Azerbaijan

Baku Business Solutions LLC, Azerbaijan – Global Accounting Alliance Member

Economic Overview & Business Opportunities

Located on the western edge of the Caspian Sea, Azerbaijan sits at the crossroad between Asia and Europe. Azerbaijan is bordered by the Caspian Sea in east, by Iran in south, by Armenia in west, and Georgia and Russia in the north, making it slightly smaller than Maine. As of now, Azerbaijan is the 93^rd largest country in the world with a population of around 9 million.

Azerbaijan is a young republic with a developing economy. Despite the efforts of government programs and development of non-oil sectors in recent years, the oil sector is still the most important sector of the economy. Large and growing oil and gas exports in Azerbaijan have contributed to the country’s high economic growth. On the other hand, foreign direct investment in Azerbaijan oil sector has great benefits for the economy, especially in terms of rapid increase in GDP. Besides, some non-export sectors like construction, banking, and real estate also featured significant growth. As an oil-based country, Azerbaijan has portrayed its ability to use its energy wealth to promote economic growth.

Azerbaijan is one the leading FDI destinations in the region. Over the years, Azerbaijan has tripled its economic potential, sustained macroeconomic stability and implemented a wide range of economic and regulatory reforms to create a good business and investment environment. Azerbaijan is said to be investor-friendly due to its transparent legislation system and political stability. Generally, Azerbaijani legislation develops a very open national regime for FDI, where foreign investors are welcome to invest in any sectors. It also applies to the participation of foreign investors in the privatization of state-owned property.

In other words, the implementation of “welcoming policy” for foreign businesses ensures that laws protect foreign investments. Foreign investors are guaranteed against adverse changes in legislation as well as nationalization and requisition, which means foreign investments are not subject to nationalization and requisition (except in cases of natural disaster, epidemics, accidents, and emergencies). In addition, Azerbaijan has significantly improved its business environment in terms of ease of doing business in the country. Among many improvements, the introduction of “one-stop-shop” system (or the “single window” system) of business registration manages to reduce the red tape, costs and paperwork in the process of business registration. Furthermore, the government has imposed important reforms in employment regulations, registering property, and finance as well as tax system to help foreign investors. Other than that, the human capital contribution, competition level, technology transfer and management and governance practices are some other strengths of Azerbaijan’s economy, making these country investment hotspots in the region.

In recent years, Azerbaijan has made remarkable achievements in economic growth due to its investment policies and competitiveness of the country. If you are thinking of expanding your investment profile in oil sector or doing business in the region of Eurasia, Azerbaijan has lots to offer.

Eytibar Garayev
Managing Director

Jeyhun Mammadov
Partner

Gulnara Bakhshiyeva
Financial Services Director