logos of our Regular members areprominently displayed on our stands on the various exhibitions as well as the newly launchedMember2Member Program specifically designed for this type of membership.Associates of the Chamber are eligible to participate in all kinds of activities; receive ourregular publications, including Membership Directory and Quarterly Inflation Survey andparticipate in the Annual National Employee Salary Survey. Associates, however, are notentitled to vote or serve on our Board of Directors.Our mission is to promote thebusiness interests of our membersby working to improve the businessclimate in Azerbaijan and byproviding services to our membersTo apply for affiliation with AmCham, a candidate must submit an onlineapplication in the form adopted by the Board of Directors. Membershipapplications are available on our website at www.amchamaz.org. Companyregistration certificate issued either by Ministry of Taxes or the Ministryof Justice should be attached to the application. A candidate meetingthe objective and subjective requirements for affiliation with AmCham isaccepted as either a Member or Associate upon receiving an affirmativemajority vote of the Board of Directors and paying the first year’s feefor the candidate’s category of affiliation. To maintain affiliation withAmCham, Member and Associates must continue to meet our eligibilityrequirements, be in good standing in the community, and be current withall financial obligations to AmCham.9

AmCham Azerbaijan Yearly Growth20092082008192200718320061682005160200414220031172002100200189200079199974199869199719962147Membership Growth in 2002-2009208Number of Associate and Regular Members210190170150130110905010911716018319210

www.amchamaz.orgMembership Growth by typeMembership by Sectors for 2009504540353025201510501. "Energy"2. “Professional Services”3. “Travel/ Tourism”4. “Production/Mnfg”5. “IT/ Communications”6. “Consumer Products”7. “Health/ Medical”8. “Diplomacy”9. “Education”10. “Other”11. “Real Estate Development/Mgmt”12. “Non Profit and Development”13. “Banking/ Financial”14. “Transportation”15. “Agriculture”11

MEMBERSHIP LISTRegular Members12

www.amchamaz.org13

www.amchamaz.orgMAERSK DRILLING15

16RoyalBank

www.amchamaz.org17

Associate Members18

www.amchamaz.org“Citimart”Supermarket19

www.amchamaz.org21

COMMITTEESAmCham is comprised of six industry sector committees. Committee work iscarried out by a group of qualified representatives of AmCham Membership, on avoluntary basis. This way, AmCham members are able to share information, raiseissues of common concern and propose possible solutions. The focus of committeemeetings depends on the current situation and topics of importance at the time inAzerbaijan, to include newly adopted laws, regulations and amendments, mutualproblems of committee members and best practice sharing. Any employee of anymember or associate company can participate in relevant committee activities. Ifyou are interested in becoming a committee member, please let us know via e-mail:chamber@amchamaz.orgStanding CommitteesBanking, Financeand InsuranceTax and CustomsHuman Resources/LaborInformation & CommunicationsTechnologies (ICT)Health, Safety andEnvironment (HSE)Travel, Tourism and Hospitality22

www.amchamaz.orgCommittee MeetingsAmCham committee meetings are a closed forum for members and colleagues to stay intouch, communicate in an informal environment, contribute by sharing best practice anddiscuss mutually important issues.Total of eighteen Committee meetings were held during 2009 with over 400 people inattendance. In addition to a variety of member presentations, some of the meetingsfeatured specifically invited experts in the relevant fields including Mr Karry Marchesefrom Chemonics International and Dr Dileep Mehta from University of Bombay.23

Banking, Finance and InsuranceThe Committee, which meets quarterly, aims to deal with the relevant banking, financeand insurance issues by organizing best practice discussions amongst the committeemembers. This year it is addressing issues such as:Management of monetary policy in an inflationary environmentPreparation of suggestions on decreasing the risks in financial sectorEncouragement of more foreign investments into the trade and finance sectorAttraction of loans and deposits from the foreign financial markets into the bankingsectorImprovement of operation regime related with bank accounts of non-residentsDevelopment of legislation for elimination of ambiguity on application of doubletaxation for legal entities and physical personsImprovement of tax regime in the banking, finance and insurance sectorsDevelopment of legal framework related to bank, finance and insurance sector24

www.amchamaz.orgTax and Customs CommitteeThe Tax and Customs Committee proactively addresses both existing and new tax issuesby maintaining a dialog with the Ministry of Taxes and Ministry of Finance, commentingon draft legislation and organizing forums for discussions of ‘hot topics’ and promoteschange in the customs system through consistent interpretation and application ofexisting regulations. We encourage growth and change in harmony with World CustomsOrganization (WCO) standards in the region. The main aim of the Committee is furtherdialogue with the customs authorities to reduce miscommunication, make clear the needfor action and increase transparency in transactions. We continue to keep in close contactwith all members, non-members and government officials through regular meetings andattendance of various forums and conferences, as well as increasing awareness of themembership on tax issues and tendencies. We strive to stay at the forefront in the area by:Proposing amendments to tax laws and regulations with member inputAddressing social insurance related issuesCooperating with the Ministry of Finance, Ministry of Taxes and Social Insurance Fundand other agencies as appropriateInviting representative tax and finance professionals to speak at Committee meetingsMembers’ experience sharing in dealing with customs and other border agenciesImproving the communication process between Customs and trade & industryrepresentativesUpdates and discussions on the Tax and Customs Code amendmentsExport Promotion and Profit Tax Discussions25

Health, Safety and Environment (HSE)As a natural avenue for sharing information among AmCham members the Committeeaims to raise the level of awareness of issues in Health, Safety and Environment areas andto share best practices with interested AmCham members by providing training sessionsand holding seminars.We strive to identify the areas of concern among AmCham member organizations andbetter understand the issues raised by the Government of Azerbaijan. For this purposethe Committee develops and distributes questionnaires (normally at AmCham luncheonsor online), holds open meetings for non-Committee members to allow for a broaderforum, organizes regular meetings with the governmental bodies and invites them to HSEmeetings and AmCham luncheons as guest speakers.26

www.amchamaz.orgHuman Resources and LaborThe Committee enables AmCham members to share best practices and resources in the fieldof human resources management. Its efforts focus on providing essential information toAmCham members and participating Committee members through:Annual National Employee Salary SurveysQuarterly Inflation SurveysResources on the current Azerbaijani labor law legislationTraining Sessions on HR Management(delivered by committee members on voluntarily basis)Best Practices presentations (delivered by committee members)Sharing human resource management expertise with local educational institutionsConstant updates on the process of obtaining residence visas and work permits forexpatriate personnel, positive and negative experience sharing, regular meetings withState Migration Service representativesLabour Inspection Audit experienceUpdates and discussions of Labor Code amendments27

Information and CommunicationsTechnologies (ICT)AmCham continues coordinating its efforts to provide specific recommendations tothe Government of Azerbaijan to assist in meeting its goal of developing ICT sectorinto the second largest industry after the oil and gas– i.e., to help lead Azerbaijan intothe era of a liberalized and competitive ICT environment, to provide appropriate legaland regulatory recommendations, and also to provide more specific guidance on oneof the central issues in creating a competitive environment in ICT sector.To achieve these goals, the AmCham ICT Committee will continue making itsrecommendations to assist ICT development and to create favorable and equalconditions for all participants (state structures, research and education institutions,private companies, NGOs, public organizations and citizens). Over the past monthsthe committee focused on some of the following topics:Solutions for a Crisis: Move Your Business onto the WebHow to increase your company’s competitiveness by use of ERP (Enterprise ResourcePlanning) systemsIt also held discussions on evaluating Azerbaijani telecom market and preparation ofthe report to be presented to Azerbaijani Government28

www.amchamaz.orgTravel, Hospitality and TourismAmCham Tourism Committee meets monthly to discuss the present situation on tourismin Azerbaijan and how to improve the country as a tourist destination. The committee’s2008-2009 Work Plan included:Working with the Ministry of Tourism & Culture and individual hotels to establish theAzerbaijan Hotel Association (AHA)Working together with Azerbaijan Tourism Institute to develop a panel of professionalswhich will administer classes to develop best practicePromoting Azerbaijan as a tourist destinationDiscussing problems and proposing solutions for the tourism sector29

ProJectsThe White PaperAmCham is closely cooperating with theAzerbaijani Government to promote thedevelopment of the private sector. Asrepresentatives of the international and localbusiness community in Azerbaijan, we havea strong interest in seeing business succeedin Azerbaijan. The key to that success isa business environment which permitsbusinesses to thrive. A healthy, competitivebusiness climate is not only good for businessbut also for all the citizens of Azerbaijan,through the creation of jobs and wealth.AmCham, as the leading advocate of businessin Azerbaijan, supports the Government’sinitiatives to improve Azerbaijan’s businessclimate. Our members have invested in everysector of Azerbaijan’s economy, and areuniquely placed to provide the Government with insight into the issues which need to beaddressed, in order to make Azerbaijan a highly competitive, attractive place to invest anddo business.A significant part of AmCham’s contribution is reflected in our White Papers, consistingof “Observations and Recommendations for Improving Azerbaijan’s Business Climate”. Inthis publication, we identify the major obstacles to the further development of Azerbaijan’sprivate sector, especially in the non oil and gas sector.Emphasizing the success Azerbaijan has achieved during the last decade, we also stressareas which are still in need of improvement and propose possible solutions. In the WhitePaper, we provide a brief overview of all sectors of the Azerbaijani economy, and highlightthe progress achieved as a result of a successful government strategy. While some ofour comments are critical of certain aspects of the Azerbaijani business climate, we haveendeavored to make the White Paper as constructive as possible by providing suggestionsfor improvement and offering our assistance. The White Paper was been prepared in a spiritof cooperation and in the hope that our contribution can help accelerate the process ofAzerbaijan’s development, improving the business climate while at the same time increasingthe prosperity of the country.The first edition of the document has been presented to the late President Heydar Aliyev in2001. Second edition has been presented to President Ilham Aliyev in November 2005. Thelatest edition of White Paper that has been presented to President Ilham Aliyev by US DeputySecretary of Commerce John Sullivan in October 2008.30

www.amchamaz.orgNational Employee Salary SurveyThis was the 11th Annual National Employee Salary Survey report prepared by the AmericanChamber of Commerce in Azerbaijan.Collection date for the survey was September 20, 2009.All data was collected anonymously through a Confidential Code Procedure, concealingcompany identity. All data was destroyed on publication of this survey.Method of SurveyInformation was gathered through confidential questionnaire.Jobs SurveyedTwenty six main job families were identified:ManagementHuman ResourcesAccountingTax and LegalBankingPurchasing, Warehouse & LogisticsMarketing & SalesPublic & Government RelationsAdministration & SupportInterpreter / TranslatorHealth Safety EnvironmentInformation and Communication TechnologiesEngineering / ConstructionDrilling EngineeringQuality ControlMarine SpecialistsSubsurface StaffSecuritySkilledSemi-Skilled / Manual WorkerMedicalDriverHousekeepingWaiter/BarmanCommisOtherBelow are some of the highlights of the Survey.EmploymentTotal employment for the 91 participating companies represented 14,185 individuals.In 2008, total employment for the 97 participating companies represented 13,384 individuals.Medical benefits & medical insuranceThis year 82% of the participating companies reported providing some type of medicaltreatment.31

National Employee Salary SurveyIn 2008-80% of those companies providing some type of medical benefits:Percentage providing care only in case of emergency or work accident . . . . 15.00%Percentage providing medical care within on-site clinic . . . . . . . . . . . . . 27.00%Percentage providing cover in a ‘Western standard’ clinic . . . . . . . . . . . 49.00%Percentage covering the benefit in the form of medicalinsurance for employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.00%Vision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.00%Dental Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.00%Immunization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.00%Prescription allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.00%Percentage providing a limited amount for Medical Insurance Plan(per contracting year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.00%Average limit for Medical Insurance (per person) . . . . . . . . . . . . . .775.28 AZNFamily member coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.00%Co-payment allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.00%Other benefitsPercentage of companies who offer the following benefits:Transport to/from work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29%Company Car authorized for personal use . . . . . . . . . . . . . . . . . . . . . 21%Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%English Language Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53%Other Training (e.g. Vocational / Professional) . . . . . . . . . . . . . . . . . . . 78%Family Support Allowances (in addition to social fund contribution). . . . . . . . . 0%Interest free loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13%Sports/fitness club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20%Mobile telephone for private use (60% of this group allows Long Distance) . . . 39%Travel allowance (other than covering business travel expenses) . . . . . . . . . 14%Meals* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29%Meal Allowances* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16%Loyalty or Safety Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22%Redundancy payments beyond statutory legal requirements. . . . . . . . . . . . 21%Other Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27%Accidental Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27%Non-Work related injury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24%Meals & meal allowancesCompanies were asked to specify benefits provided if there were differing benefits byemployee category.The table shows benefits provided for the following:A) Managers/SpecialistsB) Non-specialist level employees32

www.amchamaz.orgNational Employee Salary SurveyOf those companies providing Meal and Meal Allowance benefits by level, the followingdistribution by employee category was reported.2009Type of benefit % of Companies Amount per dayMeals (lunch, dinner etc.) Level A 29% 6.25 AZNMeals (lunch, dinner etc.) Level B 23% 5.95 AZNMeal Allowance Level A 16% 6.11 AZNMeal Allowance Level B 10% 5.72 AZN2008Type of benefit % of Companies Amount per dayMeals (lunch, dinner etc.) Level A 31% 6.64 AZNMeals (lunch, dinner etc.) Level B 29% 6.24 AZNMeal Allowance Level A 15% 6.73 AZNMeal Allowance Level B 11% 4.83 AZNSalary IncreaseIn 2009 74% of the participating companies reported giving a regular Salary Increase.In 2008 - 85%25 of the participating companies had a Special Salary Increase for Inflation.In 2008, 45 of the participating companies had a Special Salary Increase for Inflation and2 had monthly Salary Adjustments for Exchange Rate fluctuations)2009Average Salary Increase for all National Employees . . . . . . . . . . . . . . . .14.56%Average Salary Increase for Non-Specialist Level National Employees. . . . . . 13.32%Average Salary Increase for Managerial or Specialist Level National Employees. 14.60%Special Salary Increase for Inflation . . . . . . . . . . . . . . . . . . . . . . . .12.87%Monthly Salary Adjustments for Exchange Rate fluctuations. . . . . . . . . . . . . . . -2008Average Salary Increase for all National Employees . . . . . . . . . . . . . . . 20.56%Average Salary Increase for Non-Specialist Level National Employees . . . . . 18.93%Average Salary Increase for Managerial or Specialist Level National Employees. 21.75%Special Salary Increase for Inflation . . . . . . . . . . . . . . . . . . . . . . . 15.63%Monthly Salary Adjustments for Exchange Rate fluctuations. . . . . . . . . . . . 3.6%30% of companies surveyed have Fixed Annual Salary Reviews, while others review as needed.32.22% of companies already have Forecast of Salary Increase over the period of next12 months. The Average percentage of Forecast Increase is 12.53%.In 2008, 34% of companies had Forecast of Salary Increase. The average percentage ofForecast Increase for 2009 was 16.91%, but actual increase in 2009 was 14.56.33

National Employee Salary SurveyBonusesIn 2009 bonuses were paid to 500 National Employees, which is 3.52% of the total of14,185 National Employees.In 2008, bonuses were paid to 4,985 National Employees, which is 37.25% of the total of13,384 National Employees.Salary Survey Participation Growth110100908070605040302010382117 234539 39289257Participating Companies48698074127612380100 1000 01998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20091850020483105ParticipatingEmployees162761071454497133849114185250002000015000100005000Annual National Employee Salary Survey 200911010090807060504030201001998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200934

www.amchamaz.orgInflation Survey 2009In the absence of reliable data, AmCham Azerbaijan has established its own CPI index.Changes in the AmCham Azerbaijan Index of Prices (AAIP) are reported on a quarterlybasis. The survey is conducted collecting the prices of a fixed representative group or‘basket’ of goods and services every quarter. These prices are then compared to theprices of the same goods and services from the previous quarter and the price changecalculated. The prices of these goods and services are then combined into a single indexmeasuring the overall level of prices. Different ‘weights’ are attributed to the various goodsand services to reflect the average expenditure by households.In practice, the CPI is calculated by collecting a sample of prices for a selection ofrepresentative goods and services. Prices in one quarter are matched against the previousquarter to generate a matched current price against a matched previous price. If a price ismissing this quarter (e.g. because the product or service is unavailable) but was presentin the previous quarter it is deleted from the previous quarter’s calculation to ensure acorrect match.The sample of representative goods and services for which prices are collected eachperiod is held constant and the set of weights is fixed to reflect the importance in thetypical household budget of the particular good or service. It is possible that, following thetrial period, the weights might need to be adjusted and the AAIP recalibrated.AmCham reports two AAIPs -one for expatriate households (AAIPE) and one for Azerbaijanihouseholds (AAIPA). Prices are for Baku.Breakdown of AAIP changes (the base is 100 at 31 March 2006)III Q/2009 IV Q/200935

GOVERNMENT RELATIONSAzerbaijani Government RelationsOver the past eleven years, the Azerbaijani Government has done much to improvethe business climate in Azerbaijan. While Azerbaijan has seen huge inflows of foreigninvestment in the oil and gas sector which will continue to be important, the Governmentrecognizes that the development of the non-energy sector is crucial to Azerbaijan’sfuture and to the prosperity of its people. Further implementation of the current policydirection and continued reform of ills inherited from the Soviet period (as well as othersof more recent vintage) will enable a notable and prosperous Azerbaijan to become theindispensable regional financial and support hub for the East-West trade route, the CaspianBasin and Central Asia.AmCham’s collective knowledge, expertise and skill give us a strong voice which enables usto influence Azerbaijan's policymaking process. In support of the increasing prosperity withinAzerbaijan, AmCham and its committees engage in direct advocacy through investmentconferences, meetings with Azerbaijani officials and American diplomats and officials.AmCham also provides its members with opportunities to discuss important economicand trade matters with top governmental decision-makers. Regular meetings with similarorganizations, both in Azerbaijan and overseas, allow for a valuable exchange of ideas andinformation, policy coordination and a vision for achieving common strategic goals.Within the legal framework of our activities, AmCham consults its committees for inputand presents them to the appropriate ministries. These changes are heard in Parliament,and can greatly impact the final version of new laws. AmCham is also working to increaseits input and the impact on the legislative process.AmCham and its committees have produced a number of policy documents, the mostimportant of which is our White Paper, entitled “Observations and Recommendations forImproving Azerbaijan’s Business Climate.”36

www.amchamaz.orgRelations with theState Migration ServiceAmCham Azerbaijan has been actively working with the State Migration Service (SMS) tofacilitate the process of obtaining temporary residence and work permits for the expatriatestaff of our member companies. Over the past six months we have held a number ofmeetings with the Chairman of State Migration Service, General Arzu Rahimov. In additionto the working meetings with some of AmCham Board Members on regular basis, GeneralRahimov addressed the entire membership by speaking on one of our Monthly Members’Luncheons as well as held a separate meeting with members of AmCham HR Committee.We have also hosted a seminar with attendance of over 90 people at which our memberswere able to ask questions directly to migration officials.One of the major concerns expressed by our members since the introduction of a newsystem was inability to use third party consultants to prepare and submit the applicationson their behalf. Further to the discussions with SMS we have secured a right for ourmember companies to use the services of the wide range of consulting firms representedin the chamber.We hope this will significantly ease the process for those of our members that preferusing the services of consulting firms to apply for permits. State Migration Service does,however, encourage companies to apply directly as they are committed to continueimproving the application process.37

Relations with the ParliamentIn 2009 a number of high level meetings with various bodies of Azerbaijani Parliamentincluding the Head of Secretariat of Milli Majlis Safa Mirzoyev, the Chairman of theEconomic Policy Committee Ziyad Samedzade as well as Heads of Departments ofEconomic Legislation and Information Resources Rauf Hajiyev and Rashad Azizov havebeen held. These meeting have resulted in the establishment of a close working relationshipwith the Secretariat and the economic block of Milli Majlis and extensive future plans fordevelopment and expansion of this cooperation. As a first step of AmCham-Milli Majliscooperation we have been invited to submit our comments on a number of draft lawsthat will be considered in the spring session that commenced on February 2 nd , 2010. Wedecided to start with a Competition Code that has been in the agenda of the Parliamentover a year and will be discussed in the third reading in this session. We have put togethera working group comprised of the interested members and number of leading IFI’s toreview the draft and prepare formal comments. The first meeting of the working group tookplace on February 1 st where the members were presented with the analysis of the draft.In addition to highlighting the shortcomings of the existing draft, a number of additionalprovisions based on the best practices of EU and US legislation has been discussed. Amemorandum containing the summary of the comments will be prepared and submittedto Milli Majlis within the first decade of February.Concurrently, a larger work continues with the leadership of Milli Majlis to develop an efficientand sustainable model of cooperation where draft laws both initiated at the Parliament andproposed by other bodies will be provided to AmCham as soon as they pass the first reading,giving us enough time to translate the draft, study it, form a working group if needed andsubmit our comments. We would also have an opportunity to review the draft again afterthe second and before the final third reading in case it undergoes any changes in meantime.We are very excited about these prospects of enhanced cooperation with the Parliamentaimed towards reforming Azerbaijan’s legal framework to further increase country’scompetitiveness and secure its long term development and prosperity.38

www.amchamaz.orgAmCham International RelationsAmerican Chamber of Commerce is a member of the United States Chamber of Commerce(USCC), the world's largest business federation representing the interests of more than 3million businesses of all sizes, sectors, and regions, as well as state and local chambersand industry associations. From its headquarters near the White House, the Chambermaintains a professional staff of hundreds of the nation's top policy experts, lobbyists,lawyers, and communicators. Special initiatives covering energy, infrastructure, educationand training, and workforce rules help drive the pro-business agenda. The Chamber isalso active in shaping legal policy through its in-house law firm, the National ChamberLitigation Center (NCLC), and through the Institute for Legal Reform (ILR). The Chamberalso runs the Center for International Private Enterprise (CIPE), a program of the NationalEndowment for Democracy. Through its growing network of grassroots business activists,the Chamber makes a tremendous impact educating voters, turning out the business vote,and advancing legislation on Capitol Hill. In 2009, the Chamber hosted more than 2,500programs, meetings, seminars, and forums with various participants, including membersof the Obama administration, members of Congress, and dozens of international leaders.Together with 112 other AmChams in 100 countries AmCham Azerbaijan represents USChamber’s International Division.AmCham Azerbaijan is also a Member-At-Large of European Council of American Chambersof Commerce (ECACC). Founded in 1963, the ECACC today represents the corporateinterests of more than 17.000 American and European companies, based in 41 countriesand employing more than 20 million people. ECACC's member companies account formore than $ 1.1 trillion in investment on both sides of the Atlantic. Membership of ECACCis not defined by geographical borders but by the willingness and ability to contribute tothe network, as well as the basic requirement of being accredited by the US Chamber ofCommerce. ECACC promotes commercial, financial and industrial relations between theUnited States and European countries; presents the views of the business communityoperating in the areas of the member Chambers to agencies and organizations in theUnited States; represents, when appropriate, the views and aims of the members' intereststo representatives of host country governments and other regional intergovernmentalorganizations. From its inception, ECACC has been the voice of international business inEurope. It is recognized both in Europe and the United States as an influential opinionformingbody actively engaged in fostering better trade and investment relations betweenits chambers' host countries and the United States.39

AmCham International RelationsExecutive Director of AmCham Ms. Nargiz Nasrullayeva-Muduroglu attended the annualmeeting of the European Council of American Chambers of Commerce (ECACC) in WashingtonD.C. from 3rd to 10th June, 2009. Ms. Nasrullayeva met with Thomas J. Donahue, Presidentand CEO of the U.S. Chamber of Commerce, who has built the Chamber into a lobbying andpolitical force with expanded influence across the globe. Also of note is the meeting betweenMs. Nasrullayeva and Senator Charles Grassley, Ranking Member of the Senate FinanceCommittee. Senator Grassley spoke on tax deferral issues at the conference.Ms. Nasrullayeva also had the privilege of meeting US Secretary of Commerce Gary Lockeand participating in a Roundtable discussion with him. Locke is charged with implementingPresident Obama’s ambitious agenda to turn the economy around and put people backto work. She raised the very pertinent issue of the importance of a Foreign CommercialOffice to serve the interests of American companies operating in Azerbaijan. AmChamAzerbaijan together with the U.S. Embassy have been lobbying for the reopening of a FCO,and although this was announced late 2009 year, the expected FCO has not yet opened.Following the ECACC events, Ms. Nasrullayeva held a country focus meeting aboutAzerbaijan with the US Department of Commerce and a meeting with United States ExportImport Bank. (US EXIM).This conference was a valuable opportunity to network with 40 directors of AmericanChambers of Commerce based in Europe, share information, keep abreast of “hot topics” onthe Hill, identify proposals impacting on Chambers of Commerce, and explore challengesand opportunities in the leadership and function of AmChams around the world.40

www.amchamaz.orgGUAM Conference"Private sector is the vitally important component and the key player in the economicdevelopment of any country or region. American Chambers of Commerce across theworld, including the GUAM region are the leading business associations supporting andpromoting business in their respective countries and across the borders”.On 29-30 April 2008, the Executive Director of AmCham in Azerbaijan Ms NargizNasrullayeva-Muduroglu participated in the GUAM Conference as a Guest Speaker. Inher speech, Ms Nargiz Nasrullayeva-Muduroglu gave a quick overview of the country’sbusiness climate in general and customs in particular.In all of the GUAM countries AmChams represent the leading companies of local andinternational business which makes us the voice of the private sector in dialogs with theGovernments and IFIs. Established in 1996, AmCham Azerbaijan is composed of over 210Member companies from more than 15 different countries, active in every sector of theAzerbaijani economy and accounting for over 80% of all foreign and a significant portionof the local investment in Azerbaijan. As representatives of the international and localbusiness community in Azerbaijan, we have a strong interest in seeing business succeedin Azerbaijan. Key to that success is a business environment which permits business tothrive.Our region-GUAM countries compete for investment with all the other countries in theworld. While having a healthy advantage due to strategic location and its natural resources,the countries cannot become complacent in their efforts to further develop the economythrough improvement of the investment climate.41

EVENTSMonthly LuncheonsOur Monthly Member Luncheons are aimed at strengthening and developingmutually beneficial business contacts among our members. The official part of theluncheon consists of a presentation by a guest speaker invited by AmCham’s Boardof Directors. Past speakers have included important government officials such asthe National Leader of the Republic of Azerbaijan, late President Heydar Aliyev, theMinister of Communications, Mr. Ali Abbasov, the Minister of Emergency Situations,Mr. Kemaleddin Heydarov, the Minister of Youth and Sport, Mr. Azad Rahimov, theformer US Ambassador to Azerbaijan, Anne Derse, the former Country Representativeof IMF, Mr. Basil Zavoiko, the former Country Representative of EBRD, Mr. AygenYayikoglu, the Chairman of the State Social Protection Fund, Mr. Salim Muslimov, theChairman of the State Migration Service, Mr Arzu Rahimov, the Vice President of StateOil Company of Azerbaijan, Mr Elshad Nassirov, the Director of the Administration ofState Historical-Architectural Reserve “Icherisheher”, Mr. Mikayil Jabbarov, and manyothers. Luncheon programs also include new member presentations and membershipplaque presentations.As the highlight of our regular business events, our monthly luncheons help AmChamdevelop friendly business relations with the government.42

Business CocktailsAmCham cocktails are a great opportunity for our members and friends to socialize in arelaxed social context. AmCham hosts regular “Business After Hours” events that providean ideal opportunity for members to network in an informal setting.Annually, AmCham hosts a “Meet the Candidates” event, organized specifically for our regularmembers before AmCham elections in February of each year. The reception introducescandidates for election to the Board of Directors. All member of the American Chamber ofCommerce in Azerbaijan have the opportunity to co-host our business cocktails with us.43

PicnicFor the past 12 years, AmCham has hosted its Annual Independence Day Picnicfor our members, their families and employees. Each year, more than 700 peopleparticipate in a sunny day full of fun. The day features competitions for bothchildren and adults such as a watermelon tossing, tug-of-war and pie-eating. Thesurprise show is always a great entertainment success! Sponsors donate raffleprizes, including two return tickets to London and New York, raising a significantamount for Rotaract. The event goes on into the evening with dancing under thestars, topped off by a traditional fireworks display.44

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AmCham Annual Black & White BallAnnually we host our Black & White Ball for our members and friends. This event is thehighlight of the AmCham’s social calendar and gives AmCham members and patrons anopportunity to entertain clients, colleagues, and business associates in a unique environment.The Black & White Ball is a spectacular evening of elegance, glamour, music and dancing.Along with a gourmet menu, our guests enjoy live music and performances, as well as anumber of prizes including return business class tickets and other valuable gifts.This is not only a prestigious black tie event with some 240 guests, but also raises a significantprofile and visibility for our members. We are pleased to provide a number of sponsorshipopportunities to showcase our member companies to a distinguished audience.46

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MiscellaneousCorporate Social ResponsibilityA number of donations were made by AmCham Azerbaijan as a part of its corporatesocial investment in 2008 -2009:AZN 5000 was donated to the School Education Project of Junior AchievementAzerbaijan (JAA). The goal of this program is to help develop the businessworkforce through economic and business training for secondary schoolstudents and teachers. The content areas are economics, work-readiness,financial literacy and entrepreneurship. The program objectives of JAA’sproject are to teach economics in 230 schools (teacher training textbookprovision, student training), hands-on entrepreneurship training and businessethics classes.AZN 2500 raised at 2008 AmCham Independence Day Picnic was donated tothe “UREK” Humanitarian Public Unit funding medical treatment of the childrenfrom low income familiesAZN 4000 raised at 2009 AmCham Independence Day Picnic was donatedto the Orphan Education Fund organized by the Azerbaijan-American AlumniAssociationAZN 6500 was donated to Azerbaijan Diplomatic Academy to fund the purchaseof text books on economics and business for first year students of MasterProgram.48

www.amchamaz.orgImpact AzerbaijanImpact Azerbaijan is the official publication of the American Chamber of Commerce inAzerbaijan. The first issue was published in November 2007. Over the last 2 years, Impacthas expanded from 36 to 60 pages.Impact is published quarterly, with issues in Spring, Summer, Autumn and Winter.The print run is 1500 to 2000 copies.The magazine is distributed free of charge to all of our members. We also distribute to allmajor hotels, agencies of the government, international organizations and the businessclass of the airlines.Impact Azerbaijan offers advertisingopportunities to both members andnon-members to enhance the visibilityand networking of your companies49

Impact AzerbaijanThe magazine is divided into 4 sections:in focusThis section features articlesrelating to the chosentheme of the magazine.Past themes have includedEnergy Security, the WorldBank Doing Business Report,Banking and Finance, theGlobal Economic Crisis andTravel and Tourism. It includesinterviews with officials ofthe government and AmChammembers active in the sector.member contributionThis section features articleswritten by member companieson various aspects of doingbusiness in Azerbaijan, tax andlegal updates and overviews ofdraft legislation. All membersare welcome to write for ourmagazine. The articles arepublished free of charge.This is an opportunity forour members to share bestpractices and draw attention totheir knowledge and expertise,thus increasing their desirabilityas business partners.AmCham AzerbaijanThis section reports onAmCham’s cooperation withvarious organizations andgovernmental agencies, businessand social events, the importantwork done by various AmChamcommittees, and projectsundertaken by AmCham, suchas the Salary Survey, ConsumerPrice Index and MembershipSurveys aimed at increasingthe effectiveness of the work ofthe Chamber. The Member toMember Discount Programme isalso included in this section.Members’ News Section publicizes members’ achievements and milestones such asawards and anniversaries. It introduces new personnel to the business community andhighlights our members’ valuable contributions to the community through CSR and CSIprograms.Impact Azerbaijan offers advertising opportunities to both members and non-membersto enhance the visibility and networking of your companies. Advertising in our magazineprovides valuable financial support for the continued publication of Impact Azerbaijan.Our magazine is widely recognized as one of the best publications in Azerbaijan, witha consistently high quality of content and production values. It has grown from 36 to60 pages over the last 2 years, a testament to the increasing interest and contributionsfrom the business community. We wish to thank all of our members for their part in thisachievement and depend on their continued support in carrying this project forward.For all queries about advertising or publishing an article,please contact editor@amchamaz.orgWrite to us. Let’s make an impact!50

www.amchamaz.orgAmCham Member to Member(M2M) Discount ProgramAmCham Azerbaijan is pleased to offer our Memberto Member (M2M) Discount Program designed topromote AmCham Members’ business and providethem with discounts on a wide range of products andservices. M2M Programs are carried out in a numberof Chambers throughout the American Chambers ofCommerce international network. According to theexperience shared by other AmChams in the UnitedStates and Europe region, all participants in the programs report increased sales volumesand appreciate this AmCham initiative as a prestigious promotional vehicle.AmCham Regular Members in good standing are welcome to enjoy special rates at ourMember establishments. The rates of the discounts are determined by the Programmembers. In addition, the Program allows AmCham Regular members, no matterwhether they participate in the Program or not, to benefit from the discounts on variousproducts and services provided by fellow members. Special M2M Discount Card issuedby AmCham Azerbaijan for our entire Regular Membership (two personalized cards foreach Member company) is the symbol of the Program. The cards are valid for one yearand renewable. The discounts are granted upon presentation of M2M Discount Cards.How to join the Program?The members willing to join the Program and offer their products/services at specialdiscount to AmCham Regular Members have to inform AmCham office in writing. Adiscount provider has to indicate the product(s) or service(s) and discount rate(s).How to obtain discounts?All Regular Members, no matter whether they provide discounts as a part of the Programor not, can obtain discounts. Members can find information about the discounts in theM2M Section of our website www.amchamaz.org or, alternatively, in the AmCham Sectionof IMPACT Azerbaijan, Official Publication of the American Chamber of Commerce inAzerbaijan.Media:The program will only be advertised internally through the AmCham communicationschannels: AmCham Website and AmCham Quarterly Magazine – “IMPACT Azerbaijan”.Note: The cards are for personal use only. A card holder is committed to return the card toAmCham in case if he/she leaves a Member establishment.51

Stay in TouchOver the last two years, AmCham Azerbaijan’s website and softwaresystem have evolved to provide members with an improved onlineexperience. This has included such new features and enhancements as:Access to new laws and regulations released by the Government(members only)Committee Highlights section that keeps members up to date withthe work of our committeesDedicated member recruitment section for members to postvacanciesWeather, exchange rate, and “Doing Business in Azerbaijan/US” linksList of member representatives and committee members (membersonly)Ability to comment on and download committee meeting minutes(members only)Increased frequency of website updatesAccess to the U.S. Chamber of Commerce newsletterCurrent Member-to-Member Discount informationAll of this is in addition to the membership directory, event photos,membership application form, event invitations, and ability to keep yourmember information current.AmCham Azerbaijan remains dedicated to using our website and softwaresystem as the primary source of information relating to our activities. Ifyou don’t already them, we invite you to take a look and see how they canwork for you.We would also appreciate any comments, concerns, or requests regardingour website and software system. Please email admin@amchamaz.orgor call our office if you have something to say. With your help we cancontinue to improve our services and offer our members even more!52

www.amchamaz.orgContact usAmCham Azerbaijan welcomes new members and all types of contributions to ouractivities. If you are interested in becoming an active AmCham Member, please contact us:American Chamber of Commerce in AzerbaijanNargiz Nasrullayeva-MudurogluExecutive DirectorLandmark building96 Nizami Street.Tel.: (994 12) 497 13 33Fax.: (994 12) 497 10 91E-mail: amcham@amchamaz.orgwww.amchamaz.org53

54For Notes:

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