foreign investment in azerbaijan

Investment in Azerbaijan - Wikiwand These banks are subject to the same regulations as domestic banks, with certain additional restrictions. Over the past two decades, the DFC (through its predecessor, OPIC) has invested around USD 230 million in Azerbaijan across 24 business projects. The funds assets totaled USD 43.5 billion as of January 1, 2021. Masks are no longer required in outdoor spaces but remain obligatory indoors. Baku, Azerbaijan Following the EITI Secretariats evaluation in March 2017 that Azerbaijan had not sufficiently implemented required corrective actions, Azerbaijan withdrew from the EITI and established a domestic Extractive Industries Transparency Commission in April 2017 to ensure transparency and accountability in the extractive industries of the country. Foreign investments in Azerbaijan can take the form of participation in companies that have already been incorporated in this country, the purchase of companies or the acquisition of the right to use land and natural resources. Per the amendments, administrative-economic courts charged with administrative and economic disputes are divided into administrative courts and commercial courts. ASAN centers provide more transparent, efficient, and accountable services through a one window model that reduces opportunities for rent-seeking and petty government corruption and have become a model for other initiatives aimed at improving government service delivery. Azerbaijans State Real Estate Registry Service at the Committee for Property Issues registers real estate. By a decision of the Cabinet of Ministers, requisition is possible in the event of natural disaster, an epidemic, or other extraordinary situation. Azerbaijans legal system is based on civil law. Azerbaijan: Residence Right and Work Permit Exemption Restrictions All licenses are now issued with indefinite validity through ASAN service centers and must be issued within 10 days of application. The next white paper, planned for 2020, was postponed due to the COVID-19 pandemic. New Investment Act - Inward/ Foreign Investment - Azerbaijan - Mondaq According to Freedom Houses 2020 report, [property] rights and free choice of residence are affected by government-backed development projects that often entail forced evictions, unlawful expropriations, and demolitions with little or no notice. The Azerbaijani government has not shown any pattern of discriminating against U.S. persons by way of direct expropriations. Private sector associations do not play a significant role in regulatory processes. U.S. firms have identified corruption in government procurement, licensing, dispute settlement, regulation, customs, and taxation as significant obstacles to investment. Azerbaijan has signed 51 Bilateral Investment Treaties (BIT). Azerbaijan has free trade agreements (FTAs) with Russia, Ukraine, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Moldova, and Belarus. These allegations have markedly decreased since 2017. Problems of the foreign investment environment in Azerbaijan and the The legal structure covering intellectual property protections in Azerbaijan is relatively strong, but experts and businesspeople report the level of enforcement within the country is weak. Furthermore, a special license to conduct business is required for foreign or domestic companies operating in telecommunications, sea and air transportation, insurance, and other regulated industries. The Azerbaijani government has not shown any pattern of discriminating against U.S. persons or entities through illegal expropriation. In June 2015, EXIM Bank finalized a USD 211.9 million loan to finance Azerbaijan Airlines purchase of Boeing commercial aircraft. A January 2018 decree called for new legislation, which has not yet been introduced, to ensure Azerbaijan conforms to international standards to protect foreign investor rights. While oil production plateaued, the hydrocarbons sector overall posted growth of 1.1 percent, thanks to higher exports of natural gas. Although there is an Azerbaijan International Commercial Arbitration Court, at present its activity is limited. Subsequent reforms have improved overall sector stability. Employment relations are established by an employment contract, which, in most cases, does not necessarily indicate a fixed term of employment. In 2012, OPIC provided loan insurance to Viator Microcredit Azerbaijan LLC (USD 500,000), NBCO Vision Fund Azercredit LLC (USD 2 million), and FinDev again (USD 1 million). The work week generally is 40 hours. In practice, labor unions are strongly tied to political interests of the government. Under Azerbaijani laws, the state must retain a controlling stake in companies operating in the mining, oil and gas, satellite communication, and military arms sectors, limiting foreign or domestic private ownership to a 49 percent share of companies in these industries. Foreign direct investment (FDI) in Azerbaijan FDI in Figures According to UNCTAD's 2022 World Investment Report, FDI inflows to Azerbaijan were negative by USD 1.7 billion in 2021. Legal experts anticipate commercial courts and administrative courts will grow to specialize respectively in commercial matters and administrative disputes, with such specialization increasing the quality of justice. Foreign investors might make investments at the territory of the Azerbaijan Republic by the way of: a. participation in enterprises, organizations established together with legal entities and citizens of Azerbaijan Republic on the basis of sharing; b. establishment of enterprises completely belonging to foreign investors; Over the past two decades, the DFC (through its predecessor, OPIC) has invested around USD 230 million in Azerbaijan across 24 business projects. The Azerbaijani government has not shown any pattern of discriminating against U.S. persons or entities through illegal expropriation. Azerbaijan does not require that private companies establish internal codes of conduct to prohibit bribery of public officials, nor does it provide protections to NGOs involved in investigating corruption. While the legal framework is in place and initial construction has begun, the AFEZ is not yet fully operational. Private sector associations do not play a significant role in regulatory processes. The 1999 Labor Code regulates overall labor relations and recognizes international labor rights. Private entities may freely establish, acquire, and dispose of interests in business enterprises. These banks are subject to the same regulations as domestic banks, with certain additional restrictions. In 2013, OPIC signed a memorandum with Turan Bank for a loan in the amount of USD 7 million with a term of seven years for SME financing. Azerbaijan has been a party to three ICSID cases, two of which (Barmek v. Azerbaijan and Fondel Metal Participations and B.V. v. Azerbaijan) were settled and one of which (Azpetrol v. Azerbaijan) was decided in favor of the State. 1. While SOEs regularly purchase or supply goods or services from private sector firms, domestic and foreign private enterprises have reported problems competing with SOEs under the same terms and conditions with respect to market share, information, products and services, and incentives. Data not available. The government has more regularly engaged business organizations, such as the American Chamber of Commerce in Azerbaijan (AmCham), and consulting firms on various draft laws. Food and pharmaceutical products are not subject to this suspension order and are inspected for quality and safety. Nor does there appear to be limits on the inflow or outflow of funds for remittances of profits or revenue. Based on studies performed by reputable agencies, the problems of attracting foreign investors in Azerbaijan have been identified and a set of government measures required to address them has. Amendments made to Azerbaijans Constitution in September 2016 enabled authorities to expropriate private property when necessary for social justice and effective use of land. In 2012, OPIC provided loan insurance to Viator Microcredit Azerbaijan LLC (USD 500,000), NBCO Vision Fund Azercredit LLC (USD 2 million), and FinDev again (USD 1 million). Parties may select arbitrators of any nationality, the language of the proceedings, the national law to be applied, and the arbitration procedure to be used. Some progress has been made regarding Armenia-Azerbaijan talks, Charles Michel says 12:38 Pashinyan-Aliyev-Michel-Macron-Scholz meeting in Moldova to kick off at 4:30pm Armenia time 12:34 Foreign security agencies can now carry weapons while accompanying persons who come to Armenia on official visit 12:08 Leaders of Armenian churches in US call . None of these cases, however, have been resolved. Azerbaijans primary body responsible for investment promotion is the Azerbaijan Export and Investment Promotion Agency (AzPromo). Azerbaijan's vast oil reserves attract foreign investment into the country's economy. The United States and Azerbaijan are parties to the OECD Convention on Mutual Administrative Assistance in Tax Matters. International arbitration in Azerbaijan is regulated by the Law on International Commercial Arbitration, based on the UNCITRAL model law. The DFC has repeatedly provided funds for numerous banks operating in Azerbaijan in order to expand their SME lending portfolios, including USD 4.8 million to Rabita Bank in 2008 and USD 7.3 million to Turan Bank in 2009. Small and micro enterprises can choose between reporting based on IFRS, IFRS-SME, or simplified accounting procedures established by the Finance Ministry. The American Chamber of Commerce in Azerbaijan (AmCham) established a Corporate Social Responsibility (CSR) Committee in October 2011 to encourage companies to embrace social responsibility through activities and dialogue with relevant stakeholders. Tax reforms announced in January 2019 were aimed partially at reducing corruption in tax administration and received praise from the local business community. Some companies report that government restrictions on NGO registration have complicated CSR corporate social responsibility efforts. A formally registered employee who becomes unemployed is entitled to 70 percent of his/her average monthly wage, calculated over the past 12 months at the last place of work. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs, 13. The United States and Azerbaijan do not have a separate bilateral double taxation treaty. Azerbaijan is party to the European Convention on Foreign Commercial Arbitration dated April 21, 1961. SOFAZ investment is typically limited to real estate, precious metals, and low-yield government securities. SOFAZ publishes an annual report which it submits for independent audit. The law On Unemployment Insurance signed in August 2017 allows for payments to unemployed individuals registered with the State Employment Fund. Azerbaijan - Information and Communications TechnologyAzerbaijan - ICT . Corruption is a major challenge for firms operating in Azerbaijan and is a barrier to foreign investment despite government efforts to reduce low-level corruption. SOEs are, in principle, subject to the same tax burden and tax rebate policies as their private sector competitors. Foreign Direct Investment in Azerbaijan increased by 1698 USD Million in the fourth quarter of 2022. The Law, On Protection of Foreign Investments, dated 15 January 1992, and the Law, On Investment Activity, dated 13 January 1995, cease to be effective with the enactment of the Law. There have been instances where state-owned enterprises have used their regulatory authority to block new entrants into the market. There is little information available on Azerbaijani SOEs budget constraints, due to the limited transparency in their financial accounts. The government has in some cases engaged business organizations, such as AmCham, and consulting firms on various draft laws. A five-year national export strategy developed by AZPROMO aims to double the volume of non-oil exports by 2026. The average monthly wage as of January 2022 was AZN 766 (USD 451), and the official minimum wage increased in 2022 to AZN 300 (USD 176) per month, compared to the previous level of AZN 250 (USD 147) per month. Azerbaijans sovereign wealth fund is the State Oil Fund of Azerbaijan (SOFAZ). Azerbaijans Bankruptcy Law applies only to legal entities and entrepreneurs, not to private individuals. However, the government has no plans to sell stakes in state companies in 2022, including in state oil company SOCAR. Investment in Azerbaijan - Wikipedia The right to strike exists, though industrial strikes are rare. President Aliyev signed a decree in February 2019 to provide partial relief to retail borrowers on foreign-currency denominated loans that meet certain criteria. The draft legislation process typically does not include public consultations and draft legislation text is rarely made available for public comment. While a number of workers still work without contracts in Azerbaijans informal economy, recent tax and customs reforms have provided incentives for individuals to register their employment to benefit from state financial support. As of January 1, 2022, 26 banks were registered in Azerbaijan, including 12 banks with foreign capital and two state-owned banks. American companies have reported that government-connected companies often pressure current or potential partners to establish joint ventures, initiate local production of certain components, or otherwise invest in Azerbaijan in order to maintain or expand cooperation. These measures include certain partial, temporary exemptions from corporate and property taxes; favorable tax treatment for manufacturing facilities and imports of manufacturing equipment; and subsidies for certain exports. The 2021 White Paper covered issues in several fields, including taxation, customs procedures, finance, and information and communications technology. Azerbaijani law requires all companies operating in the country to register with the tax authorities. AzPromo is a joint public-private initiative, established by the Ministry of Economy and Industry in 2003 to foster the countrys economic development and diversification by attracting foreign investment into the non-oil sector and stimulating non-oil exports. In 2011, EXIM Bank closed a USD 116.6 million loan with a ten-year repayment period to finance the Azerbaijan space agencys purchase of the AzerSat-1 satellite from Orbital Sciences. Azerbaijan also passed a Law On International Arbitration. Accession to the New York Convention has greatly increased the utility of overseas arbitrations, while the Law On International Arbitration provides for international arbitrations with the place of arbitration in Baku. In 2013, OPIC signed a memorandum with Turan Bank for a loan in the amount of USD 7 million with a term of seven years for SME financing. . Azerbaijan tracks and reports on seizures of counterfeit goods but does not publish statistics on this effort. Commission on Combating Corruption This page provides - Azerbaijan Foreign Direct . Private enterprises do not have the same access (including terms) to financing as SOEs. SUMMARY: The U.S. Department of the Treasury's Office of Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. The government has also simplified its licensing regime. The United States and Azerbaijan do not have a separate bilateral double taxation treaty. During 44 days of intensive fighting from September 27 to November 10, 2020, involving Azerbaijan, Armenia, and Armenia-supported separatists, significant casualties and atrocities were reported by all sides. The portal contains information about the properties, their addresses, location, and initial costs with the aim of facilitating privatization. The construction sector tends to use temporary and contract workers; reportedly many of these workers agreements are not formally registered with the government. Registration takes approximately three days for commercial organizations. Trial court judgments may be appealed in appellate courts and the judgments of appellate courts can be appealed in the Supreme Court. Despite progress in reducing corruption in public services delivery, the civil service, public procurement apparatus, and the judiciary still suffer from corruption. Azerbaijan has not conducted an Organization for Economic Cooperation and Development (OECD) investment policy review, a United Nations Conference on Trade and Development (UNCTAD) investment policy review, or a WTO Trade Policy Review. Foreign investments enjoy complete and unreserved legal protection under the Law on the Protection of Foreign Investment, the Law on Investment Activity, and guarantees contained within international agreements and treaties. AmCham also published a corporate social responsibility guide on CSR for businesses in Azerbaijan. The Ministry of Labor and Social Protection took measures to avoid unjustified dismissals, redundancies of employees in a public sector, as well as to preserve salaries of the employees sent on vacation and ensured expansion of unemployment insurance benefits, and the establishment of a proactive support mechanism in this area. Azerbaijans primary body responsible for investment promotion is the. Despite substantial efforts to open the business environment, progress remains slow on structural reforms required to create a diversified and competitive private sector, corruption remains a major challenge for firms operating in Azerbaijan. Companies may e-register at, Azerbaijan does not actively promote or incentivize outward investment, though Azerbaijani entities, particularly the State Oil Company of Azerbaijan (SOCAR) and the State Oil Fund of Azerbaijan (SOFAZ), have invested in various countries, including the United States. In 1999 Azerbaijan acceded to the New York Convention on the enforcement of foreign arbitral awards. Foreign direct investment (FDI) in Azerbaijan - Standard Bank SOCAR is wholly owned by the government of Azerbaijan and takes part in all oil and gas activities in the country. These include. Foreign exchange transactions are governed by the Law on Currency Regulation. Furthermore, Azerbaijan invested in order to gain access to additional markets and strengthen its presence in [] Currency conversion is carried out through the Baku Interbank Currency Exchange Market and the Organized Interbank Currency Market. Arbitration practice in Azerbaijan is limited to the recognition of foreign arbitral awards by the Supreme Court and their enforcement by the Ministry of Justice. Azerbaijans foreign currency reserves are based on the reserves of the Central Bank, those of the State Oil Fund of Azerbaijan (SOFAZ), and the assets of the State Treasury Agency under the Finance Ministry. Flows of foreign direct investment to Azerbaijan have risen steadily in recent years, primarily in the energy sector. While SOEs regularly purchase or supply goods or services from private sector firms, domestic and foreign private enterprises have reported problems competing with SOEs under the same terms and conditions with respect to market share, information, products and services, and incentives. One major hindrance to the stock markets growth is the difficulty in encouraging established Azerbaijani businesses to adapt to standard investor-friendly disclosure practices, which are generally required for publicly listed companies. Producers and consumers tend not to prioritize responsible business conduct, including environmental, social, and governance issues. In June 2021, AmCham Azerbaijan organized a press conference for publicly presenting subsequent publication of its White Paper on observations and recommendations for improving Azerbaijans business climate. Ramin Valizade Following the release in November of a tripartite ceasefire declaration by Armenia, Azerbaijan, and Russia, which brought an end to the fall 2020 intensive fighting in the Nagorno-Karabakh conflict, the Azerbaijani government is seeking new investments in the territories around Nagorno-Karabakh that were previously under the control of Armenian-backed separatists. We recently expressed appreciation for Prime Minister Pashinyan's commitment to peace, and we welcome President Aliyev's recent remarks on consideration of amnesty. Azerbaijans Law on the Protection of Foreign Investments protects foreign investors against nationalization and requisition, except under specific circumstances. Domestic parties still prefer litigation as the main method of dispute settlement. The Bilateral Investment Treaty (BIT) between the United States and Azerbaijan, which went into force in 2001, provides U.S. investors recourse to settle any investment dispute using the ICSID convention. The World Bank, Asian Development Bank, and other third-country institutions are active in providing financing and insurance for investment in Azerbaijan. the Economy Ministry established standards for corporate governance, which included an evaluation methodology for these standards and a code of ethical behavior. In the World Banks Doing Business 2020 report, Azerbaijans final published score was 78.5, ranking 28 out of 190 countries worldwide. Flows of foreign direct investment to Azerbaijan have risen steadily in recent years, primarily in the energy sector. The portal contains information about the properties, their addresses, location, and initial costs with the aim of facilitating privatization. Responsible business conduct (RBC) is a relatively new concept in Azerbaijan. Corporate branches of foreign entities are subject to a remittance tax of 10 percent on all profits derived from their business activities in Azerbaijan. Azerbaijan has held observer status at the World Trade Organization (WTO) since 1997 but has not made significant progress toward joining the WTO for the past several years. The Ministry of Digital Development and Transport has discussed plans to create other special economic zones, including a petrochemical complex and regional innovation zones to boost telecommunications sector development. Graph, map and compare more than 1,000 time series indicators from the World Development Indicators. SOFAZ investment is typically limited to real estate, precious metals, and low-yield government securities. Commission on Combating Corruption Azerbaijan is a party to the Convention Establishing the World Intellectual Property Organization (WIPO), the Paris Convention for Protection of Industrial Property, and the Berne Convention for the Protection of Literary and Artistic Works. Azerbaijan: New Investment Act. Azerbaijan is a member of the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID convention) as well as the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Over the 2020 calendar year, the Economy Ministry continued work to improve the operation of the Licenses and Permits portal and the integration of information systems into ASAN systems. In 1999 Azerbaijan acceded to the New York Convention on the enforcement of foreign arbitral awards. Azerbaijans regulatory system has improved in recent years, although enforcement is inconsistent, and decision-making remains opaque. SOCAR has invested heavily in oil and gas infrastructure and petrochemicals processing in Turkey and Georgia, as well as gas pipeline networks in Greece, Albania, and Italy as part of the Southern Gas Corridor that transports Azerbaijani gas to European markets. This rank placed Azerbaijan as a top ten reformer country per the report. Foreign investment in the governments priority sectors for economic diversification (agriculture, transportation, tourism, and ICT) has thus far been limited. The Business Software Alliance estimated the prevalence of software piracy at 84 percent in 2015, including in government ministries. Azerbaijan has regulations to monitor labor abuses, health, and safety standards in low-wage assembly operations, but enforcement is less effective. The overall investment climate in Azerbaijan continues to improve, although significant challenges remain.
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