TBY talks to, Rufat Mammadov, President of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO), on everything Azerbaijan has on offer for investors. How do international events facilitate the attraction of FDI?
Over the past few years, Azerbaijan has turned into a host for many international events. Every year, we organize various international business and investment forums, sporting events, music contests, and international trade exhibitions. In a competitive world, these events are an important means of raising the profile and awareness of Azerbaijan among key business decision makers. The portfolio of events to be held in Azerbaijan confirms that our country has the necessary attributes to attract FDI in non-oil sectors. Our hosting of the World Economic Forum 2013 in Baku is evidence of our sincerity to offer an attractive business environment. Although we are a young country with only 24 years of independence, the hosting of the first European Games will put Azerbaijan in the exclusive company of countries that have hosted a complex event such as the Olympics. Additionally, the forthcoming Asian Development Bank AGM in May 2015 will be held in Baku, with 3,000 key decision makers from business, government, and international organizations. For many, it will be their first time in Azerbaijan, and I am convinced they will leave Baku with a better understanding of what Azerbaijan has to offer, and reduce their perception of the risks of investing. Our country recognizes that investors have a choice when investing, and our international events demonstrate that Azerbaijan is a good choice for them.
What opportunities for international investment have the First European Games provided, and how has AZPROMO contributed to this?
The Games have provided opportunities for international business to expand into new markets, and demonstrate their products and services using Baku as a stage from which to broadcast to Europe. In particular, significant business opportunities have been provided in construction, infrastructure, tourism, and services, among many other areas. Foreign investors working with Azerbaijani companies and people have created impressive venues around the country for the long-term benefit of the country. In 2014, the value of these foreign investment opportunities was $11 billion. Like previous international events, we expect the Baku Games to generate increased awareness of non-oil investment and trade opportunities available in our country. Whenever I travel overseas, I tell my fellow business travellers that Azerbaijan was at the center of the Silk Road, and was where the Nobel brothers made their fortune that funded the Nobel Prizes. Although surprised, they are even more intrigued by the modern opportunities presented by our country. AZPROMO is ready to help these opportunities become a reality, by providing authoritative information, advice on company establishment, and matchmaking to domestic investment projects.
“Over the past few years, Azerbaijan has turned into a host for many international events." Which sectors of the economy have been the most lucrative for investment and export in 2015, and where is there the greatest potential in the medium term?
Economic diversification is an important goal for Azerbaijan. Two decades ago, oil and gas was the dominant industry and the most lucrative sector. Today, we have made progress to re-balance our economy. With a 61% share in GDP and average annual growth of 7% to 10%, the non-oil sector has become a driving force of economic development. In recent years, the GDP contributed by communications services has increased eight-fold, industry has almost tripled, and agriculture has grown by one and a half times. As our economy diversifies, opportunities in agriculture, food processing, machinery, and chemical industries can increase while new technologies, such as pharmaceuticals, IT, space industry, and nanotechnologies have also developed. The construction sector has boomed in recent years, especially in the production of construction materials. The metallurgy industry in Azerbaijan is also being established and new production facilities have been developed with the focus on end products. The services sectors, where a big part of foreign investments have accumulated, have been growing in recent years including in communications, transport, banking, insurance, tourism, and healthcare. They have increased both the quantity and quality of services. Sumgait Chemical Industrial Park (SCIP), Balakhani Eco-Industrial Park, and High Technologies Park provide opportunities for state-of-the-art investment in the mentioned sectors of economy. As for exports, 2014 was successful in terms of promoting non-oil exports and discovering new markets. Traditional groups of products for Azerbaijan, such as fresh fruits and vegetables, processed foods and beverages, as well as chemical and metal products and articles of light and heavy industries, have huge export potential; for example, exports of fruits and vegetables in 2014 increased by over 16%, chemical products by 33%, and plastic products by almost 29%. The export of services is another important area with significant potential.
AZPROMO has representative offices in Georgia, Austria, the US, Germany, and the UAE, and continues to strengthen ties with a number of international organizations. How important are these offices and partnerships to AZPROMO's strategy?
In order to achieve our goals, we established a network of representative offices in foreign countries, such as Georgia, Austria, Germany, the US, the UAE, and the UK. Our representatives have the spirit of the Azerbaijan office of AZPROMO. They are working hard to create a network between foreign and Azerbaijani companies that is undeniably important in business today. Representative-offices are providing us with the all-necessary new events and opportunities, which allows us to reach many countries with efficiency. For example, our US representatives actively participated in business events and exhibitions in Washington D.C., Chicago, Las Vegas, and other cities during 2014. This shows the important role our representative offices play for us in accomplishing our company's goals. We have also a network of 71 partners, including investment and export promotion agencies, chambers of commerce, international organizations, and public institutions from 36 countries. In 2014, we signed 15 MoUs with institutions from different countries. We closely cooperate with investment promotion agencies through the World Association of Investment Promotion Agencies (WAIPA)—where we hold the Vice-Presidency—gathering together over 250 national and sub-national agencies from 162 countries. In terms of the practical implications of these partnerships, these are important in promoting Azerbaijan's export and investment opportunities. We continuously share experiences with our partners in trade and investment promotion, and exchange information on trade and investment. This is important for the understanding of our export and investment potential and the analysis of foreign markets, the organization of various important promotional events, the capacity to find new partners for Azerbaijani companies, to help them to enter foreign markets, and to address any issues. We actively disseminate information on Azerbaijani products to potential buyers and distributors through our partners' network and invite international companies to invest in the non-oil sector of our economy.
© The Business Year - March 2015