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 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 tourist-oriented 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.
