Doing Business with Azerbaijan
|Language||The official language is Azerbaijani, Russian is widely spoken|
|Religion||Islam (96%), Christianity (3%), Other (1%)|
|State system||semi-presidential republic|
|Head of State||Ilham Aliyev|
|Head of government||Ali Asadov|
|Currency name||Azerbaijani manat (AZN)|
|Time shift||+3 hours (in summer +2)|
|Nominal GDP (billion USD)||159.3|
|Economic growth (%)||5.6|
Azerbaijan is a secular Muslim state in the South Caucasus region with a predominantly Turkic population, which in its modern form was created after the collapse of the Soviet Union in 1991. Despite its location on the shores of the Caspian Sea, it can be considered a landlocked state, as it lacks direct access to the world’s oceans. The economy of Azerbaijan is clearly dominated by oil and natural gas extraction. These commodities accounted for approximately 86% of all exports in the first 9 months of 2021.
Regarding the overall state of the economy, Azerbaijan has objectively achieved a stunning success in consolidating an economy that was severely affected by the loss of the 1st Karabakh War and the internal political crisis of the first half of the 1990s in a relatively short period of time. The magnitude of this success is indicated by the fact that today it is the only country in the South Caucasus region to be ranked among upper-middle income countries according to the World Bank’s methodology. Azerbaijan’s oil reserves, which were opened to foreign investment under the Profit Sharing Agreement, played a key role in achieving this success. This decision also brought its negatives in the form of excessive dependence of the entire Azerbaijani economy on the extraction of energy raw materials. The oil sector accounts for approximately 35% of GDP, and should generate 55% of state budget revenues for 2022. and in 2021 accounted for around 92% of all the country’s exports. In addition to oil, investment efforts in recent years have also focused on the expansion of Caspian gas extraction and the construction of the Southern Gas Corridor through the territory of Georgia, Turkey and the Balkan states. Since its commissioning in December 2020, it has been supplying gas to Italy, Turkey and Bulgaria.
The sharp drop in oil prices on the world markets in 2015 fully revealed the dangers arising from the excessive orientation of the Azerbaijani economy to a single sector. The crisis, exacerbated by the long-term strengthening of the US dollar and the simultaneous devaluation of the currencies of a number of neighboring countries, resulted in a significant slowdown in the performance of the economy, the consequences of which the country did not have time to fully cope with, before the twin crises in the form of an even sharper fall in oil prices and the COVID-19 pandemic hit it at the beginning of 2020. The Azerbaijani leadership was aware of the seriousness of the current situation and tried to face the problems by massively supporting the development of non-oil sectors of the economy such as agriculture, chemical and processing industry, and construction. Thanks to the interventions of the Azerbaijani government, the economy already experienced a recovery in 2021 and grew by 5.6%, and growth is also expected by experts in the coming years.
Azerbaijan continues to be the strongest economy in the region with a share of 60% of the total GDP and the sovereign largest exporter. It can be expected that the main subject of interest in the following years will be the post-conflict reconstruction of the territory after the 2nd Karabakh War.
Practical telephone numbers (emergency services, police, firemen, information lines, etc.)
The country code for Azerbaijan is +994, followed by the city code and the number itself. In the case of a mobile number, +994 (with continuation e.g. 111 111 111) is instead replaced by 0 (with continuation e.g. 111 111 111).
- Emergency line of the Embassy of the Czech Republic in Baku: +994 502 291 363
- Firefighters: 101
- Police: 102
- Medical emergency: 103
- Gas crash: 104
- ASAN: 108
- Information on phone numbers: 109
- Emergency situations: 112
- Towing service: 156 (paid service)
- Taxi: +994 125 653 189 or Uber/Bolt service
Important web links and contacts
- Office of the President of Azerbaijan
- Cabinet of Ministers of Azerbaijan
- Parliament of Azerbaijan
- Ministry of Foreign Affairs of Azerbaijan
- Ministry of Economy of Azerbaijan
- Ministry of Energy of Azerbaijan
- State Statistics Committee of Azerbaijan
- The State Agency on Mandatory Health Insurance
- Central Bank of Azerbaijan
- Tender database
- Chamber of Commerce and Industry of Azerbaijan
- State Oil Company
- State water company Azersu
- Underground railway (metro) in Baku
Information agencies and internet newspapers
- Azerbaijan Press Agency
- Azerbaijan State Press Agent ra
- Turan Press Information Agency
- Internet news Day.AZ
- Press information agency Report.az
PaulSourcing: Ten Commandments for Doing Business with Azerbaijan
The PaulSourcing agency has prepared ten recommendations for doing business with this territory for Czech entrepreneurs interested in business relations with Azerbaijan.
4 recommendations for entering the Azerbaijan market during the coronavirus pandemic situation:
- Getting to know the territoryFirst of all, you need to get to know the country, for example through the current information provided on the czportal. Here, exporters will learn current economic information, but also other facts that are needed for a successful entry into the Azerbaijani market.
- Selecting and approaching business partnersPaulSourcing’s foreign office in Baku (ZK) finds partners that best match the interests of the foreign office’s clients, and therefore it is necessary for companies to inform ZK about their production, about the target group, and also to send the so-called top 5 facts that differentiate them from the competition. On the basis of this information, ZK prepares a so-called “longlist” to measure, which it sends to the client. Together, they will then choose three to five most suitable companies, which ZK will approach and, above all, specify the contacts, find out the current state of these companies, and ask them to meet at least via Skype or another application.
- Introductory meetingIn the third step, ZK arranges a Skype or e.g. ZOOM meeting between partner and client. This is successful for about 60% of verified partners. There is great interest in this method of communication from both sides, as companies and partners will clarify the next procedure and, in the event of the impossibility of continuing further communication with the ZK client, the interest partners will be specified and thus the clients’ financial resources will be saved upon arrival in Azerbaijan. Arranged meetings will already be held with those partners that the client has chosen and, based on preliminary interviews, is interested in meeting.
- Visibility and participation in events
Another supporting element that ZK offers clients is, for example, visibility on the website of the PaulSourcing Baku foreign office, where subscribers can learn more about clients.ZK also offers the opportunity to participate in events that it organizes in cooperation with individual state administration bodies. These are mainly events of a B2B nature, which, thanks to the project concept, help to open doors in the field of state administration and self-government. PaulSourcing also organizes B2G meetings in order to expand the possibility of application for some clients. Some segments cannot be completed without the opportunity to meet with representatives of the local state administration and self-government.ZK will organize the participation of Czech exporters at the following events:
ADEX/SECUREX 2020, Baku, 8–10 9. 2020
EDUEXPO 2020, Baku, 8-10 10. 2020
MEDINEX 2020, BAKU, 5-6 11. 2020
Ten points for doing business with Azerbaijan
- Communicate in RussianThe language of communication when dealing with foreigners is usually Russian, which is spoken by almost everyone in Azerbaijan, especially people from the older generation. Younger people also know English, but Russian is the more common language of business.
- Reciprocate an invitation to a restaurant. Azerbaijanis are very hospitable and pleasant companions. However, an invitation to a restaurant has to be repaid. In informal meetings, you can often achieve the desired result more easily.
- Come in a suitAlways go to a meeting with representatives of the state administration dressed formally, i.e. in a jacket and tie. Also, always show up in a business suit for meetings with company leaders. You can come to a meeting with business partners, especially in the summer months, dressed less formally, but always well-groomed. Formal attire is not required for informal gatherings.
- Tolerate your partner’s lateness Arriveat the meeting on time. It may happen that your business partner, on the other hand, is late. Your accuracy will certainly be appreciated, tolerate minor tardiness from your partner. It can be caused, for example, by unexpected traffic restrictions.
- Start with an informal conversationIt is advisable to start negotiations with an Azerbaijani partner in an informal way. For example, you can ask about health or mention the vagaries of the weather (Baku is a very windy city). Go to the actual topic of the meeting later. Immediately discussing the contract or the subject of the meeting will be considered impolite.
- Avoid political topicsAvoid religious or political issues during the meeting. Although the majority of the inhabitants are of the Muslim faith, they are not intolerant of Christians. However, some religious practices and customs can be sensitive, so do not discuss them without thorough knowledge. In the political sphere, for example, the issue of Nagorno-Karabakh should be avoided.
- Use a local intermediaryIt is definitely worthwhile to use the services of a local partner with whom you also maintain informal contacts. It will help you establish relationships with influential personalities who operate in various areas of the Azerbaijani economy.
- Respond promptlyPrepare well for the meeting. The counterpart will appreciate the ability to respond immediately to questions. If you had to consult some questions with the management of the company, they would consider you an incompetent representative with whom you cannot discuss important points of the contract.
- Be patient even outside of BakuIn Azerbaijan, there are big differences between the capital and the regions. While the rules adopted in Europe mostly apply in Baku, life moves more slowly in the regions. Arranging a meeting with a partner outside the capital can be more difficult, you need to be patient.
- Avoid problematic regionsBefore visiting the region, it is advisable to consult the foreign office of the Czech Republic or the foreign office of PaulSourcing in Baku, where you will get the necessary information about transport connections or which region is and which is not suitable for visiting. It is not recommended to visit Nagorno-Karabakh, both for security reasons, but also because you would not be able to return to the territory of Azerbaijan.