Azerbaijan Country Presentation. Basics Establishment: 28 May 1918 Independence: 18 October 1991...
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Transcript of Azerbaijan Country Presentation. Basics Establishment: 28 May 1918 Independence: 18 October 1991...
Azerbaijan Country Presentation
Basics
Establishment: 28 May 1918
Independence: 18 October 1991
Area: 86.6 thsd km2
Population: 9.48 million
Official Language: Azerbaijani
Government system: Presidential Republic
Membership in: UN, Council of
Europe, OSCE, Non-Aligned
Movement, OIC
Highlights:
1st democratic republic in the Islamic world
1st Opera in the Islamic world
Women voting right in 1918
(while in Italy - 1946; Switzerland - 1971; France – 1944)
Currency: Manat: 1 AZN = 1.27 USD
1.01 EUR
Characteristics of economy
ECONOMIC STABILITY
FAVOURABLE BUSINESS AND INVESTMENT
CLIMATE
PRIVATE SECTOR
CLEAR VISION FOR FUTURE
Economic stability: Macroeconomy
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
7.3 8.713.2
21
33.1
48.944.3
52.9
66 68.773.6Nominal GDP, bln USD
2nd fastest growing economy among
179 countries for GDP per capita growth in
2001-2010
Source: The Economist
8th among 148 countries in terms of
stability of macroeconomic environment
Source: World Economic Forum
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1.62 2.04 2.4 4.47.4
18.56 20.3
29.1
40
4650
Strategic currency reserves, bln USD
Economic stability: Diversification
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Non-oil Oil
Structure of GDP
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
2
4
6
8
10
12
14
16
1814.9
13.6
8.3
11.9
11.4
15.9
3.2
7.99.4 9.7
10
Non-oil GDP growth, %
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0.3 0.50.8
1.3
2.4
3.53
4.6 4.5
5.75.3
Foreign investments in non-oil sectors, bln. USD
Diversification of economy and
development of non-oil sectors are
key strategic priority
of economic policy
Economic stability: Competitiveness
GLOBAL COMPETITIVENESS REPORT 2014-2015
Kyrgyzstan
Armenia
Moldova
Ukraine
Georgia
Russia
Kazakhstan
Malta
Turkey
Poland
Latvia
Lithuania
Azerbaijan
Spain
Estonia
108
85
82
76
69
53
50
47
45
43
42
41
38
35
29 The report assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.
1st among CIS countries (6 times running), 38th among 144 countries
Other indicators (place among 144):
Inflation – 1st
Macroeconomic environment – 9th
Government budget balance – 15th General government debt – 12th Labour market efficiency – 33rd Capacity for innovation – 43rd
Technological readiness – 56th
Business enabling environment
Reformist business environment
Firm legal basis and continuous improvement of
business legislation
Top-reformer of business regulations according to Doing Business Report
2009
Decrease of red tape, simplifying business
permitting and licensing systems
One-stop-shop for business
registration
One of the easiest start-up procedures in the world
2 days for business registration
Internet registration of individual entrepreneurs
and local commercial legal entities
Competitive tax system
E-filing and e-paymentCorporate tax – 20%;
VAT – 18%;Simplified tax – 4% and 2%
No agriculture taxTax holidays for residents of industrial and high-tech
parks
User-friendly government
services
428 e-services by state authorities
Web portal on business permissions and licenses (www.icazeler.gov.az) and
B2B facilitation (www.b2b.az)
One-stop-shop services by ASAN Service Centers
(State Agency for Public Service and Social
Innovations)
Business enabling environment
WB Doing Business Report 2014
15th among the 50 economies narrowing the distance to frontier the most since 2005. The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005.
Economy Rank
Georgia 8
Kazakhstan 50
Bulgaria 58
Italy 65
Turkey 69
Azerbaijan 70
Romania 73
Czech Republic 75
Croatia 89
Russia 92
Ukraine 112
70th among 189 countries
Some sub-indicators:
Starting a business– 10th
Registering property – 13th Investor protection – 22nd Enforcing contracts – 28th Getting credit – 55th
In Global Competitiveness Index 2013-2014 (rank/148):
Hiring and firing practices – 8th Burden of government regulation – 21st Strength of investor protection – 25th
Liberal investment climate
Welcoming policy National regime for foreign investors
No restrictions for any type of foreign
investment
Incentives for foreign investors
Guarantees
Guarantee against adverse changes in the
legislation, nationalisation and
requisition
No discrimination policy
Guarantee of compensation of
damages and repatriation of profits
Sophisticated legal base
Law on Investment Activity and Law on
Protection of Foreign Investments
Party to New York (1958) and Washington
(1965) Conventions
46 bilateral investment treaties
45 double taxation treaty
Institutional support
Azerbaijan Export and Investment Promotion
Foundation (AZPROMO)
Azerbaijan Investment Company
National Fund for support of
Entrepreneurship
Liberal investment climate
Total Investments
172.4 bln USD
Domestic88.7 bln USD
Foreign 83.7 bln USD
Non-oil sector
64%
Oil sector
36%
1995-2013
Food industry/agriculture
Climatic zones/types – 9 out of 11 existing in the world and fertile land
Largest employer with up to 40% of employed workforce
Tax breaks and subsidies
Strong comparative advantage in exporting fresh fruits and vegetables
Import substitution and export orientation
Access to the regional markets: FTAs with the CIS countries
Focus on productivity, competitiveness and marketing
Tourism
Unique geografic and climatic conditions
In 2013 number of tourists increased by 3.9 times in comparison with 2003
World Tourism Organisation: Azerbaijan is top 2nd in terms of the growth of tourist inflow in percentage ratio (+27% in 2012)
Tourism related expenditures of foreingers: in 2003 - $0.577 bln and in 2013 increased by 2.8 times up to $1.6 bln.
Focus on establishment of modern tourism infrastructure, restoration of historical, cultural and natural sites and marketing
Potential for the development of almost all types of tourism
The largest project: winter-summer tourism complex in Shahdag – to be completed in 2016 and able to welcome 10 000 tourists
ICT
Average annual growth rate at 20-25% in the last 10 years
80% of income in ICT belongs to private sector, while mobile telephony and IT are completely private
Around 2.5 bln USD invested in ICT in the last 10 years, 72% of which accounts for private sector and foreign investments
70% of population uses internet, 50% uses broadband internet
Space industry started with the launch of the first national satellite in February, 2013
First among CIS States on share of internet users according to the WEF Global Information Technology Report 2013
Recent projects: High technologies park, ICT Development Fund, IT University
Industry
Share in GDP: 46.3%
Intensive industrialization policy: increase of 262% since 2005
Investment (2013): total $9.5 bln – 53.4% foreign, 46.6% domestic
Priorities on heavy industry, mechanical engineering, agroindustry, construction materials, chemicals, alternative energy, light industry
Establishment of industrial parks: chemicals, waste recycling
Focus on establishing supply chains and clusters as a driving force for industrial development
New industrial parks to be established
Special zones
Total area: about 300 ha
Administration:“Sumgait Chemical Industrial Park” LLC under management of Ministry of Economy and Industry
Priority products: chemicals used in agriculture, construction, packaging and automotive industries
Infrastructure: All utilities are provided by plug-and-play concept
Tax holidays (corporate, property and land taxes and VAT on imported equipment) for 7 years
Key advantage: Availability of in-door raw materials, increasing domestic demand and close proximity to regional markets
Sumgait Chemical Industrial Park (SCIP)
Special zones
Balakhani Eco-Industrial Park
Total area: 7 ha
Administration: “Tamiz Sheher” OJSC under management of Ministry of Economy and Industry
Priority areas: Recycling of plastics, tire/rubber, electronics, accumulators, non-ferrous metals, cabels and specific types of domestic waste
Infrastructure: Offices, training centers, laboratory, All utilities are provided by plug-and-play concept
Tax holidays (corporate, property and land taxes and VAT on imported equipment) for 7 years
Key advantage: Proximity to city waste landfill site, Material Recovery (waste sorting) Facility and modern Waste-to-Energy Plant
Azerbaijan Investment Company
Supporting Non-Oil Sector Development
ABOUT AIC
“Azerbaijan Investment Company” OJSC (AIC) is a state owned equity fund, established by the Presidential Decree on the 30th of March 2006
AIC serves the purpose of developing non-oil sector of the national economy via termed equity injections
Supervisory Board is the supreme governing body of AIC
Supporting non-oil sector development via termed equity investments in commercially viable projects and investment funds
Attraction of local and foreign investments into the economy of Azerbaijan
Increase market value and competitiveness of investee companies by integrating new technologies and know-how, and promoting modernization and innovation
Support development of capital markets in Azerbaijan
OBJECTIVES
KEY INVESTMENT
PRINCIPLESInvestments in all sectors excluding oil and gas industry
Investments into brownfield or greenfield projects
Minority shareholding in the invested projects
Competitive products
IFRS compliance
Independently audited financial statements
Corporate governance best practices
Board member at investee companies
INVESTMENT
CRITERIA
Divestment via IPOs
Sale to third-party strategic acquirers
Sale to existing shareholders
EXIT STRATEGYSubject to terms of shareholders’ agreement AIC may choose from the following exit strategies:
PORTFOLIO
DISTRIBUTION6.80%
13.90%
4.10%
75.20%
Sub - Funds - 6.80%
Agriculture - 13.90%
Food Processing - 4.10%
Industry - 75.20%
Azerbaijan Investment Company
37 Khojali Ave. Baku, Azerbaijan AZ1025TEL: (+99412) 488 8010FAX: (+99412) 488 8012