Baku, 11 December 2021 (GNP/TDI): Since the oil boom in Azerbaijan in 2005, business opportunities in Azerbaijan have increased. With the exponential growth in Baku’s economy, with investment in public infrastructure and major construction projects.
In addition, the newly expanded agricultural and tourism industry has attracted several related businesses, resulting in various small business opportunities in Azerbaijan.
Overview of Azerbaijan’s Economy
The entrepreneurs who look for investment or business opportunities and want to start a business, also want a low-risk investment. In this regard, investment or business opportunities in Azerbaijan (particularly small business opportunities in Azerbaijan) are one of the best options because of its economic potential and economic stability.
Azerbaijan’s economy grew by 2.2% in 2019, which was its best performance since 2014. On the supply side, the hydrocarbon sector has stagnated; as natural gas emissions (rising by 27% annually) have reduced the 3.3% decline in oil production.
At the same time, the country’s non-energy Gross Domestic Product (GDP) grew at a solid 3.5%, while agriculture and services continued to grow. On the demand side, investments remained cash-strapped while rising real incomes, as a result of higher government spending, subsidized spending.
Azerbaijan’s official poverty rate is low
Moreover, Azerbaijan’s official poverty rate is low, standing at 5% in 2018. Given the recent increase in private consumption, the poverty rate is projected to drop dramatically by 2019. Cash accumulation in Azerbaijan’s foreign accounts decreased by 2019, whereas the surpluses on Azerbaijan’s external accounts narrowed in 2019. Flat exports and an acceleration in imports of Azerbaijan, reduced the trade surplus to 12% of GDP by 2019 (from 17% in 2018). Similarly, net accumulated revenue decreased to 12% of GDP in the first 3 quarters of 2019.
In 2017, Azerbaijan’s GDP was $ 41.37 billion, it increased by $ 5.57 billion in 2018 and reached $ 46.94 billion. In the first quarter of 2019, the GDP of Baku was 26.16 billion and GDP per capita was 2646 USD. Therefore, Azerbaijan is ranked 73rd in the world in terms of GDP.
In 2018, the share of small and medium-sized enterprises (SMEs) in GDP was 4%. The State aims to increase the share of small and medium-sized enterprises in GDP to 60-70% by 2025. In order to encourage small business opportunities in Azerbaijan, the government creates tax rights and ways to promote business.
Another macroeconomic indicator
The Inflation rate is another macroeconomic indicator that should be considered by those who want to start a business. Inflation, in turn, contributes to the cost of living, the cost of doing business, borrowing money, mortgages, and all other aspects of the economy.
Azerbaijan’s inflation rate was recorded at 6.7% in 2018. Considering the oil-dependent economy of Azerbaijan, this rate of inflation is quite acceptable. There are World Bank (WB) figures on business performance for 2018 and 2019. This figure shows how the regulatory environment adapts to the conditions regarding the start-up and operations of the company.
With inflation within the Azerbaijani Central Bank (CBA) target range of 4.2%, the CBA continued to lower its policy rate between 2019 and early 2020, lowering it to 7.25%.
According to these annual estimates, Azerbaijan is ranked 25th out of 190 economies that are easy to do business with.
What are the main business opportunities in Azerbaijan?
Before listing and commenting on business opportunities in Azerbaijan, let us start with the main guidelines for import and export. When we provide ideas about Azerbaijan business opportunities and investment opportunities. We are more likely to be involved in day-to-day business activities.
Therefore, idle investment in Azerbaijan is a different topic. which only requires the purchase of shares and interest rates per year. It should be clear that in idle investments, especially in Baku companies, the main factor and condition is the total annual profit and return on investment in addition to shares, this is a different financial analysis with due diligence.
It should also be noted that Small and Medium Enterprises (SMEs) in Azerbaijan are incentivized by the government, enjoying a variety of tax exemptions, with tax rates as low as 2%. Especially in Baku, small businesses are often successful and many people come up with new ideas (for small business opportunities in Azerbaijan in general).
Exports to Azerbaijan
Currently, in addition to oil and gas products, the most imported goods and products from Azerbaijan are Cotton Fiber, Onion, Tobacco, Wine, Pomegranate Juice, Tea Leaves, Confectionery Products, Canned Vegetables, Cosmetics, Flowers, Building Materials, Frozen Chicken.
The above list provides general and original ideas about the most exported goods from Azerbaijan. Naturally, the list goes above and beyond. Therefore, similar goods not listed above will be considered to be among those exported.
Imports in Azerbaijan
Due to underdeveloped domestic production, as well as a fragmented economy based heavily on oil gas products, Azerbaijan relies heavily on imports. Azerbaijan imports everything from all over the world. In Azerbaijan, many imported products are machinery, electrical appliances, appliances, cars and parts, clothing and apparel, meat and dairy products, tea leaves, wheat, rice, tobacco, and pharmaceutical products.
It should be known that in undeveloped industrial areas, Azerbaijan offers tax incentives, such as Investment Promotion Certificate (IPC). This certificate provides an opportunity for individual entrepreneurs to get a 7-year exemption from a few types of taxes, that is; 50% of personal income tax exemptions are considered individually as well as corporate income tax.
List of business opportunities in Azerbaijan
Based on analysis on the import and export of Azerbaijan, various business opportunities in Azerbaijan are enlisted here. Manufacturing of goods which are mostly imported, imports of goods concerning the above imports, as in other import markets, local competition depends on traditional business practices. Therefore, any innovative and alternative supply of goods would attract significant demand. Extract production and commodity-based goods, especially from the chemical and agricultural industry.
It should be noted that Azerbaijan has free trade agreements (FTAs) with Russia, Ukraine, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Moldova, and Belarus. Under the FTAs, goods can be imported from those countries without tax. Therefore, competing goods manufactured in Azerbaijan focusing on exports will be considered.
Hospitality and tourism
As one of the developing industries, recent investment opportunities in Azerbaijan focus on this approach, hostels, guesthouses, car rental services, tourism companies, and travel services, as well as integrated tourism support services.
Restaurants and cafes
Due to the prosperity of the tourism industry, as well as the changing attitudes of young people about outdoor dining, restaurants, and restaurants are also among the best investment and business opportunities in Azerbaijan. New chains of restaurants and oriental food, in particular, are growing in popularity. Baku is very focused on this business opportunity.
In the context of small business opportunities in Azerbaijan, agricultural production is tax-free. Agricultural culture plays a major role in Azerbaijan, with rich daily resources and a variety of fruits and vegetables are among the ideas of productive goods. Both domestic and export markets. In addition, diaries, meat exports, especially in the Gulf countries, are among the new trends.
Information technology (IT)
And advanced technology, the Information and communications technology (ICT) industry was underdeveloped in Azerbaijan. a host of ICT and IT services, including new IT solutions are needed in Azerbaijan. Many newly established IT businesses are growing rapidly, which is a sign of demand in the local market. Baku’s renaissance is the main focus of the sector.
In terms of construction, the industry has been strong and competitive in Azerbaijan. However, experienced companies and craftsmen will benefit from the local architecture. As well as the need for new construction and designs. With the variety of real estate services for sale, including agency and real estate, estate development consultancy. Business Services, Various Certificates, Technical Consultations. Business Consultations, Financial Consulting Services are among the most required areas.
The above are just speculations and any business format with a solid foundation and the right plan will succeed. As long as detailed market research is done.
Why choose Investment and Business Opportunities in Azerbaijan?
First, several market research and statistics should be done before choosing a business in Azerbaijan, among the opportunities available. The factors to be considered shall be the experience of the foreigner, a company owner, or a businessman in a particular area.
Second, in the initial budget, small business opportunities in Azerbaijan are among the most needed. Small businesses with focused operations offer a competitive advantage, reduce costs and focus on quality.
Third, business location, labor costs are low in the regions, unlike Baku. Overall, the average wage for workers, the cost of electricity, gas, and transportation are much cheaper in Azerbaijan compared to similar markets.
Last, although there has been a privatization campaign in recent years. Most businesses are still owned by the government. So exports will likely have to deal with government officials for some time during their trade-in Azerbaijan.
Hence, there is vast potential for business opportunities in Azerbaijan. The government is taking different measures to facilitate and bring entrepreneurs to the country.