| Azerbaijan | May 25, 2016
A short yet vital overview of key information with which to be briefed before setting to work in Azerbaijan: from red tape and regulation, to day-to-day customs and the etiquette of business life in the country.
Azerbaijan has worked hard to create an environment that is business friendly and open to FDI. Ranking the country 63rd out of 189 economies for the second year running, the World Bank’s annual Doing Business report masks a particular divergence when it comes to operating in Azerbaijan. The country comes an impressive 7th in the listing for the ease of starting a business, yet 110th for the effort required to connect that business to the national grid. Should things not work out, filing insolvency (84th) is a good deal easier than obtaining that line of credit in the first place (109th). To succeed in what is still one of the world’s fastest growing economies, the would-be investor needs to be fully informed on the country’s setup.
There is a very high level of government spending on infrastructure projects, with many openings for foreign companies at all levels of design and construction. Coupled with this is an ongoing diversification strategy that is helping foreign SMEs and entrepreneurs to obtain a foothold in areas of the economy that were in the past crowded out by the ubiquitous oil and gas behemoth.
Azerbaijan in 2016 is a fast-changing country, which can throw up opportunities in the path of the alert businessman at short notice. And coupled with this is its enviable location on an east-west axis betwixt Asia, the Middle East, and Europe. Neighboring Russia, Iran (since January 2016, especially), and Turkey all offer cross-border potential from with Azerbaijan.
This is a country in which regulations can be applied in a haphazard manner, and law enforcement can be unpredictable. Duplication of registered trademarks is a common dispute in the business world, for example. In addition, it is important to note that Azerbaijan is not a member of the World Trade Organization, which at times leads to complications over import and exports, and customs procedures in general. Across the board, few companies and fewer websites have information in English, so non-Azeri speakers (or those without working knowledge of Russian) might do well to invest in a translator when dealing with the country’s bureaucracy. If investing, be aware that relatively few Azerbaijani companies will have audited accounts.
Foreign investors are at liberty to repatriate all post-tax profits, returns, and revenues. In addition, the country has signed 44 bilateral treaties offering mutual protection of investments in the country.
Last, a word on how to interact with your Azerbaijani partners and clients (note that Azeri refers to a specific people, and not the citizens of the country at large). Expect to drink copious volumes of tea in any business meeting, often accompanied by chocolates and nuts. Yet even if almost all meetings start with tea and meandering conversation, punctuality is vital, and tardiness can be viewed as disrespectful to your host—regardless of the gridlock on Baku’s streets. In formal situations, remember it is normal to address someone by their first name, followed by Hanum for ladies, and Bey for men. Although a predominantly Shia Muslim country, Azerbaijan takes its tone from its secular state, and does not exhibit the strict social codes sometimes encountered in other Islamic countries.