Azernews.Az

By Aynur Karimova

Azerbaijan, which is keen to develop the national economy and draw foreign investment in both oil and non-oil sectors, attracted $7.5 billion foreign capital in the form of direct investments in 2015.

The Central Bank's balance of payments, published this week, shows that the share of the oil and gas sector in the structure of these investments amounted to 88.5 percent, while the volume of direct investments drawn to the non-oil sector totaled to $860.4 million, or 11.5 percent of the total volume of FDI.

The figures show that foreign investments attracted to the non-oil sector is much less than those drawn to the oil sector. Economist Ogtay Hagverdiyev believes that Azerbaijan, eyeing to develop the non-oil sector of the economy, should draw foreign investments in the country by all means.

"It is necessary to study the experience of China, Kazakhstan and other countries that have established free trade or free industrial zones in their territories," he told local media. "They have created such business environment that attracts foreigners."

The expert reminded that foreign companies prefer to work in such territories, which have an access to the world oceans. Therefore, it would be better to create a free trade zone in the Nakhchivan Autonomous Republic of Azerbaijan, as Nakhchivan enjoys a direct access to Iran, and from there to the Persian Gulf and to the world oceans.

Promoting materials about Azerbaijan's investment climate and doing business conditions in the world media would also give a very good result, according to Hagverdiyev.

"In particular, it is necessary to mention that Azerbaijan is looking for investors for the construction of various plants, factories. Mentioning the conditions that would attract foreign investors would be of importance as well. For example, to specify that the constructed plant should produce competitive products, and to mention that after the completion of the facility construction and its exploitation the government will not levy taxes from the investor so that it could recoup all costs within 2-5 years."

Experts also propose to further simplify the registration process and accommodation of foreign citizens in the territory of Azerbaijan, claiming that it will give an impetus for attracting a new inflow of investment and developing various sectors of the economy.

In early 2016, President Ilham Aliyev set a target before the government: to increase the volume of foreign investment, particularly in the non-oil sector of the economy.

The government takes decisive measures towards increasing the attractiveness of the country for foreign investors. In this regard, privatization is considered to be one of the important tools for ensuring inflow of foreign direct investment to the country.

Also, the development of local production is other option for inflow of funds. In this regard, the Azerbaijani government is keen to further transfer oil and gas revenues to the non-oil sector as the development of this sector is expected to enable Azerbaijan not to depend on imports.

Also, taking the current economic processes into account, investing in Azerbaijan is also advantageous because of the low exchange rate of the national currency, the manat and the availability of specialized personnel.

Azerbaijan also focuses on development of the transport infrastructure. In recent years, the government has invested billions in the development of marine, railway, road and social infrastructure as developed infrastructure and good business climate are the main conditions for attracting foreign direct investment in each country.

Azerbaijan also applies the principle of "single window" for transport of transit cargoes through its territory via the railways, maritime transport, ports and terminals.

Azerbaijan has reduced transit costs by around 40 percent for foreign carriers heading to the Kazakh port of Aktau and Turkmenbashi port of Turkmenistan. The government applies a 30-percent discount on the services of transit of oil and oil products by railway and transshipment via the sea terminals.

Such measures are aimed at further increasing Azerbaijan's attractiveness for foreign investors and opening doors for investments. Today, a struggle for the investments intensifies in the world, and Azerbaijan will have to compete for its share.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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