Why Invest in Azerbaijan? • Growing economy and international trade • Political, economic and social stability • Healthy financial sector and stable currency • Vast investment opportunities in non-oil sector • Clear long term strategy for developing the non-oil sector and diversification of the economy • Successful implementation of state development programs: on regional development, investor protection and support, food security, poverty reduction, etc • Fully fledged support by the government on the coinvestment projects via capital injection and debt financing (Azerbaijan Investment Company, ESF)
Why Invest in Azerbaijan? • Sufficient oil and gas resources that will fuel the future development of the non-oil sector • Massive investments in infrastructure enhancements • Strategic location provides an advantage for Azerbaijan to become a future regional business hub • Young, qualified, motivated and eager to learn local work force • Very safe living and working environment • Beautiful nature, friendly people, excellent cuisine
Top Reformer in 2009 ‘Doing Business’ report ECONOMY DB 2009 rank … … Latvia 29 Israel 31 South Africa 32 DB 2009 rank DB 2008 rank Change in rank 30 France Ease of… Azerbaijan 33 St. Lucia 35 Slovakia 36 33 97 +64 Starting a Business 13 66 +53 155 160 +5 Employing Workers 15 67 +52 Registering Property 9 63 +54 Getting Credit 12 25 +13 Protecting Investors 18 110 +92 Paying Taxes 102 143 +41 Trading Across Borders 174 176 +2 Enforcing Contracts 26 27 +1 Closing a Business 81 78 -3 Dealing with Construction Permits 34 Puerto rico Doing Business … …
Starting a business in Azerbaijan Starting a business data DB 2008 DB 2009 DB 2010 - 11 17 Procedures (number) 12 6 6 Time (days) 36 10 10 Cost (% of income per capita) 6. 9 3. 2 2. 9 Min. capital (% of income per capita) 0. 0 Rank List of Procedures: 1. 2. 3. 4. 5. 6. Obtain a confirmation of the legal address of the company from the lessor Notarize company documents Deposit the charter capital in a bank; pay the state registration fee File documents with the company registrar at the One Stop shop Taxes, register for VAT purposes, if applicable Obtain a company seal Open a permanent bank account
Investment protection • Foreign investments in Azerbaijan enjoy full legal protection, guaranteed by the present “Law of the Azerbaijan Republic On Protection of Foreign Investments”, other legislative acts and international agreements. 9. 7 10 8 6. 7 6 4 6 6 5. 7 5 3 • Foreign investors can take part in privatization of state and municipal enterprises in Azerbaijan 2 A N ew ze r al an d ba ij Bu an lg a Ro ria m an i Tu a rk ey Ru ss ia Ira n 0 Ze Protecting Investors Index 12 Note: The higher the score, the greater the investor protection/Doing Business 2010 As referenced in Doing Business 2010, presence of legal and regulatory protections for investors explains up to 73% of the decision to invest. • Foreign investors enjoy same rights and obligations in Azerbaijan as local investors and can benefit from state programs • Azerbaijan have joined 15 agreements on protection of intellectual property rights
SME support is priority in Azerbaijan • State Program on Development of SMEs (2002 -05) • Various laws on state support to SME • Definition of SME has been adjusted to the pace of economic development • SME support and strengthening is a priority in the State Program on Socio-economic development for 2009 -2013 • Dedicated department at the Ministry of Economic Development in charge of policy for business support As a result: • Company registration procedures have been optimized (“one stop shop”) • Tax regime for SME has been simplified • Business environment is continuously improved • Fairs organized for farmers to sell produce • Export-import procedures simplified • Subsidized loan program geared towards SMEs
Advantages of investment in agriculture in Azerbaijan • Convenient location close to large consumer markets with easy access • Large stocks of fertile land • Constantly reinforced infrastructure • Subsidized government loan program • 0% profit tax in agriculture, no other taxes besides property tax • Availability of agro service companies • Opportunity of co-investment by Azerbaijan Investment Company
About AIC · “Azerbaijan Investment Company” OJSC (AIC) is established by the Presidential Decree of March 30, 2006 to support the development of businesses in the non-oil sector of the Azerbaijani economy via equity investments · The initial charter capital of AIC is financed by the State Oil Fund of the Republic of Azerbaijan · Key economic ministries and agencies of Azerbaijan are represented in the AIC Supervisory Board, which is the supreme governing body of the Company
Supervisory Board Minister of Economic Development of Azerbaijan (Chairman) Executive Director of the State Oil Fund of Azerbaijan First Deputy Minister of Finance of Azerbaijan Deputy Chairman of the State Committee on Property Affairs of Azerbaijan Deputy Chairman of the Board of the Central Bank of Azerbaijan
AIC’s Mission ● Termed equity investments into commercial enterprises in Azerbaijan with exit strategy ● Attraction of local and foreign investments into the economy of Azerbaijan ● Contribution to the development of capital markets and rise of the market value of investments
Key Investment Principles · Investments into commercially effective projects in Azerbaijan · Investments in all sectors excluding oil and gas production and processing · Equity investments in the existing companies or greenfields · Minority shareholding in the invested projects · Investment into any particular project not exceeding 20% of the AIC’s charter capital · Investment into any particular economic sector not exceeding 35% of the AIC’s charter capital
Investment Criteria · Competitiveness of products and their export oriented nature · Compliance or strong commitment to implement financial reporting in line with IFRS · Verification of financial reports by an independent auditor · Application of the best corporate governance practices, protection of rights of investors · AIC representation in the Supervisory Board (Board of Directors)
Foreign Relations · Member of European Private Equity and Venture Capital Association (EVCA) and Emerging Markets Private Equity Association (EMPEA) since 2007 · Cooperation with IFC - technical assistance in corporate governance · Cooperation with USAID- technical assistance in corporate governance, investor relations, investment analysis, and investment management · Cooperation with EBRD- technical assistance and know-how in the area of investment and fund management · Cooperation with TACIS - increasing share listing and the country private sector attractiveness for FDI development of capital markets and promotion of portfolio investment
Invested Projects · Development of dairy production with “Milk Pro” LLC, (20% of shares are held by AIC, 10% by EBRD). · Joint investment company “Caspian International Investment Company” together with the Islamic Development Bank and ICD. The AIC holds 24. 1% of the shares; other shareholders include prominent companies from Persian Gulf countries. · Poultry meat production and processing with “Davachi Broiler” OJSC. AIC’s share is 25%. · Construction of a new Oil and Gas Terminal in Baku, Azerbaijan. AIC’s stake is 25%.
Invested Projects • Largest cement producer in Azerbaijan. AIC has acquired 10% of the company in 2008. Holcim (Switzerland) is the major shareholder of Garadagh Cement, EBRD owns 10% of the charter capital. • Construction of a salt plant with the “Azersun Holding” LLC. AIC’s participation stake is 25% • "Kuwait-Azerbaijan Investment Company" CJSC by AIC and the Kuwait Financial House owned by "Turkapital" holds 75% and AIC-25% accordingly.
Few of the projects in the pipeline Greenhouses Development of modern greenhouse complex in Khachmaz region of Azerbaijan Dairy production Development of diary complex in Agstafa region of Azerbaijan Poultry Development of modern poultry complex in the western region of Azerbaijan Seed development Investment in large seed development, processing and storing company Fish production Construction of controlled-environment fish farm We invite to co-invest with us in these and many other projects in Azerbaijan
Future Prospective · Enhance foreign strategic players’ investment to Azerbaijan · Promote investments into priority sectors, defined as below: § § § Agriculture Food processing and packaging Logistics Alternative Energy Tourism Industrial Production · Prepare investee companies for IPO or sale to the strategic investors
AIC Contacts Zaur N. Mammadov Deputy Executive Director Chief Investment Officer Tel: Fax: E-mail: Web: (+99412) 437 29 09 (+99412) 437 29 03 z. mammadov@aic. az www. aic. az Address: 11, H. Abdullayev street Baku, AZ 1001, Azerbaijan
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