Market Overview and Business Opportunities in Azerbaijan

March 11, 2023

Since 2015, Azerbaijan’s business environment has entered a new phase of development, marking a significant shift in its economic landscape. Consequently, Azerbaijan, with its economy heavily dependent on the oil and gas sector, started to prioritize the growth of its non-oil sector as a primary economic objective. Therefore, to achieve this intention, Azerbaijan implemented consistent measures. Specifically, these included a series of reforms in relevant legislative acts, the business environment and tax regulation, among others. These reforms have produced significant results, leading to a notable improvement in the business environment in Azerbaijan during this short period. As a consequence, the broadening of business opportunities and the enhancement of the business environment in Azerbaijan have started to draw foreign businessmen to the country.

In this blog post, we will provide you with an overview of the business environment and opportunities in Azerbaijan. Additionally, please note that if you require Business Consulting and Legal Services in Azerbaijan, you can seek the expertise of DLB Consulting.

Market Overview and Business Environment in Azerbaijan:

In 2022, Azerbaijan’s GDP reached $78.7 billion, marking a 4.6% increase from the previous year. During this period, the country experienced a significant increase in its non-oil GDP by 9.1%, despite a 2.7% decrease in its oil GDP. Breaking down the GDP, the industrial sector made up 51.1%, with trade and automotive repair contributing 8.2%. Transport and logistics accounted for 6%, and construction for 4.8%. Other sectors like agriculture, forestry, and fisheries added 4.8%, hospitality services 1.6%, information and communications 1.4%, while taxes represented 7.4%.

Alongside the growth and diversification of our economy, the business environment in Azerbaijan is also evolving continuously. Like in any country, the development of the business environment in Azerbaijan results from various factors, including economic, political, legal, social, and others. For instance, the government has consistently implemented policies in recent years aimed at enhancing the transparency of the economy. This has naturally necessitated legal reforms. Consequently, our country has experienced significant legislative and judicial reforms, among other changes.

Business Opportunities in Azerbaijan:

We firmly believe that Azerbaijan is a land of unlimited business and investment opportunities. While this might seem somewhat exaggerated, the highly dynamic development across various business sectors in our country justifies this belief. Consequently, this development results from the efforts made by the state to diversify the economy. While these efforts have led to prosperity in almost all business sectors, certain areas stand out for their exceptional opportunities and potential.

Renewable Energy Sector:

Azerbaijan is one of the countries with high potential for renewable energy sources.The technical potential for these energy sources in our country is estimated at 135 GW on land and 157 GW at sea. Furthermore, the economic potential of renewable energy is estimated to be around 27 GW. This includes 3,000 MW from wind energy, 23,000 MW from solar energy, 380 MW from bioenergy potential, and 520 MW from the potential of mountain rivers. For all these reasons, particularly in recent years, business opportunities in the Renewable Energy Sector have significantly encouraged foreign investors to consider investing in Azerbaijan. Thus, in recent years, several companies, especially from the Kingdom of Saudi Arabia and the United Arab Emirates, have made significant investments in the Renewable Energy Sector of the Republic of Azerbaijan.

Information Technology and Innovation:

We would not be wrong in saying that Azerbaijan possesses significant potential and business opportunities in the fields of IT and Innovation. Indeed, it’s true that in our modern era, particularly, business opportunities are expanding in the field of IT and Innovations in many countries, not just in Azerbaijan. However, Azerbaijan is consistently implementing reforms that encourage development in the spheres of IT and Innovation. For instance, in recent years, significant tax incentives have been offered for projects focused on the digitalization of both public services and the private sector. As a result, foreign companies are also showing interest in starting businesses in Azerbaijan, attracted by the existing opportunities in the mentioned business sphere. Especially in recent years, we’ve observed that companies from different countries have undertaken nationally significant projects in the field of IT and Innovation.

Tourism and Hospitality:

Azerbaijan is a country with an ancient history and rich cultural heritage. Additionally, our country is distinguished by its magnificent nature. All these factors have contributed to a growing interest from foreign tourists in Azerbaijan in recent years. Furthermore, the domestic tourism opportunities and the interest of the local population in domestic tourism are significantly increasing. The growing interest in tourism potential also signifies the development of business opportunities in this sector in Azerbaijan. Consequently, the existing business potential and opportunities in Azerbaijan present significant prospects for both local and foreign businessmen.

Agriculture:

Agriculture has always been one of the promising business spheres in Azerbaijan. This is, of course, connected to the fact that our country possesses resources conducive to farming and animal husbandry. Additionally, the state is actively implementing consistent measures to further the development of agriculture. In line with these efforts, the government also provides substantial subsidies for machinery and other agricultural inputs, specifically targeting crops such as hazelnuts, rice, citrus fruits, tea, tobacco, and cotton. Furthermore, our country offers considerable tax incentives and exemptions to producers of agricultural products. All these factors indicate the business opportunities in the agricultural sector in Azerbaijan. Let us also add that foreigners aiming to utilize these business opportunities have identical rights as local businessmen.

Real Estate and Construction:

Real estate and also Construction have always been among the successful options for business and investment in Azerbaijan. Particularly in the last five years, there has been a noticeable growth in business and investment opportunities in these spheres in Azerbaijan. Premium real estate projects currently being implemented in Azerbaijan promise substantial returns for property investors. Indeed, for some premium projects, the annual return can reach up to 20%. Consequently, this encourages both local and foreign real estate investors to consider investment opportunities in the relevant sector in Azerbaijan. The sharp rise in interest in real estate investment, in turn, creates significant business opportunities for construction companies in Azerbaijan.

DLB Consulting Services in Azerbaijan:

We hope this blog post has provided informative insights into the business environment, as well as business and investment opportunities in Azerbaijan. In addition, if you need legal and consulting services related to business and investment in Azerbaijan, you can seek the expertise of DLB Consulting. We are looking forward to the opportunity of working together!