Ukraine plans to focus on Azerbaijan

By Nigar Orujova

After some stagnation in bilateral relations between Azerbaijan and Ukraine, the two countries need to update a platform for cooperation and reboot partnership.

The two countries enjoy mutually fruitful cooperation within international organizations both in bilateral and multilateral formats and plan to breathe a new life into the economic cooperation.

“Ukraine shows a very strong interest [in widening cooperation] indeed and this is especially felt in the last two years,” Head of the Economic Department of the Ukrainian Embassy in Baku, Vadim Sidyachenko told AzerNews,

Mentioning the three-fold devaluation of the Ukrainian hryvnia, which resulted in a sharp difference between the domestic price and the price of agricultural products on world markets, he spoke about profitability of exporting agricultural products to various countries including Azerbaijan.

“We receive offers on a regular basis [concerning the export of Ukrainian goods to Azerbaijan, as well as opening joint ventures and Ukrainian businesses in Azerbaijan] and we guide them to Azerbaijan Export and Investment Promotion Foundation, the Azerbaijani Confederation of Employers, and individual companies,” he said.

Ukrainian products, not conceding on quality, have proved to be much more competitive in price than even products from neighboring Russia and Kazakhstan, Turkey and Iran, Sidyachenko said. That is why the Ukrainian enterprises have set their sights on many markets, including in Azerbaijan.

What Ukraine can bring to Azerbaijan?

There are wide export opportunities of Ukraine, which is rich by nature, to enter the Azerbaijani market.

“All products Ukraine is growing and producing have its consumers in Azerbaijan,” Sidyachenko said. “We have different climatic zones, which offer various types of fruit and vegetables, not counting the common plants.”

For instance, last spring recorded export of even the Ukrainian potatoes, which is very cheap. Even if to take into consideration the transport fees, the Ukrainian potatoes are low in price and justify the export.

“At present, about 70 percent of walnuts in the Azerbaijani market are from Ukraine. Various groats including buckwheat and semolina can be delivered from Ukraine at lower prices as compared to the above mentioned countries. Ukraine is the world's third producer of grain and prices of grain and all flour products are low respectively,” he added.

Sidyachenko went on to say his country could also supply Azerbaijan with confectionery and alcoholic beverage products. “Ukrainian vodka is globally recognized for its highest quality, even higher than the Russian vodka because of better wheat and the latest technologies.”

Moreover, more and more meat from Ukraine is exported in frozen, chilled and even live weight, primarily cattle.

Ukraine is also interested in the cooperation in the fields of agricultural, transport, energy and construction, the department head said.

“We can also set up joint ventures in the construction field, as there are many points of common interest such as building of various objects including road, infrastructure, construction of offices, and the development of the Baku Metro. We assume that Baku needs a new distributing centre for sewage waters and collection and discharge of water from the streets. Here, Ukrainian companies can participate in tenders and joint construction projects,” he noted.

What can Azerbaijan offer Ukraine?

Famous as a country rich with hydrocarbons, Azerbaijan now is focused on the non-oil sector on the background of the constant decrease in oil prices. Today Azerbaijan plans to increase export of its fruits and vegetables in the region.

“We are also exploring the possibility of creating regional logistics centers, to supply Ukraine with tropical products: citrus fruits, pomegranates, persimmons, figs, fresh and dried, hazelnut. We are interested in this because we have always developed trade relations with Azerbaijan and we have a free trade regime,” Sidyachenko said.

Ukraine is keen to develop joint tourism services so Azerbaijanis can relax in Ukrainian tourist resorts, primarily Truskavets and Zakarpatye. On the other side, Ukrainians can travel more and discover Azerbaijan: Baku – the Caspian Dubai, mountain resorts, the sea, both summer and winter tourism, and the historical places as well, he added.

Moreover, Azerbaijani investors plan to put about $50 million to Ukraine.

Joint industries expected to open in Azerbaijan

The Ukrainian Grain Association plans to hold the Black Sea-Caspian Sea Agrarian Congress at Baku Marriott Absheron hotel in April 2016, to discuss a number of issues that will not be related only to grain, the diplomat said.

“A lot of grain has died because of the drought in Azerbaijan a year ago. Ukraine has a variety of grains for the southern regions of the country that are resistant to drought. They can be cultivated here,” he assured.

Ukraine can supply and grow breeding stock and provide strong support for the revival of viticulture in Azerbaijan.

Ukraine also plans to start joint industries in Azerbaijan. One of them is assembling of agricultural machinery that is produced in Ukraine.

“There are many enterprises in Ukraine producing a lot of agricultural machinery for small farms… We can organize the supply of vehicle kits and assemble them in Azerbaijan. It would be cheaper in terms of delivery and in sharing production. The Azerbaijani Agroleasing company can further deliver them to farmers,” he noted.

These small tractors, seeding and winnowing machines for small areas are cheap because of the small engine power, and consume little fuel, Sidyachenko explains. However, these machines are of high reliability as engines are not only of Ukrainian, but also of the European production, and sturdy Ukrainian metal is reliable, and can be exploited for decades. Thus, it would be very convenient for farmers and not costly for Agroleasing.

There are also possibilities to produce equipment for cattle – drinking bowl, milking machines, and equipment for greenhouses.

“This equipment is just the same as its European one, but twice cheaper in price. In current situation when the manat unfortunately devalued, the issue of price and quality assumed a particular importance. In this context, Ukrainian products, that is equal in quality to European but with much lower price, will always be beneficial to Azerbaijan,” Sydyachencko believes.

Is Azerbaijani business environment attractive for foreign entrepreneurs?

The diplomat said that reforms in Azerbaijan are going in the right direction when freedom of business is increasing and this allows us to develop the business.

“In general, many businessmen both Ukrainian and Azerbaijani told me that they have breathed freely and it became easier to work especially in the second half of 2015, especially in the fall, when the head of state had a serious reform of the tax system, the customs system, in fiscal matters, and inspections of enterprises,” he added.

Ukraine is also attracted by the opportunities of the industrial parks created in Azerbaijan that suggests an opportunity of working seven years without paying income tax, land tax and property tax. In addition, equipment and technology used in such parks are not subject to VAT.

"We are interested in the technology parks and want the Ukrainian businessmen to establish joint productions precisely in the tech parks," he added.

Azerbaijan – a key to Asia for Ukraine

Azerbaijan is attractive for its location on the crossroad of East and West, as Ukraine is today out of touch with Asian markets.

Ukraine attended a meeting of heads of the railroads of Azerbaijan, Ukraine, Iran, and Georgia for the development of the North-South transport corridor on January 12, and participated in negotiations between the heads of railways of Azerbaijan, Ukraine, Kazakhstan and Georgia to develop the transport corridor East-West on January 14.

“When Russia has banned transportation of Ukrainian goods through their country, Caucasian corridor – Black Sea-Caspian Sea – is becoming strategic for Ukraine,” Sidyachenko said.

“We applause a good decision by the Azerbaijani president to establish the Coordination Committee, because it became a single window through which we can solve and we have already solved certain issues on tariffs and transportation,” he said stressing that “Now we have even informed the Ukrainian government about this experience to create the Ukrainian analogue to this structure.”

The Ukrainian Ambassador Alexander Mishchenko has already met with the Minister of Economy and head of the Committee Shahin Mustafayev, and they have managed to solve all needed issues.

“We have close business ties with the leadership of the port of Baku. We are maintaining the ideas on the development of the Baku Sea Trade Port as a transport hub of the Caspian and the Caucasus regions. We have already brought Ukrainian shipping transport companies so they were acquainted with the work of the port and hauled loads in this direction,” he noted.

In the future, Ukraine plans to carry up to 2-3 million tons of cargo annually through Azerbaijan to Central Asia as well as in Iran and later in India and the Persian Gulf.

High-level visits continue

Talks on the governmental level are expected to continue in March during the 11th session of the Intergovernmental Commission, with participation of Azerbaijani first Deputy Prime Minister Yagub Eyubbov and Ukrainian Vice-Prime-Minister Gennady Zubko.

Moreover, the first visit of Ukrainian President Petro Poroshenko to Baku is expected in April-May, following invitation of the Azerbaijani President.

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Nigar Orujova is AzerNews’ staff journalist. Follow her on Twitter: @o_nigar

Follow us on Twitter: @AzerNewsAz