#1azpromo Azerbaijan Export and Investment Promotion Foundation Azerbaijan Country Presentation 2#2azpromo Azerbaijan Export and Investment Promotion Foundation O Establishment: O Independence: Ở Area: Population: O Official Language: O Government system: O Membership in: 28 May 1918 18 October 1991 86.6 thsd km2 9.37 million Azerbaijani Presidential Republic UN (Non-permanent member of UN Security Council for 2012-2013), Council of Europe, OSCE, Non-Aligned Movement, OIC Ⓒ Highlights: O 1st democratic republic in the Islamic world 1st Opera in the Islamic world * Women voting right in 1918 (while in Italy - 1946; Switzerland - 1971; France - 1944) Ⓒ Currency: Manat: 1 AZN = 1.27 USD Basics (*#3O azpromo Azerbaijan Export and Investment Promotion Foundation Interesting facts ■ 50% of world oil production in XIX century | 80% of total Soviet oil production during World War II | First Baku 'oil boom' | Nobel's first Kerosene factory | 1846-first hand-dug oil wells NOBEL ETH & C PETROLE NOBEL 50 H. METH ■ First Baku-Batumi Pipeline Nobel's distribution system | First rail tank cars#4azpromo Azerbaijan Export and Investment Promotion Foundation Stable economy •Total: GDP •Per capita: •Growth rate: •Total: Non-oil GDP •Share in total GDP: •Growth rate: •Total: Investments •Domestic: •Foreign: 2012 68.7 bln USD 7490 USD 2.2% 36.2 bln USD 52.9% 9.7% 25.7 bln USD 15.5 bln USD 10.3 bln USD •Trade turnover: 43.8 bln USD Trade •Export: 34.2 bln USD •Import: 9.6 bln USD Other macroeconomic figures Social statistics Source: State Statistics Committee •Inflation: •Strategic currency reserves: •Budget balance: 1.1% 46 bln USD +3.6% of GDP ⚫Average monthly wage: •Unemployment: •Population income growth: 502 USD 5.2% 13.8%#5azpromo Azerbaijan Export and Investment Promotion Foundation Competitive economy Sovereign debt ratings Rating agency Term Rating Outlook STANDARD & POOR'S Fitch Ratings Long Term Foreign Currency Short Term - Foreign Currency Long Term Local currency Short Term - Local Currency Long Term - Foreign Currency Short Term - Foreign Currency Long Term Local currency BBB- Stable A3 BBB- A3 BBB- Stable F3 BBB- Long Term Foreign Currency Baa3 Stable MOODY'S - Long Term Local Currency Baa3#6azpromo Azerbaijan Export and Investment Promotion Foundation Competitive economy Global Competitiveness Report 2013-2014 Economy Rank Azerbaijan 39 Poland 42 Turkey 44 Czech Republic 46 Kazakhstan 50 Slovenia 62 Russia 64 Georgia 72 Armenia 79 Iran 82 Ukraine 84 The report assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity. 1st among CIS countries (5 times running), 39th among 148 countries Other indicators: Inflation - 1st - Macroeconomic environment - 8th Government budget balance – 15th General government debt – 13th Labour market efficiency - 30h Capacity for innovation - 35th Technological readiness - 50st#7azpromo Azerbaijan Export and Investment Promotion Foundation Business enabling environment WB Doing Business Report 2014 Economy Rank Georgia 8 Kazakhstan 50 Bulgaria 58 Italy 65 Turkey 69 Azerbaijan 70 Romania 73 Czech Republic 75 Russia 92 Serbia 93 Iran 152 70th among 189 countries 15th among the 50 economies narrowing the distance to frontier the most since 2005. The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005. Some sub-indicators: Registering property - 13th Starting a business- 10th - Enforcing contracts – 28th Getting credit – 55th - In Global Competitiveness Index 2013-2014 (rank/148): Hiring and firing practices - 8th - Burden of government regulation – 21st Strength of investor protection - 25th#8azpromo Azerbaijan Export and Investment Promotion Foundation Liberal investment climate Welcoming policy National regime for foreign investors No restrictions for any type of foreign investment Incentives for foreign investors Guarantees Guarantee against adverse changes in the legislation, nationalization and requisition No discrimination policy Guarantee of compensation of damages and repatriation of profits Sophisticated legal base Law on Investment Activity and Law on Protection of Foreign Investments Party to New York (1958) and Washington (1965) Conventions 46 bilateral investment treaties 44 double taxation treaty Government institutional support Azerbaijan Export and Investment Promotion Foundation (AZPROMO) Azerbaijan Investment Company National Fund for support of Entrepreneurship#9azpromo Azerbaijan Export and Investment Promotion Foundation Non-oil sector 62% Oil sector 38% Source: State Statistics Committee Liberal investment climate 1995-2012 Total Investments 144.4 bln USD Domestic 71.2 bln USD Foreign 73.2 bln USD#10Gas Export Projects ❖ Expansion of SCP from 8 to 16-20 bln. c.m.a ❖ Trans-Anatolian Pipeline (TANAP) Length: 2,000 km; Capacity: 16 bln. c.m.a.; Cost: $7 bln; SOCAR with 51% share BULGARIA BLACK SEA JURKIYE VE GEORGIA Kuklareli Edir Zonguldak REE C Tekir İstanbul Ereol Izmit Bartin Caycuma TANAP Cankar Samsung Ordu Giresun Amasya Sakarya Çorum Tokat Can analle • внести Kacabey Bursa Ankara Yozgat Kinkkale Sivas Eskişehir Yapraok Baltesir Kütahya TURKEY Trabzon Art Rize Gümüşhane Bayburt Erzincan Erzurum BTC Ardah SCP ars Horasan 1gd Agn Doğuba Alinga Afyon S Mnisa zmir Turgutlu Usk Ayn Denizli Kirsehir Kayseri Elazig Nevsehir Malatya Batman Konya Aksaray Niğde Diyarbakır Adıyaman Sirnak Kahramanmaras Van 8#11Other Investment Projects (2) *Petkim Investments of $10 bln. during upcoming 7-8 years, ✰ Construction of an Oil Refinery Supply Petkim with raw chemicals. ⚫ Decline import of raw chemicals by 30% Investment of $5-5.5 bln. in 6 years. Expansion of Petkim ⚫ Investment of $730 mln. ✰ Expansion of port near Petkim • Investment of $230 mln. ✰ Construction of Electric power station Investment of $0.8-1.2 bln. 10#12azpromo Azerbaijan Export and Investment Promotion Foundation Investments to energy sector PSA Tax Regimes Withholding Tax Applies to Foreign Subcontractors Tax rate varies from 5% to 8% ☐ Applicable to: •Work & Services performed in Azerbaijan •Mark-up, Handling fee on Goods sold in Azerbaijan Satisfies Subcontractors corporate tax liability Profit Tax Applies to Foreign Subcontractors ☐ Calculated under the PSAs ☐ Profit Tax rate varies from 25% to 32% ☐ Taxable Base revenues less operating costs and tax depreciation Other Taxes VAT - exempt with credit (0%) Customs Taxes - exempt Personal Income Taxes - payable by employees at a max. rate of 25% ☐ Contractor Parties are entitled to full and complete exemption from other taxes, such as royalties, property taxes, etc. EXON Mobil Chevron#13azpromo Agriculture Azerbaijan Export and Investment Promotion Foundation Investments to non-energy sector Alternative energy Construction O Tourism Waste management ICT Chemical industry#14O azpromo Azerbaijan Export and Investment Promotion Foundation Policy advocacy + strategy direction OUR SEVICES Image building Investor servicing + aftercare Investment facilitation Investment generation ■ Image building marketing campaigns (perception=reality), communication strategy ■ Investment generation Identification of potential investors, marketing campaigns, presentations, seminars, road shows ■ Investment facilitation Investment information, site visits, organisation and providing information ■ Investor servicing + aftercare Helping investors get established and be operational, expansion and re-invest | Advocacy+strategy formulation Advocating for investment friendly business climate, inputs to national FDI policy#15Azerbaijan Export and Investment Promotion Thank you for the attention! Foundation azpromo Azerbaijan Export and Investment Promotion Foundation (AZPROMO) Baku Business Center 44, Neftchiler ave., Baku, Azerbaijan www.azpromo.az www.b2b.az Tel.: (+99412) 598 01 47/48; Fax: (+99412) 598 01 52 [email protected]