Doing Business in Azerbaijan

 

Abundant hydrocarbon resources made Baku the birthplace of the global oil industry. Over a hundred years later, the oil & gas sector remains an important part of the Azerbaijani economy. But as the world economy changes, so too is Azerbaijan giving non-oil sectors an increasingly important role. The new industrial policies launched by the government aim to diversify the Azerbaijani economy, make the country less dependent on oil & gas revenues, increase the role of private sector and establish a sustainable development trend in non-oil sector. The new initiatives of recent years have produced some significant results. For example, during the last ten years, machinery industry has increased production by 15 times and holds 21.5% share in the non-oil manufacturing sector of the economy. This section provides a brief review for the major industries of the Azerbaijani economy.

POLITICAL AND ECONOMIC STABILITY

  • In the past 10 years, GDP and foreign trade has doubled in size
  • Strategic currency reserves have increased by 3 times
  • The foreign debt of Azerbaijan is only 4% of the GDP
  • The budget deficit is about 4% (2016)
  • 37th most competitive economy among 138 countries (WEF Global Competitiveness Report 2016-2017)
  • Azerbaijan is ranked 65th in the World Bank Doing Business Guide (2017).
  • Investments worth 220 billion USD since 1995

ATTRACTIVE INVESTMENT CLIMATE

 

  • Attractive investment incentive schemes
  • NO restrictions on foreign investments
  • NO local content requirement
  • NO business inspections by state authorities and agencies
  • Party to all major multilateral instruments on protection and promotion of foreign investment
  • 47 bilateral investment treaties and 51 double taxation trea- ties with foreign countries
  • Over 450 e-services by state authorities

REFORMIST BUSINESS ENVIRONMENT

  • A number of fundamental reforms aimed at promotion of ex- ports and investments
  • New economic reforms launched by the President through the series of Strategic Roadmaps in 2016
  • Top reformer of business regulations in the world according to the World Bank’s Doing Business Guide 2009 and 2015
  • Improved access to tourism and business through the launch of the ASAN e-visa system
  • Low burden of government regulation
  • Strengthening a welcoming business environment and legis- lative reforms are among the top priorities of “Azerbaijan 2020: The Vision of the Future” – national development concept

 

SKILLED LABOUR FORCE

  • About half of the population is economically Total labour force reached 5 mln. in 2016
  • One of the highest employment rates in the region (95 % )
  • The main driver of employment is the private sector (75.4 %)
  • Extremely high literacy rate of 99.8%
  • Around 30,000 students graduate from universities and other higher education institutions annually
  • Large number of Azerbaijani students studying in the best uni- versities worldwide in the framework of the State Programme on
  • Education of Azerbaijani Youth Abroad in 2007-2015
  • A large R&D center, the National Academy of Sciences (alto- gether they affiliate about 40 research and cultural institutions throughout the country) in parallel with 54 universities and 113 primary vocational educational institutions ensures the scientific and HR component of economic development

TOURISM & HOSPITALITY

International events held in Baku, such as the 1st European Olympic Games 2015, the 4th Islamic Solidarity Games, and the Formula 1 Grand Prix 2016-2017, are raising the international profile of Azerbaijan as a tourist destination. The Government policy of hosting international business conferences and events, targeted on key sectors continues this trend. As a result, TripAdvisor announced Baku among top 10 world destinations on the rise in 2016, taking the top spot for Asia.

The Government of Azerbaijan has initiated some key improvements to the visa application process. As a result, tourists from most of the countries of the world can apply for a pre-entry visa through the special online ASAN e-visa system. Generally, visas are issued as fast as within 3 working days. This has encouraged a tourism boom, with an 11% increase in tourists visiting from the Gulf, Middle East, and Europe in 2016. The improving transport links with Azerbaijan, resulted in Baku being attractive to 26 cities, with a population of more than 90 million. The World Economic Forum named Azerbaijan the most-improved country in the Travel & Tourism Competitiveness Index 2017.

To serve the demand created by international sports, business and political events, the tourism and hospitality infrastructure is developing quick-ly. A number of top class international hotel chains such as Four Seasons, Marriott, Pullman, Hilton, Excelsior, Rixos, Fairmont and others operate in Azerbaijan. In 2012, Shahdag Winter-Summer Tourism Complex in Gusar was put into operation. The complex includes two hotels (“Shahdagh” and “Peak Palace”), trade centers, a restaurant, café, game hall, equestrian sports, skiing and other services. Continuously increasing volume of international visitors stimulates direct investment into the development of tourism industry and related services. A new incentive mechanism for investors was put in place in 2016. According to the World Travel & Tourism Council, Azerbaijan is placed 17th in the world for the travel & tourism long-term growth forecast 2017-2027 (Travel & Tourism Economic Impact 2017: Azerbaijan).

The Strategic Roadmap for the Development of the Tourism industry aims to push the sector into the next stage of development. This includes the promotion of tourism based on national values of Azerbaijan in the international marketplace and locally. Moreover, it includes improvements in the tourism communications infrastructure (including signage), and international hotel certification. This will create opportunities for companies with expertise in the service industry, investing in human capital and practical know-how within the country.