EU investments in country exceed 15B
Over the past five years, the European Union (EU) countries have invested more than $15 billion in Azerbaijan’s economy.
Azerbaijani Deputy Economy Minister Rufat Mammadov made the remarks at the EU-Azerbaijan business forum on June 5 in Baku.
He noted that more than 1,500 European companies are currently operating in Azerbaijan.
“Economic cooperation between the EU and Azerbaijan is constantly improving. Last year, the trade turnover between the EU and Azerbaijan amounted to 9.4 billion euros, which account ted for 32 percent of the total trade turnover of Azerbaijan. In the four months of this year, the trade turnover amounted to $3.7 billion, which is 15 percent more than in the same period last year. Over the past five years, the EU has invested $15.3 billion in the country,” Mammadov said.
The deputy minister noted that Azerbaijan is also an important partner of the EU in the energy sector.
“Azerbaijan provides five percent of the EU's oil needs. On May 29, we officially launched the Southern Gas Corridor project, which will provide Europe with Azerbaijani gas as well in the future,” he said.
Mammadov noted that the parties continue to work on various cooperation programs, and since 1992 the EU has allocated about 600 million euros to Azerbaijan as technical support.
The deputy minister said Azerbaijan also pays great attention to the development of bilateral relations with the EU countries.
“Up to now, Azerbaijan has signed agreements on avoidance of double taxation with 24 EU countries, and agreements on promotion and protection of investments with 17 countries. There are intergovernmental commissions with 16 countries. In addition, we have already signed agreements on strategic partnership with nine EU countries,” Mammadov said.
Further, he stressed that another $1.1 billion will be invested in industrial parks operating in Azerbaijan.
“Currently, $2.5 billion have been invested in industrial parks in Azerbaijan. Another $1.1 billion will be invested in industrial parks in the future,” the deputy minister added.
The deputy minister also spoke about the successful implementation of the mechanism of investment promotion documents, holders of which are exempt from many taxes and receive various preferences.
“To date, investment promotion documents have been issued as part of the implementation of 276 investment projects, totaling 2.5 billion manat ($1.47 billion),” Mammadov said.
Addressing the event Chairman of the State Customs Committee of Azerbaijan Safar Mehdiyev said that the trade turnover between Azerbaijan and the European Union continues to grow every year.
The head of the State Customs Committee noted that an increase is observed in both export and import operations between Azerbaijan and the EU this year.
“Over the past five months of 2018, the trade turnover between the EU and Azerbaijan exceeded $5 billion. At the same time, exports to the EU increased by five percent compared to the same period last year, amounting to $3.7 billion, and imports rose by 41 percent, amounting to $936 million,” Mehdiyev said.
Last year, the turnover of Azerbaijan with the EU countries amounted to $9.4 billion, an increase of 51.6 percent, compared with the end of 2016. Azerbaijan’s exports to the EU countries for the reporting period amounted to $7.45 billion, and imports - 1.94 billion.
The main trading partner of Azerbaijan among the EU countries in 2017 was Italy, which accounted for more than half of the trade with the EU countries - $4.7 billion.
In turn, the country’s Minister of Taxes Mikayil Jabbarov noted that there are still problems with the provision of complete and transparent reporting in Azerbaijan.
“If we conduct a survey here, then it will become clear that 60-70 percent of business representatives are registered as payers of value added tax (VAT). But according to the statistics of the Ministry of Taxes, VAT payers account for just about three percent of all active taxpayers. As you know, according to the legislation of Azerbaijan, VAT payers are those whose annual turnover exceeds 200,000 manats ($117,600). Here we face three problems - the concealment of wages, turnover and reporting. Reforms in the legislation will be aimed at solving these problems,” Jabbarov said.
The minister noted that the reforms will be aimed not only at increasing reporting requirements, but also in easing the tax burden, adding that the ministry will continue to reduce the number of field audits.
Taking his turn, Executive Director of Azerbaijan’s Center for Analysis of Economic Reforms and Communication Vusal Gasimli mentioned that the continued economic development in Azerbaijan has led to a revival in the financial and banking system.
“As of the end of April 2018, the volume of assets of Azerbaijan’s banking sector remained stable. The trend of falling loan portfolio of the banks stopped, and the loan portfolios even increased, albeit insignificantly by 0.8 percent or 85 million manats ($50 million). The dollarization of the loan portfolio decreased from 41.3 percent to 39.6 percent, the share of liquid assets made up 22 percent of the total volume, and the external debt of the sector decreased by 40 percent. During the first four months of 2018, the capital injection into banks amounted to 313 million manats ($184 million),” Gasimli added.
Further, speaking of oil prices, he stressed that despite the fact that oil prices currently hold at $80 per barrel, Azerbaijan should continue carrying out economic reforms, adding that this year, in the rating of Doing Business, we intend to become one of the reforming countries.
According to the Executive Director of the Center, in recent years, Azerbaijan has carried out successful reforms related to the organization of business, issuing permits for construction, access to loans, protecting the rights of investors and so on.
Head of the State Migration Service Vusal Huseynov said that the council will include representatives of such organizations as American Chamber of Commerce in Azerbaijan (AmCham), the Azerbaijan-Turkey Business Association (ATIB), the German-Azerbaijani Chamber of Commerce, as well as such companies as BP and SOCAR.
He said that the council will ensure more simplified and transparent process for issuing permits for the employment of foreign citizens in Azerbaijan.
“All processes - from submitting documents to obtaining a final decision - will take place online, and it will be possible to monitor these processes from their start to finish,” Huseynov said.
He also touched upon the issue of expanding the quota for obtaining permits, adding that entrepreneurs will be able to take an active part in the defining of quotas.
Agriculture Minister Inam Karimov, for his part noted that despite the large trade turnover volume between Azerbaijan and the EU countries, only a small proportion of agricultural products accounts for it.
“Last year, Azerbaijan exported products for $7.4 billion to the EU and imported products worth $1.9 billion. However, the trade turnover of agricultural products is at a very low level. Increasing this indicator is our strategic goal,” Karimov said.
The minister noted that the agricultural sector of Azerbaijan increased by 4.2 percent in 2017, and its share in the country’s GDP hit 5.6 percent, adding that agricultural exports increased by 39.8 percent in 2017.