BAKU, Azerbaijan, May 5. The latest report from FDI Intelligence, a division of the Financial Times, named Baku the third most sought-after investment destination globally.
As per the report, the agreements reached last year regarding foreign direct investments in Azerbaijan mark the largest projects since 2017. As such, in 2023, the economy of Azerbaijan saw a hefty influx of foreign direct investments totaling $6.7 billion. The leading contributors to Azerbaijan's economy were the UK, with $1.9 billion, Türkiye with $1.3 billion, Cyprus with $792 million, Russia with $617 million, and Iran with $396 million.
Azerbaijan's welcoming business climate and promising investment opportunities have been drawing in a multitude of foreign investors. Across various sectors of the economy, pivotal projects are underway, spearheading innovation and growth while simultaneously fostering the creation of new employment opportunities for the country’s workforce.
Last year, an agreement was inked with between Azerbaijan's Investment Company (AIC) and Hungary's Hell Group. As per the deal inked, a new factory with an annual production capacity of 700 million aluminum beverage cans is set to be constructed in the Alat Free Economic Zone. The goods produced will cater to local demand and will also be exported to Central Asian countries. The project with a hefty investment of $211 million aims to generate over 300 job opportunities.
Another major venture set to receive substantial investment in Azerbaijan involves the production of electric motor buses through a partnership with the Chinese BYD Company Limited within the Sumgayit Chemical Industry Park. Initially, BYD has earmarked $34 million for the project, with an additional $60 million planned for investment in projects aimed at creating added value. The project aims to generate 800 new job opportunities. Starting from the third year of production, there are plans to localize spare parts for electric motor buses.
Moreover, with the participation of the Turkish firm "Gen İlaç ve Sağlık Ürünleri Sanayi ve Ticaret A.Ş.", a project was launched in the Pirallahi Industrial Park in 2023, with an investment outlay of $35 million. Additionally, construction is underway for a pharmaceutical facility in the Alat Free Economic Zone in collaboration with the Israeli BioPharmax company, with a project cost amounting to 45 million euros.
Azerbaijan has forged highly successful partnerships with energy companies from Arab nations. One notable example is the collaboration with the UAE's Masdar, which has been actively engaged in Azerbaijan since 2020. Masdar achieved a significant milestone with the successful launch of the 230 MW Garadagh solar plant in October 2023.
Furthermore, Masdar has entered into agreements to develop onshore wind and solar projects, as well as integrated offshore wind and green hydrogen projects, boasting a combined capacity of 4GW in the country. Remarkably, Masdar and Azerbaijan have mutually agreed to an option to expand the total capacity of renewable projects to an impressive 10GW, spanning across various technologies. Moreover, it has been revealed that Masdar will kick off the construction of several renewable energy projects in Azerbaijan this November, with a total value surpassing $1 billion.
In 2019, Saudi Arabia’s ACWA Power made its debut in Azerbaijan. Currently, the company is developing a 240 MW wind power plant in Azerbaijan, with a total investment of $286 million. The EBRD facilitated a syndicated loan of $197.1 million (186.9 million euros) to ACWA Power Azerbaijan Renewable Energy on October 26, 2023. Additionally, the OPEC Fund approved a $50 million loan to ACWA Power Wind Azerbaijan Renewable Energy on December 15 of this year, aimed at supporting the construction of the Khizi-Absheron wind power plant.
Earlier this year, ACWA Power signed four implementation agreements for major projects, including a 1GW onshore wind farm, a 1.5GW offshore wind farm, and a battery energy storage project, in collaboration with the Ministry of Energy.
So, these are just a few examples of Azerbaijan's successful investment partnerships with a wide array of global counterparts. Ongoing discussions with both existing and potential partners focus on attracting investments into new ventures. Recently, for instance, Azerbaijan and Kazakhstan established a joint investment fund aimed at attracting bilateral investments across various sectors. Additionally, at the recent Tashkent Investment Forum, Azerbaijan and Uzbekistan explored new avenues for investment collaboration.
With the COP29 conference scheduled for November this year, Azerbaijan aims not only to promote the climate agenda but also to showcase investment opportunities to potential partners. Notably, significant investment prospects are emerging not only in Baku but also in the liberated territories of Azerbaijan, offering opportunities in the energy sector, agriculture, transportation infrastructure development, and various other industries. Companies from Türkiye, Russia, Israel, Germany, and other nations are already capitalizing on these opportunities.
Azerbaijan's diverse investment landscape comes with tax incentives. Foreign investors can trust that Azerbaijan has robust laws and regulations to safeguard their rights and interests.
Overall, Azerbaijan has secured a spot in the top seven countries favorable for investment, according to the International Monetary Fund's 2024 report. This indicates that Azerbaijan will continue efforts to enhance its investment appeal, leading to more opportunities for investment attraction in the future.