“Made in Germany” brand stands for high quality in Azerbaijani market – Tobias Baumann

Economy Materials 17 December 2018 09:00 (UTC +04:00)
Currently Azerbaijan is the largest and most important trading partner of Germany in the South Caucasus and the sixth largest supplier of crude oil to the country.
“Made in Germany” brand stands for high quality in Azerbaijani market – Tobias Baumann

Baku, Azerbaijan, Dec.17

By Sara Israfilbayova - Trend:

Trend's exclusive Interview with Tobias Baumann, Executive Director of AHK Azerbaijan

Question: Which measures are being taken to increase trade turnover between the countries?

Answer: Currently Azerbaijan is the largest and most important trading partner of Germany in the South Caucasus and the sixth largest supplier of crude oil to the country. With the recent launch of the Southern Gas Corridor (SGC), Azerbaijan is also a key strategic partner of Germany and Europe in diversifying sources of energy supplies. Coming to statistics, trade turnover between Azerbaijan and Germany has recovered by around 80% in the first ten months of 2018, amid higher oil prices and firming currencies, compared to the same period of 2017.

The "Made in Germany" brand stands for high quality and enjoys an excellent reputation in the Azerbaijani market. The machinery, plants, and equipment remain the largest group of imported goods from Germany. We expect this demand to increase even further, due to the fact that starting from May, 2018 imports of equipment to Azerbaijan in reconstruction of oil refineries is exempted from customs duties. The close cooperation between Azerbaijan and Germany is observed through the organisation economically significant events and trade fairs supported by both countries.

The German-Azerbaijani Chamber of Commerce (AHK Azerbaijan) is the official representative of Messe München in Azerbaijan and Georgia. We provide the companies from both countries with the technical support and facilitate their participation in the trade fairs in Munich as exhibitors and/or visitors. Moreover, every year in October-November our Chamber organises a traditional German-Azerbaijani Business Forum. This is a unique business platform bringing together companies from Germany and Azerbaijan to present new projects and to define opportunities for further cooperation and partnership. It is also worth mentioning that recently in November Azerbaijan organised an export mission to Berlin, Germany, with representatives of 28 companies involved in production of food products, textile and furniture industries.

We are now planning export missions to Germany as well as delegation trips of German companies to Azerbaijan in 2019. On 5-8 February 2019, the trade fair "Z and Intec" - the flagship of Saxony's industry trade fairs - will take place in Leipzig, Germany. On this occasion, the AHK Azerbaijan organises a business delegation trip to the "Z and Intec" Trade Fair on 4-7 February 2019 for high-level representatives of Azerbaijani organisations and enterprises operating in Machine and Tool Manufacturing and Mechanical Engineering industries within the framework of the Industry-Specific Sales Promotion Tool.

Q.: What are the priority areas of cooperation between Germany and Azerbaijan and what is being done for further development of this cooperation?

A.: As the main growth driver of the Azerbaijani economy, oil and gas sector obviously tops the priority areas of cooperation between the two countries. Considering that the international oil companies are the main clients of German companies operating in the country, the new exploration and development projects will create long-term prospects for German companies as contractors of the oil majors in 2019-2020. Furthermore, digitalisation has recently become a crucial topic of the oil and gas sector. In this view, the upstream industry also opens up great opportunities to German companies offering information technologies and digital services in this industry.

Within the diversification policy of the government, the current focus of the development strategy is maximising integration of Azerbaijan's upstream-midstream-downstream oil and gas value chain. Hereby petrochemical industry is the field with great prospects for cooperation with German companies.

Going forward, development of the long-term energy strategy remains one of the key priorities in Azerbaijan. The Azerbaijani government aims to attract new sources of private investments into the energy sector in 2020 2022 by ensuring a more effective, flexible and transparent legislation and regulatory frame work. With that, there will be new chances for German companies to further position themselves in the market as providers of technology, equipment and expertise.

Q.: Are German businessmen interested in cooperation with Azerbaijan? If yes, in which areas?

A.: In the background of its energy diversification strategy, Germany is considerably interested in the further development of the SGC project. A number of global and well-known German companies are already actively involved in the construction of SGC by providing services, expertise, machinery, and key pipeline materials at the various phases of the project. We are witnessing a growing number of long-term partnerships as well as successfully established joint ventures between German and Azerbaijani companies.

A more promising economic outlook and the government's ongoing strategy of diversifying the economy will pave a way for the German manufacturers of machinery and equipment, as well as chemical products and raw materials in the non-oil sectors, including construction, infrastructure, transport, and building materials.

To summarise, all the steps mentioned above are implemented or are planned to be realised in order to strengthen the relationship between Azerbaijani and German businesses and to further stimulate trade between two countries.

German companies can offer their relevant expertise and knowledge particularly in the electricity and renewable energy sectors to increase the efficiency of the energy system in Azerbaijan, which is also among the main priorities of the Azerbaijani government in the following years. In this context, they can be involved in the repair process of existing solar, wind, and bioenergy plants along with the development of feasibility studies on new plants.

Q.: Azerbaijan is actively attracting foreign capital in the field of pharmaceuticals. To this end, the PiгаIlahi Industrial Park has been established, where factories for the production of medicines are being built together with Iranian and Russian partners. Are German companies interested in investing in this area in Azerbaijan? Are there any negotiations?

A.: The Azerbaijani market for medical and laboratory equipment and pharmaceuticals is still an import market, but the Pirallahi Industrial Park, founded in 2016, is expected to become an important center for the local production of pharmaceuticals. Germany together with Switzerland and Turkey account for the most important supplier countries for pharmaceuticals, measured by the value of imports. As the adverse effects of the earlier collapse of oil prices and exchange rate vulnerability began to recede, imports of pharmaceuticals have been on the rise again since 2017. To the best of our knowledge, German pharmaceutical companies are interested in this sector and are observing the market considering the possible market entries in 2019-2020. However, we have no relevant knowledge to date on direct investment plans of any specific German company in production capacities at the Pirallahi Industrial Park.