Azerbaijan: Investing

FDI in Figures | Why You Should Choose to Invest in Azerbaijan | Procedures Relative to Foreign Investment | Investment Opportunities

FDI in Figures

Foreign direct investments are very important in the Republic of Azerbaijan, especially in the energy sector. The flows of FDI reached USD 473 million in 2009, an increase in relation to 2008. The shares of FDI in relation to the GDP are also increasing: 21% in 2009 against 17.5% in 2008.

Country Comparison For the Protection of Investors

	Azerbaijan	Eastern Europe & Central Asia	الولايات المتحدة	Germany
Index of Transaction Transparency*	7.0	6.3	7.0	5.0
Index of Manager’s Responsibility**	5.0	4.0	9.0	5.0
Index of Shareholders’ Power***	8.0	6.2	9.0	5.0
Index of Investor Protection****	6.7	5.5	8.3	5.0

Source: Doing Business- Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	14	473	563
FDI Stock (million USD)	8,557	9,030	9,593
Performance Index*, Ranking on 141 Economies	135	111	-
Potential Index**, Ranking on 141 Economies	58	-	-
Number of Greenfield Investments***	42	44	-
FDI Inwards (in % of GFCF****)	0.2	79.2	-
FDI Stock (in % of GDP)	17.5	21.0	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

Why You Should Choose to Invest in Azerbaijan

Strong Points: The country's strong points are:
- Fast economic growth;
- An interesting geographic location;
- Competitive production costs;
- Cheap and qualified labor;
- The size of its energy sector;
- The signing of numerous bilateral treaties aimed at promoting trade.
Weak Points: The country's main weak points are:
- The poor quality of its infrastructures;
- The high rate of corruption within the administration;
- The slowness of procedures;
- The destabilization risks due to the conflict in Karabakh;
- Other than the oil industry, there are few developed sectors;
- A certain level of Insecurity.
Government Measures to Motivate or Restrict FDI: The country has signed numerous treaties to encourage FDI. It has also put in place legislation facilitating the creation of companies, limiting corporate taxes, and laws to protect FDI.
For more information and to consult the law texts, visit the Agency for the Promotion of Investment in Azerbaiajan website.
Bilateral Investment Conventions Signed By Azerbaijan: The country has signed conventions with many countries: Austria, Belgium, Bulgaria, China, Egypt, Finland, Georgia, France, Germany, Greece, Iran, etc.

Procedures Relative to Foreign Investment

Freedom of Establishment: In theory, there is a great amount of freedom for investments, but the bureaucracy and the corruption makes investing difficult outside the energy sector, which is dominated by foreign investments.
For more information, consult the report "Investment Climate 2009" on the US Department of State's website.
Acquisition of Holdings: A majority holding interest in the capital of a local company is legal in Azerbaijan.
Obligation to Declare: The Agency for the Promotion of Foreign Investments in the country gives information on the authorizations required for setting up a company.
Competent Organization For the Declaration: Agency for the Promotion of Investment in the Republic of Azerbaijan
Ministry of Taxes of the Republic of Azerbaijan (for starting a company)
Requests For Specific Authorizations: For certain sectors, specific authorizations are necessary.

For more information, consult the report "Investment Climate 2009" on the US Department of State's website.
For more information, consult the website of the Agency for the Promotion of Investment in the Republic of Azerbaijan.

Learn more about Foreign Investment in Azerbaijan on Globaltrade.net, the Directory for International Trade Services.

Investment Opportunities

Investment Aid Agency: Agency for the Promotion of Investment in the Republic of Azerbaijan
Ministry of Economic Development of Azerbaijan
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Azerbaijan
Asian Development Bank, Proposed Projects in Asia
Globaltenders, Tenders & Projects from Azerbaijan
DgMarket, Tenders Worldwide
Other Useful Resources: Website of the Azerbaijani government

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Learn more about Investing in Azerbaijan on Globaltrade.net, the Directory for International Trade Services.