Azernews.Az

Nazrin Abdul

Read more

Azerbaijan has cultivated a robust business and investment environment, attracting both local and foreign entrepreneurs. A recent visit by a high-level delegation from the All-China Federation of Industry and Commerce, led by Mrs. Shen Ying, highlighted the potential of the Alat Free Economic Zone as a key player in enhancing bilateral relations and promoting investment opportunities, particularly for Chinese companies. The delegation met with Mr. Valeh Alasgarov, Chairman of the Board of AFEZ Authority.

During the meeting, Mr. Alasgarov provided the visitors with extensive information about the advantages offered to investors in the Free Zone. He discussed the favourable geographical location, the unique legislative framework, as well as the land plots equipped with ready-to-use internal and external engineering and communication systems, along with a package of financial and non-financial incentives available to investors.

The Alat Free Economic Zone was established to make a long-term contribution to the country's economic development and to attract foreign investments. It offers several advantages compared to other economic zones, including:

- Industrial land plots with ready infrastructure are available to investors, which means these plots come equipped with on-site and off-site infrastructure and engineering-communication systems.
- Entrepreneurs are exempt from taxes and customs duties. Products sold by local enterprises to companies operating in the Alat Free Economic Zone are also exempt from VAT and customs duties, creating a favourable export point for enterprises in the main economy. Moreover, when considering transportation costs and insurance for raw materials imported from abroad, it becomes more profitable for investors in the Free Zone to source products from Azerbaijani companies.

-The Alat Free Economic Zone operates independently, with a legal basis that ensures its extraterritorial status. No government agency has the authority to regulate the activities of the Free Zone, nor those of legal entities, financial institutions, and employees registered there. According to the law, other laws of the main economy do not apply in the Free Zone, except for criminal law and laws related to money laundering, terrorist financing, and targeted financial sanctions. To prevent any conflicts between the legislation of the Alat Free Economic Zone and the main economy, relevant changes and additions have been made to over 90 laws of the main economy, ensuring the supremacy of the legislation of the Free Zone. This process is ongoing.

-The Alat Free Economic Zone is designed to attract investors who can provide high added value through export-oriented production and relevant international services based on international standards and innovative technologies. Specifically, at least 75% of the products produced by enterprises in the Free Zone must be exported abroad to qualify for the benefits offered. This requirement aims to prevent interference with the activities of enterprises in the main economy. Consequently, companies operating in the Free Zone will be able to sell their products at lower prices in the local market due to the concessions and favorable conditions applied, which could harm the domestic market. However, when a product is sold from the Free Zone to the main economy, it is treated as an import for the Azerbaijani buyer, requiring payment of customs duties and VAT. This regulation is intended to protect domestic producers and prevent Free Zone companies from using their privileges to undercut the local market.

All these advantages aim to create the most favorable possible business environment for investors while supporting their future development and expansion.

Ms. Ying, head of the high-level delegation, emphasized the strategic geographical position and legislative framework of the Free Zone, as well as its well-developed infrastructure and favorable policies. She stated that this area is particularly attractive for investors, especially Chinese ones. She noted that many members of the Federation are engaged in high-tech production activities and expressed hope that these companies will take advantage of the favorable conditions provided to establish their production facilities in the Free Zone.

On September 20, Minister of Economy Mikayil Jabbarov met with the delegation led by Mrs. Shen Ying, Executive Vice-Chairman of the All-China Federation of Industry and Commerce (ACFIC). During this meeting, opinions were exchanged regarding investments by Chinese companies in Azerbaijan and the development of cooperation in various fields.

The meeting also highlighted the adoption of the "Joint Declaration on the Establishment of a Strategic Partnership between the Republic of Azerbaijan and the People's Republic of China" during the Shanghai Cooperation Organization Summit in Astana, which laid the foundation for a new phase in bilateral relations.

As cooperation between Azerbaijan and China strengthens in political, economic, investment, transport, green energy, public diplomacy, and other areas, new opportunities for trade, investment, and private sector collaboration have emerged through this newly adopted Declaration.

Notably, trade turnover between China and Azerbaijan is on the rise, with successful collaboration in investment, industry, energy, agriculture, and other sectors. Thanks to the efforts of Azerbaijan's Trade Representation in China, several Azerbaijani products are gaining recognition in the Chinese market.

To further enhance Azerbaijani companies' participation in exhibitions and forums in China, and considering the interest of Chinese companies in the Azerbaijani economy, the meeting discussed the need for active cooperation between relevant institutions from both countries.

Additionally, the meeting on September 20 emphasized the potential for Chinese companies to operate in Azerbaijan's industrial zones, including the Alat Free Economic Zone (AFEZ), as well as in the liberated territories, focusing on infrastructure, transport, and other sectors.

The discussions also highlighted the development of economic and trade relations and the expansion of partnerships in sectors such as tourism, IT, innovation, and fintech. Opinions were exchanged on the potential for Chinese private sector companies to invest in Azerbaijan, the implementation of joint projects, and the support of initiatives by the All-China Federation of Industry and Commerce.

Both Azerbaijan and China aim to further increase the volume of bilateral trade, optimize the structure of goods, and facilitate market access for products.

Furthermore, the two countries actively participate in international exhibitions and forums. China welcomes Azerbaijan's participation in events such as the China International Import Expo, China Import and Export Goods Exhibition, and the China International Service Trade Fair. Azerbaijan, in turn, appreciates the involvement of leading Chinese companies in international military exhibitions like ADEX.

It is worth recalling that in 2013, the People's Republic of China launched the "One Belt, One Road" initiative, aimed at creating infrastructure and fostering mutual relations between Eurasian countries. As the first country in the Caucasus to support this initiative, Azerbaijan plays a vital role as a logistics center in its implementation.

The collaboration between Azerbaijan and China is poised for growth, bolstered by recent agreements and the strategic advantages offered by the Alat Free Economic Zone. As both countries focus on expanding trade, investment, and cooperation across various sectors, the groundwork laid during these discussions promises to foster a mutually beneficial partnership that can drive economic development in both nations. With continued efforts to enhance business opportunities and streamline regulations, Azerbaijan is well-positioned to attract significant foreign investment, particularly from high-tech industries in China.

---

Follow us on Twitter @AzerNewsAz