Joint Working Group on Investment to boost investments between Qatar and Azerbaijan

(MENAFN- The Peninsula) The bilateral relations between Qatar and Azerbaijan have developed steadily over the past years. The Joint Working Group on Investment will further boost the bilateral trade and investment between the two countries, said H E Sevinj Hasanova, Deputy Minister of Economy of the Republic of Azerbaijan.

The bilateral, regional and international cooperation between Azerbaijan and Qatar has developed since the establishment of diplomatic relations between the two countries.

'We have signed a number of bilateral agreements during the official visit of His Excellency President Ilham Aliyev to Qatar in 2017 which provide a solid base for strengthening and expansion of these ties, she said.

Intergovernmental Commission between Qatar and Azerbaijan has been an effective platform for the development of bilateral cooperation since its first session held in 2017 in Baku. In February last year, the Commission met in Doha for the second session and discussed cooperation on a wide range of areas such as tourism, transport, trade and investment, environment, education, culture, youth and sports. 

'This list is a proof of the breadth of bilateral cooperation between Qatar and Azerbaijan, said the Minister.

To support and complement existing contacts, the Joint Working Group for Investment has been set up as part of the Intergovernmental Commission. This Working Group convened for the first time in October 2019 for a series of productive discussions on current levels in investment, trade and business relations. 

'We think that the working group will prove to be an effective tool enabling us to achieve increased bilateral trade and investment, said the Minister.

The Deputy Minister of Economy added, 'I think it is relevant to highlight that Azerbaijan's foreign trade has been consistently growing in recent years, both in sheer volume and a range of exported goods. Today, we have trade relations with more than a hundred countries, including Qatar. The current level of trade between our countries has good potential to grow.

Export diversification toward non-resource products, as well as the introduction of local products to new export markets, are among priorities of both countries' foreign trade policy. 'The State of Qatar and other Gulf countries are among our target markets. We are ready to work in this direction with our partners, said the Minister.

She said that Azerbaijan has taken a series of measures to create a favourable environment for investors.

'We need to emphasise that in recent years Azerbaijan has initiated comprehensive economic, regulatory and administrative reforms aimed at creating more favourable investment climate in the country. We have significantly simplified and streamlined legal requirements and procedures regulating entrepreneurial activities. This has been noted and lauded by the business community, said H E Sevinj Hasanova.

'The government has spearheaded measures to adopt a liberalised legal framework for local and foreign investors. Not only does this favourable legal environment aim to attract prospective foreign investors, but it also guarantees the legal rights and interests of investors.

'In other words, our investment laws ensure the inviolability of private property and assets, creation of equal labour conditions for local and foreign entrepreneurs and free transfer of profit, to name a few, said the Minister.
'We continue to demonstrate that we take our commitments with regards to foreign investments very seriously. We signed special agreements on promotion and reciprocal protection of investments with 49 foreign nations, including Qatar, added Sevinj Hasanova.

All these agreements have been ratified by Azerbaijan and came into force in 2018. 'We have also upgraded our licensing requirements currently, only about 80 types of activities need a specific licence, compared to 300 that were required in the past. Moreover, these licences are now much cheaper to obtain, and, once you have, they're valid indefinitely, so there's no need for repeated applications, said the Minister.

'To make life easier for foreign investors, we have also introduced the one-stop-shop system in various areas, such as undergoing customs procedures, obtaining construction permits, or registration of companies. Investors can enjoy zero export tariffs and market of 300 million potential consumers just across national borders of Azerbaijan, added Sevinj Hasanova.

Azerbaijan's economic growth over the last decade, as well as the implementation of large-scale international and local infrastructure projects, have been turning the country into an important regional and international hub.

It has long established itself as a reliable partner in ensuring the region's, as well as Europe's, energy supplies. Since 2003 Azerbaijani economy more than tripled in size. More than $270bn have been invested in the country, half of which is from foreign investments. Political stability stemming from its balanced foreign policy, natural resources and favourable environment have made Azerbaijan an attractive destination for investors.
Up to now, 10 Qatari investors have registered in order to operate in Azerbaijan in the fields of agriculture, construction, transport and tourism.

'In 2018-19, investments made by Qatari entities into the Azerbaijani economy amounted $67.1m. But we expect the Joint Working Group on Investment, to generate more interest towards Azerbaijan within the Qatari business community and facilitate further investments from Qatari companies and individual investors, said the Deputy Minister of Economy.

'At present, we've identified the following sectors as priorities for the attraction of foreign investments: infrastructure, with a major focus on public-private partnership, agriculture, food production and processing, alternative and renewable energy, chemical industry, including petrochemicals and pharmaceuticals, metallurgy and machinery, added Sevinj Hasanova.

Investing in these areas is beneficial, given Azerbaijan's favourable investment climate and the country's efforts to diversify its economy away from dependence from oil and gas. 

Investors may also find it beneficial to invest in industrial parks. These are specially created hubs that encourage new technology and provide special concessions offered to investors.

'Among other areas of potential interest, I would certainly mention tourism. Azerbaijan has lately become an attractive and sought-after destination amongst tourists. The number of foreign visitors has been rising year on year, said the Minister.

'Given Azerbaijan's natural beauty and diverse landscapes, as well as rich history, tradition and cuisine, we do have amazing opportunities in tourism indeed. Investing in Azerbaijan's tourism industry will be encouraged by the governmental support which may include various concessions and discounts on tax and customs duties, added Sevinj Hasanova.

Qatari investors wishing to start a business in Azerbaijan can benefit from the assistance provided by the Azerbaijan Export and Investment Promotion Foundation (AZPROMO), which serves as a one-stop-shop for foreign investors.

'Our taxation system is aligned with the best international practices. Thanks to the 'one-stop-shop principle of business registration and user-friendly digitalized registration processes said the Minister.

Azerbaijan is ranked among the top 20 global economic reformers, according to the latest edition of the World Bank's Doing Business report. Azerbaijan is legally committed to provide the guarantees to ensure safety and non-discrimination towards any foreign or local investments.

'For the purpose of promoting investments, starting from 2016, investment promotion mechanism is applied in Azerbaijan successfully, which grants investors tax advantages as VAT and customs duties exemptions for equipment and technology import, 50 percent of profit, 100 percent of land and property tax exemptions for seven years, added H E Sevinj Hasanova.

As part of the strive to improve the investment climate and stimulate investments, Azerbaijan has also initiated the modification of its tax legislation. As a result of recent amendments in the Tax Code, Azerbaijan now offers tax exemptions and privileges for entities who invest in industrial facilities and production, agriculture and innovations.

'We have also introduced exemptions and privileges for micro, small and medium-sized businesses (SMBs), as well as entities involved in non-oil export activities. Almost there is no income tax on the labour force in the non-oil private sector, said the Minister.

His Excellency President Ilham Aliyev issued a series of decrees and executive orders stipulating measures to develop a wide range of industries. 'We have launched a nationwide campaign aimed at industrialisation and technological advancement in all spheres. As part of this campaign, we created industrial and technological parks, said the Minister.

Investors who are classified as residents of these parks will be exempted from income tax, property tax and land tax for 10 years, import of technology and equipment for the purposes of construction of production facilities will be exempted from VAT and customs duties, any goods imported with the intent to carry out research and development will also be subject to exemptions.

'On top of this, Azerbaijan adopted a special law on free economic zones providing exemptions from all taxes and customs duties on imported goods, works and services. Azerbaijan has to date signed bilateral agreements on avoidance of double taxation with 55 various countries. The good news for the potential Qatari investors is that we have similar arrangements with Qatar, said H E Sevinj Hasanova.

There is certainly a potential for the development of business relations between the private sectors of two countries. 'We are trying to continue with our efforts to facilitate such contracts. Indeed, in April 2019 Azerbaijan Export and Investment Promotion Foundation (AZPROMO) led an export mission to Doha. Azerbaijani delegation consisted of representatives of companies with the focus on the tourism and other industries, said the Minister.

'They held a series of meetings with their Qatari counterparts and presented Azerbaijan's tourism and hospitality potential to the hosts. Such initiatives are very important, as we are seeking long-term business partnerships. Besides, we consider Gulf countries' market as one of our priority target areas, she added.

'The outcome of such visits may not necessarily transpire straight away, but they lay a foundation for a lasting relationship. Needless to say, these relations will have to be nurtured to become mutually beneficial and long-lasting, she added.

Qatar has been rapidly developing in recent years and this progress is well noticed by the international community. The type of progress achieved in becoming a business and tourism destination and a valuable logistics hub is certainly worth much. 

'I believe it is a very correct path to capitalise and build upon such developments and offer more investment opportunities and incentives to prospective investors. Bilateral investment agreement we have signed is reflecting on the positive nature of relations in terms of mutual investment promotion between our countries, said the Minister.

'As much as we aspire to attract foreign direct investments to Azerbaijan, as much it could be an aspiration of the Qatari side and we understand that. During the meeting of the Joint Working Group for Investment in October of 2019, we have been informed on the investment opportunities in Qatar, as well as the advantages offered by the free economic zones of your country to foreign investors, added the Minister.

In asserting that, SOFAZ's activity in Qatar is noteworthy in light of investment cooperation and a kind of proof of a trust in Qatar's financial markets.

Global diversification across asset classes, sectors, regions and countries is the cornerstone of SOFAZ's investment philosophy and such the size and depth of the financial markets in the scope of the global financial markets play a vital role in defining the total exposure to any specific country. 

'As a country with vast amount of foreign exchange reserves Qatar is one of the high creditworthy countries. In this context and considering the size of the market SOFAZ has invested in fixed income market of Qatar via sovereign or government-guaranteed corporate bonds and may continue these investments going forward, said H E Sevinj Hasanova. 

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