A floor of investments in Azerbaijan continues rising. According to the State Statistics Committee, over the first quarter of 2006, 1,106,7m manats has been invested in the economy, which is 6.9% more than 2005. Major investing sources in January to March 2006 were enterprises (968.9m AZN with a rise of 5.7%), bank credits (22.1bn manats with a rise of 64.4%), community funds (22.7m AZN with a rise of 64.4%), budget funds (63.1m manats with a rise of 4.2%), non-budget funds (16.6m manats with a rise of 3.3 times).
Azerbaijan is a country favorable for investing. One of stimulating factors in the countrys tax legislation is the absence of discrimination in taxation of local and foreign businessmen. They enjoy equal rights. On the hand, the foreign investors are more interested in stable tax policy. The list of taxes does not change, while rates drop every year. It is an excellent factor stimulating flow of foreign investors.
In compliance with local legislation, the foreign investors can participate in local market through establishing joint ventures and local companies, daughter companies, belonging to foreign investors, representations and branches of foreign legal entities. Another important factor is possibility of repatriation of incomes earned out without any obstacles and there is not any limitation in the tax legislation in this respect.
Stimulating factors are used in the state level for development of definite fields of economy and attraction investments to Azerbaijan. For instance, tax privileges are injected periodically. The privileges vocation for agriculture producers are being applied in Azerbaijan and those desiring to invest in this field will be released of all types of taxes except the royalties. The privileges have been injected since 2006 with respect to develop insurance market.
In a conference on Direct foreign investment and development held in Baku on 31 March, organized by the Azerbaijani Fund for Promoting Investments and Export (AZPROMO) with assistance of EU TACIS program, the capita of Azerbaijan was awarded a prize Baku city of future investments in 2006-2007 in East Europe. The prize for granted for best economic potential (GDP of the city, level of investments), rents of offices, industrial facilities, land plots, cost houses at new buildings. Heydar Babayev, the Minister for Economic Development, attributed it as a result of achievement in the countrys economy, creation of equal terms for attraction of foreign investors. Today there are projects which will be implemented through attracting Р°prestigious companies.
The practice shows following increase of oil revenues they should be directed in the non-oil sector in the right way. The important directions for the country are the agriculture production and refinery, as well as establishment of infrastructure (irrigation system, electricity and gas networks) and simultaneously, the sphere of science, which promotes attraction of internal and foreign investments. Big investments in the non-oil sector of the country can be regarded the funds, which will be spent on refinery of housing returns. Approximately $100-110m is required for the construction of such an enterprise.
Additional is done is Azerbaijan for improvement of the investment climate through arrangement of information conferences and exhibitions. Our country participated in similar exhibitions in Germany, Saudi Arabia, China, Italy and Russia. The amount of Russian investments in the Azerbaijani economy made up $0.9m in 2005. South Korea took interest in the currency regime and investment climate of Azerbaijan. Macroeconomic situation, possible ways for expansion of existing relationships between the two countries are under consideration. In April an Azerbaijani delegation comprised 30 entrepreneurs left for Turkey to participate in the business forum of Azerbaijani and Turkish businessmen on the topic Azerbaijans investment opportunities. Investments by Turkish businessmen in Azerbaijan made up $2.2bn, while TPAO, an oil company, intends to put over $14bn in Azerbaijan. Meanwhile, the Turkish businessmen continue getting familiar with the investment climate in Azerbaijan.
A bill on Investment activities will be submitted to the parliament in a new edition shortly in the second on reading. According to head of the permanent parliamentary commission on economic policy, Ziyad Samedzade, it is necessary to adopt the draft law, as within past 10 years of adoption of since the adoption of existing legislation, investment climate in the country has changed in the country. The process should find its refection in the legislation. It will be a frame document, which does not envisage the application of tax and other privileges. The process will be of individual character. Azerbaijan is ready to offer equal terms for domestic and foreign investors, he underlined.
At present the countrys of the new economic model of Azerbaijan is being outlined and the priority is the model of world leadership. Azerbaijan now is taking part in projects implemented in other countries and the number of such projects is expected to grow by years. Samedzade urges that Azerbaijan, which is borrowing finances, should become a creditor thanks to its economic growth. The economic indices makes possible to assure that it is possible, while big currency reserves, amount of currency flows and financial basis get improved every year testify it will occur shortly. The development of non-oil sector, including the agriculture, communications and transport offers a base for making Azerbaijan a creditor country.
Of course, these investment projects actually make us happy. But there evolves a question: could cover own demand in investments prior to becoming a full foreign investors in 2009-2012.