By Amina Nazarli
Azerbaijan and Kazakhstan are the most attractive countries in the Central Asian and South Caucasus region for investments, reads a report by the Expert Center for Eurasian Development.
The ECED report titled “Map of investment attractiveness of the countries of Central Asia and South Caucasus” covered eight countries including Azerbaijan, Kazakhstan, Uzbekistan, Georgia, Kyrgyzstan, Armenia, Tajikistan and Turkmenistan.
The investment attractiveness of the countries was assessed on a number of factors, such as transport accessibility, political stability, implementation of programs for economic development and reform, and others.
The authors note that Azerbaijan has a well-developed transport system that will become diversified as much as possible in the medium term with the introduction of two Azerbaijan-Iran and Baku-Tbilisi-Kars railway projects.
"The republic has a developed road network that connects it with Russia, Iran and Georgia. Although a port facility on the Caspian Sea is in the development process, its infrastructure allows carrying out transit functions for the Central Asian countries. The republic also has a developed, diversified pipeline system for pumping oil and gas," the report says.
The ECED experts also highlighted the economic reforms taken in Azerbaijan, noting that, in the face of the global economic crisis provoked by the decline in energy prices, the country's leadership undertook a set of measures to improve the investment climate, demonopolize the economy and weaken the regulation.
“Azerbaijan has an economic policy aimed attracting foreign investors, as well as a set of measures to reform the economy, diversify it and increase attractiveness for investors,” the document says.
As for the main task of the Azerbaijani government, the authors pointed to maintaining the stability of the financial system and reducing of dependence on transfers from the State Oil Fund.
“Development of the agricultural sector will become one of the priorities in the economy. It is planned to create an agricultural insurance fund and create special agro-incubators in each of the economic regions [total of 10],” the report further reads.
Another direction will be support of heavy industry and engineering.
"One of the tasks is to reduce the import of components for agricultural machinery, drilling equipment, ferrous metallurgy. The largest amount of investment is envisaged in the creation of a metallurgical complex in Sumgayit by 2019, consisting of five plants [1200 jobs]. The project is estimated at 1.225 billion euros," the report said.
Tourism is intended to become the third point of growth for the Azerbaijani economy, the experts say. "In this regard, the development of tourist infrastructure is expected," the report says.
Stable economic and political situation in Azerbaijan is one of the main prerequisites for attractiveness of the economy. The Azerbaijani government has developed a very substantial reform package aimed at diversifying the economy, which received very strong support from international financial institutions. The country invested largely in industry and agriculture and is also looking for the markets for export of its non-oil products.
The Davos World Economic Forum ranks Azerbaijan’s economy number 37 with respect to competitiveness. The country has a very low foreign debt, which is 20 percent of the GDP. Moreover, all the investments of foreign companies and local companies are duly protected, thus creating additional incentives and interest in investing in Azerbaijan.