Welcome from Lesley Batchelor OBE, FIEx (Grad) - Director General, Institute of Export & International Trade
This ‘Doing Business in Azerbaijan Guide' introduces a significant market in the Caucasus with a 10 million-strong population and a government that is keen to diversify its economy. Formed as an independent nation in 1918, and gaining independence from the Soviet Union in 1991, Azerbaijan is neighboured by Georgia, Armenia, Russia and Iran.
The country has long benefitted from the strength of its oil and gas industry as well as its close ties to Russia. It is a member of the Commonwealth of Independent States (CIS), though not a member of the CIS free trade area. Ranked 25th in the World Bank’s ‘Doing Business’ rankings, and with GDP growth for 2019 predicted to be 1.8%, Azerbaijan is increasingly becoming an attractive market in the region for overseas businesses.
It is becoming less reliant on trade with Russia, with the EU now representing 48.6% of its overall trade, whilst trade with Turkey is also growing. Though Azerbaijan is not currently one of the UK’s more significant import or export markets, its government’s high spending on infrastructure projects, diversification strategies, and its nonetheless significant oil and gas industries all provide ample opportunity for the UK’s exporters and investors. Currently, services, technology, engineering equipment and oil machinery are among the UK’s top exports to Azerbaijan.
As with any country there are of course challenges to be overcome. Corruption remains a significant factor, so you’d do well to have clauses in your international terms and conditions covering the Bribery Act. Further, there are various tax and customs requirements you will need to meet, including 18% VAT on most imports and all consumer goods are subject to an import duty of 15%.
In terms of business culture, the official language is Azerbaijani, though Russian is still widely used, and English is often spoken and understood in the capital of Baku. Personal relationships are key to successful business partnerships in Azerbaijan, as companies are not particularly responsive to emails or phone calls. It is an Islamic country but is relatively liberal compared to some of its neighbours, with family playing a key role in Azerbaijani culture. A level of directness is appreciated in their business culture, though politeness and diplomacy are also well regarded. Patience is certainly important, as business decisions are mulled over carefully, and relationships can take a while to develop.
As ever, we at the Institute are more than happy to help you develop your export strategy to Azerbaijan, whether that’s through our qualifications, training, technical helpline or other membership services.
Lesley Batchelor OBE, FIEx (Grad)
Director General - Institute of Export & International Trade
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