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Foreigners investing more in Azerbaijani market

28 August 2015 10:25 (UTC+04:00)
Foreigners investing more in Azerbaijani market

By Amina Nazarli

With a favorable location at the crossroads of East and West and promising opportunities, Azerbaijan remains an alluring destination for investment.

Despite the slowdown in global markets, the South Caucasus country could attract 3.87 billion manat ($3.5 billion) in foreign investments for its oil dependent economy in the first half of 2015, an increase of 46 percent from the same period last year.

Developing the non-oil sector of economy is a priority for the country, whose public budget is composed nearly 65 percent from oil revenues.

The country is improving conditions for attraction foreign investors by creating new industrial, chemical, and high-tech parks.

Investors wishing to work in these parks are granted with tax and customs privileges, allowing them to reduce their production costs. All foreign investment is adequately protected in the country, enhancing investor confidence in Azerbaijan.

Over 6,857 foreign companies are operating in Azerbaijan. Foreign investment not only plays an important role in the development of the oil sector in the country, but it also gives a powerful boost to the development of the non-oil sector

There is growth in the flow of foreign investment to Azerbaijan’s non-oil sector, economist Vugar Bayramov told AzerNews.

The tourism, food, and service sectors are some of the main fields attracting foreign investors and more and more countries are investing in these areas, the expert said.

From January to May, investment in Azerbaijan’s tourism, service, and food sector increased 5.7 times.

Turkey and UK are among the countries that are interested in tourism.

Earlier, Muzaffar Agakerimov, the deputy chairman of the Azerbaijan Tourism Association said foreign investors are interested in engaging in the field, noting a strong demand for hostels in Baku and the regions.

Another sector attractive for investments is agriculture, which offers appealing prospects.

2015 was declared the Year of Agriculture in Azerbaijan with the expectation of involving state financial resources to promote the country's agrarian potential.

Bayramov said that the UK’s share in the total volume of foreign investments to Azerbaijan amounted to 31.8 percent, occupying a lead position in the agrarian sector.

Companies from the Netherlands, Switzerland, France, Turkey, Germany, Italy and Pakistan are also interested in this sector.

Experts state that within three years, this sector will bring significant revenues to the state budget due to increased demand for processed agricultural products.

Azerbaijan will also invest in the development of refrigerated wagons used for the transit of perishable goods, whereby storage is only possible at low temperatures. Russia needs at least 1,000 of these wagons. This could ensure the national welfare without oil or gas for at least 20-25 years. These wagons could deliver products even to Magadan [Russian port town], bringing in strong revenues throughout the year.

Bayramov said that the construction sector differs from other ones, as it attracts an ever-growing rate of investment. Here, Turkish companies are showing great activity. China and Japan are also keeping up with Turkey’s investments.

The government of energy-rich Azerbaijan has been taking significant measures on the development of the IT sector.

Bayramov predicts that the total amount of foreign investments to the country will amount to about $10 billion. He believes that about a half of this will be ensured by non-oil sector.

Statistics show that some 86.1 percent or over 3.3 billion manat of investments are accounted by investors from the UK, Turkey, Norway, Russia, Iran, Sweden, the US and Japan.

The UK is the leader among investors. Its share of the total volume of foreign investments amounted to 31.8 percent, or 1.23 billion manat.

Turkey’s investments from early 2015, totaled 14.1 percent, followed by Norway at 10.5 percent, Russia and Iran at 6.8 percent each, Sweden at 5.1 percent, the U.S. at 5.8 percent and Japan at 5.2 percent.

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Amina Nazarli is AzerNews’ staff journalist, follow her on Twitter: @amina_nazarli

Follow us on Twitter @AzerNewsAz

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