Monday, 15 October 2018 15:14

Go for new markets

The growing role of Azerbaijan on the world stage as serious economic partner is undoubtedly contributing to the increase of foreign investments and the volume of turnover. Azerbaijan which proved to be a reliable energy partner is confidently tapping into the world market with its non-oil products.

In the last year alone, Azerbaijan’s turnover with the world countries increased by 57% and reached $16,524.5 million according to the results of July 2018.

In particular, the turnover between Azerbaijan and the EU countries continues rising year by year. According to the Head of the Customs Committee of Azerbaijan Safar Mehdiyev, there has been an increase this year both in export and import operations between Azerbaijan and EU countries. According to the data of the State Customs Committee of Azerbaijan, turnover between the EU and Azerbaijan reached almost 7 billion dollars over the last 7 months of 2018. Besides, export to the EU rose almost twice and totaled $5.5 billion compared with the same period of the last year. Import rose by 41% and reached up to $1.3 billion.

Italy has been Azerbaijan’s main trade partner among the EU countries for 10 years. Italy has got the leading position in export since 2008, except for the first 3 months when Turkey took the lead in January 2008 and then the USA in February-March. During these years, maintaining good bilateral economic relations, Italy remained a major trade partner of Azerbaijan and the first consumer in the energy sector. Other sectors are being considered as well. It should be noted that Italy is represented well enough also in the metallurgical sector of Azerbaijan. Italian products, in turn, are very valuable in Azerbaijan. It refers not only to usual sectors of the Italian export (fashion, furniture, food products) but also mechanics, engineering and technology.

According to the results of January-July 2018, this country accounted for over half of turnover with the EU states -$2.8 billion.

Germany is also playing an important role in the increase of Azerbaijan’s turnover with the EU. While Azerbaijan ensures supply of energy resources, Germany has been an important supplier of German techniques, technologies and, above all, vehicles. At the same time, Azerbaijan is the major trade partner of Germany in the South Caucasus.

According to the data of the State Customs Committee of Azerbaijan, turnover between Azerbaijan and Germany totaled 805.35 mln AZN in January-July 2018. Germany’s share in the total turnover of Azerbaijan totaled 4.87%. With this indicator the country is in the top 5 external trade partners of Azerbaijan.

Recently, Germany has started expressing particular interest in economic cooperation with Azerbaijan. This was confirmed by a visit of the Federal Chancellor of Germany Angela Merkel to Azerbaijan in August of this year, which resulted in signing of many agreements about bilateral cooperation in the economic field.

To date, over 200 German companies are operating in the country. The size of German investments into the Azerbaijani economy totaled $496.6 million. German companies are actively implementing projects in Azerbaijan as subcontractors.

There are over 1,500 European companies operating in Azerbaijan. In the last five years, the EU countries invested over $15 billion into Azerbaijan’s economy. According to the Deputy Minister of Economy of Azerbaijan Rufat Mammadov, Azerbaijan is a major energy partner of the EU and satisfies EU’s 5% oil demand. “To date, Azerbaijan has signed agreements about avoidance of double taxation with 24 countries of the EU, and treaties about investment promotion and protection with 17 countries. There are intergovernmental commissions working with 16 countries. In addition, we have already signed strategic partnership agreements with 9 EU countries”, Mammadov says.

There are particularly close economic relations, seen in high turnover and investment indicators, between Turkey and Azerbaijan. 

According to the data of the State Customs Committee of Azerbaijan, the turnover between Azerbaijan and Turkey totaled $1.739 billion following the results of January-July 2018. It is 20% higher than the figure of the same period of the last year. Besides, the volume of export of the Azerbaijani products to Turkey totaled $857.6 million. The import of the Turkish goods made $881.8million.

Of course, the fact that Turkey exempted goods, supplied from the Nakhchivan Autonomous Republic (NAR), in October 2017 also contributed to the increase of this indicator. 43 product items (13 agricultural, 30 industrial goods) were included into the list, which was an important step towards the signing of the intergovernmental Azerbaijani-Turkish agreement on preferential trade.

Nevertheless, these figures do not reflect a real potential. As Ambassador of Azerbaijan to Turkey Khazar Ibragim assumes, economic relations and turnover indicator between Turkey and Azerbaijan are not high enough and do not justify the hopes. In his opinion, the volume of turnover between Azerbaijan and Turkey should be brought up to $5billion.

Till 2020, Azerbaijan is also planning to invest $20billion into the economy of Turkey. Today, investments made by Azerbaijani companies into Turkey’s economy constitute about $15 billion. The considerable part of these investments fall to the share of the energy sector and oil processing. In addition, the real estate sector in Turkey has been recently of interest to Azerbaijani investors. 

Turkish investments in Azerbaijan are focused in ICT, finance, insurance, extractive and food industry. Investments of the Turkish companies in Azerbaijan exceeded $12billion.

There are over 3,000 companies operating in Azerbaijan with the Turkish capital. The number of companies operating in Turkey with the Azerbaijani capital makes about 2,000.

Morocco also plans to increase goods turnover with Azerbaijan. According to the data of the State Customs Committee of Azerbaijan, the turnover with Morocco totaled about $3.9 million at the end of 2017. In spite of this, the two governments are working on developing economic partnership and ensuring the turnover growth. There are many opportunities for Moroccan and Azerbaijani businessmen in both countries. Signing of the agreements both on the bilateral level and on the level of the joint bilateral committee will provide the business community with a legal base for the development of economic relations.

China is another country with which Azerbaijan has its trade relations growing each year. According to the data of the State Customs Committee of Azerbaijan, the top three countries with the highest rate of import into Azerbaijan for January-July 2018 are as follows: the first place belongs to Russia ($917.1 million) which accounted for 15.88% of the Azerbaijani import. Turkey takes the second place ($881.8million) and China is the third ($586.4million). China accounts for 10.15% of import made into the country.

Turnover between Azerbaijan and China totaled $1,298 million in 2017. The volume of turnover increased by 33.16% last year and reached the highest historical rate. Export from Azerbaijan to China rose by 63.75% and totaled $443.8 million during the period under review. Import from China to Azerbaijan increased by 21.38% and totaled $854.5million. Thus, China became the fourth big trade partner of Azerbaijan in 2017.

The main export goods delivered from Azerbaijan to China are fuel, plastic and or plastic products, chemical products, wines, etc. Goods imported from China to Azerbaijan are mechanisms, electrical devices, equipments and their spare parts, vehicles and spare parts, clothes, ceramic goods, medical items, furniture, lighting appliances, household items, etc.

As far as Chinese investments in Azerbaijan are concerned, total investments of Chinese companies into Azerbaijan’s economy reached $770million early in 2018. Most of them were invested into the oil sector. At present, the proposal of the Chinese side to open an industrial park in our country is being studied. As the country gives priority to the development of the non-oil sector and delivery of qualitative products to the international markets under the “Made in Azerbaijan” brand, Azerbaijan is interested in exporting Agro-Industry products, including hazelnuts, mineral waters, processed products to the Chinese market.

Thus, Azerbaijan and China have all opportunities to expand economic cooperation and maintain the positive which was gained through years.

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