Exclusive interview with Ambassador Extraordinary and Plenipotentiary of the Republic of Azerbaijan in Ukraine Azer Khudiyev
– Mr. Ambassador, what is the situation with the bilateral economic relations of the Republic of Azerbaijan and Ukraine? In 2018 , the year the plan was the increase of volumes of mutual trade to $ 1 billion annually. What’s today growth, according Toyour estimates?
– Azerbaijan in recent years has significantly improved its economic dimension and economic cooperation with Ukraine.
However, the current economic relationships and statistics in our view does not correspond to the potential between our countries. Because until 2013, the trade turnover between our countries exceeded $1 billion, and sometimes reached up to $1.5 billion. But a complex political process, the armed conflict in the East of the country could not affect the volume of trade. By the end of 2015 was a very large economic decline of the trade turnover between our countries – it was only $333 million.
We managed to raise this figure in two and a half times: at the end of 2018 the turnover reached $829 million, an increase of 2.5 times. This growth was particularly noticeable in the export from Azerbaijan to Ukraine during this period, it increased almost 16 times. As a result of this growth Ukraine – 11 th main trading partner of our country.
In this case, if once we were a country importer from Ukraine always was an elevated segment of export to Azerbaijan, over the past 3 years we have been able this stereotype to break. We are proud that now more is exported from our country – as oil products and other products.
Let me remind you that in June 2018, the company opened a Trading House in Azerbaijan. The decision to open the Trading House was taken at the top management level of the two States. Just the increase in trade turnover between our countries, promotion of the brand Made in Azerbaijan, the idea of a common platform for cooperation between entrepreneurs of both countries. The trading House has received all the necessary documents for conducting export-import operations in Ukraine. Already signed first contracts for the supply of alcoholic beverages from Azerbaijan to Ukraine. We are currently working on establishing a regular supply of products of the food industry, special building materials and cable equipment to Ukraine. In addition, we are working on the opening of the Trade House of Ukraine in Azerbaijan, in Baku. Both the Trading House will establish mutually beneficial cooperation to increase and diversify our trade.
– Traditionally, Azerbaijan supplies to Ukraine the products of the oil industry – more than 85% of oil refineries in Ukraine receive oil from Azerbaijan. What other areas interested in Azerbaijan’s business sector?
– Our country today actively develops not only in the oil sector. We have many areas where contact with Ukraine, tourism, agriculture, medicine and military-technical cooperation. And we purposefully develop other areas besides oil.
– How many Azerbaijani companies working in Ukraine?
According to our data, currently in Ukraine was almost 3000 legal entities and physical persons – entrepreneurs who are citizens of Azerbaijan. Let me emphasize that this figure does not include ethnic Azerbaijani businessmen, as citizens of your country.
– In which sectors in Ukraine are ready to invest Azerbaijani entrepreneurs? Who is already successful in Ukraine?
In recent years, more and more of our investors, despite the difficult investment environment in Ukraine, economic risks, more willing to participate in infrastructure projects, competing and often winning tenders among foreign companies.
There are quite a lot of investment in Azerbaijani legal entities and individuals, nested in a resort area in Western Ukraine – Truskavets, Skhidnytsia and others Is not only the growth of financial investments in the region, but also improving the quality of health and medical service in the resort area.
A significant role in Azerbaijani investments in Ukraine is played by the State Oil Company of Azerbaijan (SOCAR), which has a network of petrol stations in the capital and in the regions of the country. Through SOCAR, our government has invested in the Ukrainian economy more than $200 million.
Ukraine also work construction companies of Azerbaijan, which we are proud – except for investments in Ukraine, our experts build quality homes and buildings, landscaped areas. In Ukraine our stroysektor represented, for example, international by the Azerbaijani company Caspian Service. The company not long ago came to the Ukrainian market, invest to start $7 million, but I think soon will be involved in larger projects, including infrastructure, hundreds of millions of investment.
Another example, the Azerbaijani company Industrial Aksu, which was revived in Sumy old non-functional sugar factory, one of the largest in the region. The first phase of the investment amounted to about $7 million. Today the company employs several hundred of Ukrainians.
Azerbaijani business has a great interest in the development of the industrial sector of Ukraine. Now, negotiations began on the construction in Ukraine of a major project – a plant for the production of composite pipes for the irrigation system of the southern part of Ukraine. Taking this opportunity, I would like to encourage our colleagues and partners to relate to this and similar projects, in which Azerbaijan is ready to invest a large finances as seriously. For projects of such level it is necessary to attract diplomatic corps, because the Embassy in this case acts as a guarantor on the stage of negotiations that the participants from our side are honest, have sufficient experience and qualifications that are in demand on world markets.
Another direction of Ukrainian industry in which you are interested our company is the establishment of a joint engineering and construction industries. As you know, in our region, Azerbaijan is a major logistics hub. We are already in the framework of the economic program “One belt, One Road” along with China carried out 38 projects is a transport interchange rail journey.
In the Caspian sea we have built and successfully operates one of the most powerful and modernized logistic ports in the region.
In the framework of international transport and logistics projects “North-South” and “South-West” we would like to bring Ukraine, which has an extremely advantageous geographical position in terms of the global transport system and logistics.
We are also interested in the Ukrainian energy market, ready to participate in its modernization. We intend to strengthen our activities in the promotion and development of cooperation in the energy sector. Will be signed long-term contracts for the supply of Azeri energy resources to the Ukrainian market. I hope that next year we will be able to form more joint Azerbaijani-Ukrainian business companies.
But for this Ukraine needs to create an enabling environment and long-term contracts for supply from our side. Ultimately, Ukraine’s success will depend on stability and balance in the energy and investment law.
– Will allow our monopolists to enter the energy market to foreign companies…
– I think soon things will get better, we need political will.
And note that it is still about business interests, market relationships.
For example, in Switzerland, SOCAR has about 200 petrol stations, we provide jet fuel and all airports. If the Swiss, Austrians, Italians, and other European partners have let us on its market, why should Ukraine give up the quality of product and service? Your country is also moving to Europe, she would need experience on European standards and we already have successful experience and are ready to assist, with the cost of services of our companies are markedly more comfortable and more acceptable than the European.
We are ready to modernize the Ukrainian energy market, we are also ready to modernize the infrastructure projects. Azerbaijan over the past 10 years has accumulated vast experience, including international projects.
– Were there attempts of Azerbaijani business to go in the port sector of Ukraine?
– There were, of course, but in the end there were always different sorts of obstacles.
It is important to note that Azerbaijani companies took on a whole other level of business participation in the fraud and “schemes” of any kind is unacceptable. Since we work with a large international Western and Asian companies, international financial institutions, the risk of corruption schemes to lose the international market and reputation is very high. Needs to be full transparency.
– Do now your companies that export to Ukraine its products, goods problems with customs? As time goes reform, something has changed?
– Previously, we often received complaints and signals on such matters, but I must say that lately the pain eased by our companies.
– How Azerbaijani business was ready to invest in agro-industrial complex of Ukraine, given the possible opening of a land market?
– Our country is now actively developing the agricultural sector, and of course, we are interested in cooperation in this field. Your country has great experience in the agro-industry, since Soviet times. If we just generated the appropriate institutions for the development of agro-technology, processing technology of agricultural products, then you they have a long long tradition. In addition, we are interested in agricultural market of Ukraine for the delivery of modern high-quality fertilizers more affordable for farmers and large farmers price than existing on the market today.
– What, in your opinion, will stimulate large-scale investment in Ukraine?
Now we are waiting for the completion of reforms, the adoption of appropriate laws aimed at formation of favorable investment climate and protection of investors ‘ rights. This is a complex and difficult task for each government. Plus, the stability in the country is the main factor of investment attraction.
The most important is peace and stability. Today the world is becoming more unpredictable in many parts of risks, threats, bloody conflicts, irreconcilable confrontation becoming acute, and there is no respite. In these difficult circumstances, States use various strategies to protect national interests. Azerbaijan, in particular, as a full member of Nam, has a balanced and independent foreign policy aimed at developing relations of cooperation with all States.
– Recently, Azerbaijan’s operator has invested, according to some in the purchase of Vodafone Ukraine about $1 billion. What is the position of this operator in Azerbaijan?
– It is gratifying to note that the Antimonopoly Committee of Ukraine adopted a decision to allow Azerbaijan Bakcell to acquire more than 50% of the shares of B. V. Preludium offers that will allow it to become an indirect owner of the mobile operator Vodafone Ukraine.
Bakcell is the first company in Azerbaijan that started since 1994 to provide mobile services. Today Bakcell’s network, consisting of more than 8,000 base stations covers 93% of the territory and 99% of the population. As a leader in innovation and one of the largest investors in the non-oil sector of Azerbaijan, Bakcell offers a wide range of high quality modern telecommunications services to more than 3 million subscribers.
– And as with the investment climate in Azerbaijan? How comfortable are you to go to foreign investors?
– This year our country has significantly improved its positions in Doing Business rating of the world Bank Group. We took the 25-th place among 190 countries (in 2018 Azerbaijan occupied 57th place), and in the CIS in the first place.
Our country is at the 2nd place in the indicator “Protecting investors ‘ rights”, on 9-th place on the indicator “Registration of enterprises”, on the 17th – “Registration of ownership”, and on the 22nd place – “Getting credit”, at the 28th – “Taxation”. In the current report it is stressed that Azerbaijan joined the list of countries with the most visible improvements. The country has carried out a record number of reforms – 8 aimed at simplifying doing business in 2017-2018 gg, among the 10 economies that have demonstrated significant improvement.
In particular, we have simplified the process of obtaining construction permits, getting electricity (thanks to the ASAN centers Kommunal), registration of property, obtaining loans, taxation, international trade. Carried out reforms in the labour market. Some of our reforms include institutional changes. Azerbaijan has created a “single window” for issuing construction permits, reducing the time of obtaining permits for 80 days. In combination, these reforms improve the investment environment and provide good economic dividends.
I believe that in the near future and leading Ukrainian companies also with great zeal and optimism will enter the market of Azerbaijan.
– As the Armenian-Azerbaijani Nagorno-Karabakh conflict affects the comprehensive development of Azerbaijan? This topic is important for Ukraine…
During the years of independence balanced foreign policy and pragmatic use of oil and gas resources and a socially oriented domestic policy has turned Azerbaijan into a modern stable state, the highly respected around the world. However, inherited from the former Soviet Union the Armenian-Azerbaijani Nagorno-Karabakh conflict, the resolution of which is a major priority of Azerbaijan’s foreign policy, is still waiting for their final and fair solution.
The destructive policy of the Armenian authorities, supported the radical-nationalist segments of society and the Diaspora, is the main obstacle on this path. All these years the Armenian-Azerbaijani Nagorno-Karabakh conflict has been and continues to be a serious threat to peace and security in the region and prevents the full cooperation of the countries of the South Caucasus.
The state Oil Company of Azerbaijan (SOCAR) created by the decree of the President of Azerbaijan Republic Abulfaz Elchibey 13 Sep 1992, Today the brand is represented by companies in 15 countries. Operates in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, Britain, Iran, Germany, Ukraine.
In 5 countries – Azerbaijan, Switzerland, Romania, Georgia, Ukraine – developing a network of petrol stations under SOCAR brand luxury.
In Ukraine represented a subsidiary of SOCAR Energy Ukraine. Started its activity in 2009. In 2010, the company started to develop its own network of refuelling complexes of premium class. Now open 60 fuel stations, the company employs more than 1,800 employees.
During the work in Ukraine, the company invested more than $5 million in the development of socio-cultural projects in Ukraine.
General Director of SOCAR Energy Ukraine Elchin Mammadov.
Bakcell telecommunication company, leader in innovation and one of the largest investors in the non-oil sector of the Azerbaijani economy. Bakcell is the largest, best in quality and fastest in Azerbaijan. The company is part of NEQSOL Holding, representing a diversified group of companies operating in different industries and countries. The main activities are oil and gas, telecommunications, high tech and construction industry. The geographical scope in which companies in the group carry out operations and provide services to, includes such countries as the United Kingdom, the USA, Turkey, Azerbaijan, Georgia, Kazakhstan, the United Arab Emirates and Bangladesh.
In 2014, the company Bakcell has opened an incubation center AppLab, one of the first startup incubators in Azerbaijan, which allowed local start-UPS and developers of hardware and software to receive significant support from the company. In 2018, Bakcell signed a cooperation agreement with centre for incubation and acceleration INNOLAND State Agency for services to citizens and social innovation under the President of Azerbaijan Republic. In the framework of this agreement, Bakcell and INNOLAND carry out a joint incubation program for local startups.
The Chairman Of The Board Of Directors Bakcell – Lothar Heinrich And Andreas Paoli
Chief Executive officer – Rainer Ratgeber
Caspian Service and Construction company Caspian Service was founded in 2001, becoming at the base of the revival of the construction industry in Azerbaijan. The company – 71 project in Azerbaijan, 6 – in Kazakhstan, 2 in Georgia,1 in Poland, 8 in the Ukraine. During the existence of the real estate market, the Caspian Service company built and put into operation more than 1 million 200 thousand m2 area.
2011 – Prize “European Quality Award”,
2012 – Award “Azeri Business Award-2012”,
2013. – The “European Grand Prix for Quality” Prize IQS “International Quality Summit” Award “Caspian Energy Integration Award 2013”.
In Ukraine the company has entered in 2014. In 2018, the company as a developer began implementation of the residential complex BASA City near Kiev. The BASA project, the City awarded a special award for the project of the future award in real estate EEA Real Estate Forum & Project Awards 2018.
General Director of Caspian Service in Ukraine – Genghis Kishiev.
AKSU Inşaat and Sənaye – AKELIK GROUP is a construction company specializing in construction of large infrastructure projects. Represented in 9 countries, and a. h., through its local offices implements projects in Uzbekistan, Tajikistan and Georgia. Actively working in Ukraine. In 2016 invested in “October sugar factory” and large-scale project on modernization of production capacities in Sumy.
Among the implemented projects in Ukraine: major overhaul of overpasses in the city of Bila Tserkva and Kiev, the construction of the shopping center NOVUS in Kiev, the reconstruction of heating systems in Zhitomir. The company is modernization of 84 buildings of budget institutions (schools, kindergartens) in the city of Dnipro.
One of the active areas of the company – investments. Priority countries – Ukraine, Georgia, Azerbaijan, Kyrgyzstan, Moldova, Uzbekistan and Tajikistan.
In 2018, the company rebranded, now presented as AKELIK GROUP.
Chairman AKELIK GROUP – Suleiman Babayev.