Top Ten Reasons to Invest
At present, Azerbaijan is one of the rapidly developing economies in the world. In spite of world finance crisis, the GDP annual growth in 2009 was 9.3%. Today, the country is the regional leader not only in terms of overall economic growth but also, in FDI attraction. Azerbaijan is also in top 20 for equity capital attraction in absolute terms.
One of the main substantial comparative advantages of doing business in Azerbaijan includes such important factors as political and financial stability. Existence of opportunities for regulating inflation level (1.5% in 2009) and national currency within some points increases appropriateness of the investment climate in the country. The recent global financial crisis did not affect significantly financial system of Azerbaijan due to sustainable development policy.
Azerbaijan is located on the very south-eastern border of the European continent and serves as the natural bridge between Europe and Central Asia as well as it is the most convenient route from the north-east of Europe to the Middle East. The country is the logistics hub for the Caspian region. Excellent infrastructure of Baku (including largest regional sea and air terminal) is the best choice for any business entering the markets of the Caspian Sea region. Favourable location of Azerbaijan enables easy access to Asian, Gulf, CIS and European markets.
Azerbaijan is rich in mineral and climatic resources. The Caspian Sea oil & gas reserves are one of the major deposits globally. Azerbaijan has also substantial explored deposits of precious metals (including gold and silver), ferrous and non-ferrous metals, various construction raw materials deposits etc.
One of the major resources the country has is its natural diversity. Despite relatively small size, the Azerbaijani territory due to complex terrain and geography has a number of distinct climatic zones ranging from humid subtropical climate to semi-arctic. This creates unique opportunities in agriculture and tourism.
Azerbaijan has long lasting industrial and trade traditions. The industrial revolution has taken place here in the late XIX century due to expanding and advanced oil production and processing sector. Further industrial development led to growing Research and Development (R&D) base. A large R&D centre, Academy of Sciences with circa 7,000 research studies, exists in Azerbaijan in parallel with a number of universities and colleges.
The country is rich in engineering skills yet the wages are still very competitive. Azerbaijani government's policies in respect of utilities tariffs are manufacturer friendly.
Azerbaijani legislation is evolving in accordance with the strategic goal of the Government which implements the "welcoming policy" for foreign businesses.
Foreign investments are protected by certain guarantees provided by the government and legislation, including:
- Guarantee against adverse changes in legislation
- Guarantee against nationalization and requisition
- Guarantee of compensation of damages
- Guarantee of repatriation of profits
The transport sector in Azerbaijan, comprising railway, aviation, roads and maritime shipping, amounts for about 7% of domestic output. Azerbaijan has taken significant steps to implement structural reforms in the transport sector and has implemented significant improvements in rehabilitation and construction of roads, railways, and other infrastructural installations. Azerbaijan strongly supports regional transport initiatives and promotes international transit transportation. Azerbaijan's active role in the establishment of the Transport Corridor for Europe, the Caucasus and Central Asia (TRACECA), together with its being the base for the TRACECA Intergovernmental Commission (IGC), is a powerful indication of its open transport policy.
Competitive labour market (skilled and cheap labour force) is one of the comparative advantages in terms of choosing Azerbaijan as a favorable place for doing business. The number of overall labour force in Azerbaijan amounts to 4 million people. The level of literacy is 99.6% and people with professional education (more than 0.2 million) are main elements of the high competitive labour market.
Tax burden on the economy of Azerbaijan is significantly lower compared to developed countries. Serious measures have been undertaken for decreasing tax burden of enterprises in the country. Thus, profit tax was reduced from 27% in 2000 to 20% 2010; VAT was reduced from 28% down to 18%. Implementation of the State programs on improvement of tax system (tax management, tax control mechanism, tax payment and etc.) results in the saving of additional cost and time related to payment of taxes for industrial entities.
The sustainable development is impossible without the favorable business and investment climate. The government of Azerbaijan creates and reforms normative and administrative bases due to the enterprises could develop and operate beneficially. At present the new Law on investment activity and the Competition Code are developed for the improvement of an investment climate and the common Legislation is improved according to the requirements of WTO.
