Looking to the future – Azerbaijan’s buoyant economy highlighted in London
Press Release: The European Azerbaijan Society (TEAS) has organised its fourth annual London Business Forum, entitled Enhancing Azerbaijan’s Competitiveness and Business Climate,attended by over 200 politicians, business executives and journalists on 5 November.
The event came at the end of a pivotal year for Azerbaijan. This has seen the concrete steps taken towards realisation of the Southern Energy Corridor, following the signing of the protocols regarding construction of the Trans-Anatolian Pipeline (TANAP) and the selection of the Trans-Adriatic Pipeline (TAP) by the Shah Deniz Consortium to bring Caspian gas from the European border of Turkey to Italy. It has also seen the launch of AzerSpace–1, the first Azerbaijani communications satellite, whilst work on the Trans-Eurasian Information Superhighway (TASIM) is expected to reach completion at the end of the year.
Charles Hendry MP, Prime Ministerial Trade Envoy to Azerbaijan, Kazakhstan and Turkmenistan said: “In a little over 20 years, Azerbaijan has made tremendous progress. The UK is the greatest foreign direct investment contributor to Azerbaijan, due to the oil and gas industry, but it is time for it to take a similar position in the non-oil sector. There is a pre-existing long-term relationship between the countries. Azerbaijan’s role in the development of the Southern Gas Corridor, due to the construction of TANAP and TAP, is destined to provide European energy security. Today’s event, with its additional emphasis on the non-oil sector, is of great significance for Azerbaijan and the UK. I urge British businesses to come to Baku and see what the country has to offer. The UK government wants British businesses to be the partner of choice for their Azerbaijani counterparts.”
Matthew Bryza, former US Ambassador to Azerbaijan, commented: “I wish the US government would appoint someone in a similar role to Mr Hendry. There have been dramatic physical changes in Azerbaijan, and the country has now entered a new market economy era. In the US, we need a new strategic vision for Azerbaijan, and I am delighted that AzerSpace–1 was manufactured by Orbital Technologies, a US company. The vision of the Azerbaijan Investment Company (AIC) has been to create a private equity fund for the non-oil sector. It is particularly necessary to develop the agricultural sector – this currently employs 60 per cent of the Azerbaijani workforce, yet only accounts for six per cent of GDP. Azerbaijan is a very stable place, and the government welcomes investors and entrepreneurs, particularly if they wish to establish small- and medium-sized enterprises. It is undeniable that the non-oil sector is the new engine of growth.”
During his address, H.E. Fakhraddin Gurbanov, Azerbaijani Ambassador to the UK, underlined the economic achievements, commenting: “Economic growth during the first nine months of the current year was 5.4 per cent. The non-oil sector grew by 10.4 per cent, which is remarkable. Other macroeconomic indicators were also very positive – inflation was only 2.3 per cent and unemployment was about 5 per cent.”
One of the main objectives of the event was to highlight investment opportunities in the non-oil sector. Ambassador Gurbanov continued: “The Azerbaijan 2020: A Look into the Future action plan, approved by Presidential Decree on 30 December 2012, is based on an export-oriented economic model. This states that Azerbaijan aims to double its per capita GDP by 2020, with an annual average growth rate of 7 per cent in the non-oil sector.” He went on to reveal that more than 400 UK companies are currently active in Azerbaijan, employing around 5000 people.
Orkhan Mammadov, Head, Interstate Economic Co-operation Department, Azerbaijani Ministry of Economy and Industry, said: “Azerbaijan has implemented more than 40 agreements aimed at eliminating double taxation. There are currently great opportunities for overseas investors in such projects at the East–West and North–South Transport Corridors, Baku–Tbilisi–Kars railway and the new Baku International Sea Port, development of the Heydar Aliyev International Airport in Baku and new airports in the regions.”
Mehmet Ogutcu, Chairman, Global Resources Corporation, and Special Envoy at Energy Charter, pinpointed the major players in the world energy sector who are having an impact. He warned that these would have profound implications for Azerbaijan. He called for Baku to adapt its governance structures and strategies for effectively responding to the changing dynamics in the new energy consumption map, away from the OECD world. Mr Ogutcu particularly focused on the growth of unconventional fuels, gas price differentials, declining levels of investment in certain regions, shifts in trade flows, geopolitical realignment, and sustainability.
Al Cook, Vice-President, Shah Deniz Development, BP, confirmed that the final investment decisions on TANAP would be taken during the third week of December 2013, whilst Michael Hoffman, External Affairs Director, TAP, announced that their final decision would be made on 15 November. Rufat Afandiyev, Director, UK Representative Office, State Oil Company of the Azerbaijani Republic (SOCAR), reported that such new gas fields as Absheron, Babek, Umid and Nakhchivan, would be rapidly developed and feed into the Southern Gas Corridor. He also underlined the impact of shale gas extraction in Azerbaijan and elsewhere.
Tale Heydarov, Chairman and Founder, TEAS, also highlighted opportunities in the non-energy sectors, saying: “Currently there is an emphasis on information and communications technology (ICT), but there are also great opportunities in the agricultural sector, which is set to become a major source of income in the future. This is the Year of ICT in Azerbaijan, and the importance of ICT has been demonstrated by the launch of AzerSpace–1 earlier this year. Tourism in Azerbaijan also has enormous potential, based on our stunning scenery and nine different climatic zones.” He also called on potential investors in Azerbaijan to look beyond Baku, where there are immense opportunities, with high rates of return.
Rufat Mammadov, President, Azerbaijan Export and Investment Promotion Foundation (AZPROMO) commented: “Azerbaijan continues to rank amongst the fastest growing economies in the world, and ranks at 39th place in the Global Competitiveness Index, published by the World Economic Forum. Currently, the non-oil sector accounts for 53 per cent of the economy, with 85 per cent of the economy being in the private sector. Azerbaijan also accounts for around 80 per cent of the GDP in the South Caucasus. To date, AZPROMO has invested $160bn in the non-oil sector, including such projects as the Sumgait Chemical Industrial Park and the Balakhani Eco-Industrial Park, which are ideal for international investment.”
Ilham Aliyev, Deputy Executive Director, Azerbaijan Investment Company (AIC), reported progress on projects being undertaken via Public–Private Partnerships, including shipyards, agribusinesses and cement plants.
Rufiz Chiragzade, Senior Operations Officer, The World Bank, spoke on the investment opportunities in the agribusiness sector, explaining that such diversification is a necessary element of the economic agenda for several factors, including food security.
Farid Ismayilzade, Founder and Chief Executive of GoldenPay, a successful IT start-up, announced that it would be the first company of its type to make an IPO in Azerbaijan.
Gustaf Nobel, Chairman, Nobel Sustainability Trust, also announced the launch of the Nobel Sustainability Fund, worth $200m, which will promote the development and application of clean technologies around the world.
Dmitriy Solovyov, Azersun, reported that a high level of technological innovation had resulted in more efficient and effective agricultural production.
The day concluded with an afternoon of business-to-business (b2b) sessions, where potential investors could exchange views and gain information from executives and experts representing companies who are already active in the country.
Sponsors: Azsigorta, AFB Bank, Akkord Industry Construction Investment Corporation, Fireland Capital, Trans-Adriatic Pipeline (TAP).
Media Partners: Bloomberg, Business News Europe, Templeton Thorp, The City UK, Open Central Asia Magazine.