Successfully investing in Azerbaijan

published on May 16, 2018

 

How do you assess the current economic situation in Azerbaijan?

The economic situation of Azerbaijan continues to be stable, just like last year. Oil prices have risen and tended not to fluctuate. The government has managed to stabilise the exchange rate of the national currency Manat against the euro and the US dollar. Thanks to these factors, internal business activity has increased. It should be expected that certain reforms pursued by the government to stimulate the business climate, such as e.g. the simplification or the digitisation of the customs procedure yet this year, will further boost the economy of the country.
 

How would you describe the investment climate in Azerbaijan? Which sectors offer the largest potential?

In terms of the investment volume, Azerbaijan was ranked 1sth among all countries of the region last year. This is thanks to the extensive economic and legal reforms in the country.

 

Also the investment climate continues to be favourable in Azerbaijan. The country enjoys political and economic stability and has a highly educated workforce. This makes all foreign investments in the country low-risk.

 

Sectors that offer the largest potential: 

  • Oil and natural gas production
  • Petrochemical industry
  • Information and telecommunications industry
  • Construction industry
  • Agriculture
  • Transport
  • Tourism

   

The devaluation of Manat, the currency of Azerbaijan, had both positive and negative consequences. On the one hand, purchasing power and imports, especially from the EU, decreased. On the other hand, this created opportunities for the exporting industries.

   

What challenges do German companies face during their business ventures into Azerbaijan?

The greatest challenge to German companies is how to navigate through the tax and migration laws.

 

In this respect, companies which focus their business on domestic consumption should embrace the fact that they are very likely to incur losses. Especially, the undersupply of consumer loans puts such companies at an even more disadvantaged position. By contrast, good prospects are offered to export-oriented commercial companies.

 

In Azerbaijan, foreign corporations and their subsidiaries are subject to high social security contributions of 22 per cent.

       

For Germany, Azerbaijan is the most important economic partner of all Caucasian countries. What importance does Germany have for Azerbaijan?

Germany is one of Azerbaijan's most important economic partners among all EU countries. German products from all branches of industry are renowned for their high quality in Azerbaijan.  Because Azerbaijan is a country which heavily relies on imports of various products, Germany has historically been a very attractive export partner to Azerbaijan. The branches of industry where demand for imports from Germany is high include: automotive industry, technical equipment, foodstuffs, technologies, household chemical products.
 

In your opinion, how will Azerbaijan develop?

Azerbaijan will continue to develop very positively also in the future. The launch of the Shah Deniz 2 project and the modernisation of regional transport routes to Azerbaijan as a transit country will stimulate this development even more.

 
The government of Azerbaijan is taking more and more measures aimed at boosting the development of the non-oil sector. Particularly strong growth is expected in agricultural production and tourism.

 

The infrastructure of the country is very well-developed. As for exports, there are logistic routes directly connecting the country to international markets by sea, motorways, railroad and airports. Azerbaijan is and will remain an attractive location – not only to the local market players but also to investors from the neighbouring countries.

 Contact

Elchin Usub

Associate Partner

+994 12 5944 351
+994 12 5944 359

Send inquiry

Klaus Kessler

Partner

+380 44 5862 303
+49 911 9193 9058

Send inquiry

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