To combat low oil prices, Azerbaijan and Kazakhstan are considering tactical moves to entice foreign investors and increase revenues, representatives of the two countries said at the recent CIS Global Business Forum in Dubai.
Deputy Minister of Economy Sahil Babayev, speaking at the forum organized by the Dubai Chamber of Commerce and Industry, said falling oil prices indicate an opportunistic time for his country to delve into diversification options in its economy.
“While low oil prices affected Azerbaijan’s income, we see this as a good opportunity to attract investments in other sectors,” Babayev said. “Diversifying the country’s non-oil sectors is our top priority in 2016.”
Babayev highlighted the need to appeal to foreign investment in non-oil sectors, specifically those investors coming from the UAE and the GCC region.
“This is a long process decision and we have certain achievements on this front. Currently, non-oil sectors are contributing 71 percent to Azerbaijan’s overall GDP,” Babayev said Dr. Babayev. “Baku’s involvement in China’s Silk Road Economic Belt vision (also known as the ‘Iron Silk Road’ project) promises great potential for investors, as new railway lines envisaged by the project will allow easy access of goods on both directions between Azerbaijan and China. This poses a huge growth opportunity for Azerbaijan, especially in sectors such as agriculture, food processing, machinery and tourism.”
The neighboring country of Kazakhstan is also confident in building its non-oil sector portion of its economy thanks to its desirable location on the Silk Road trade route.
“We believe there will be a great deal of demand on organic food production, especially from China, over the next few years,” Kazakhstan Vice Minister for Investments and Development Rakhim Oshakbayev said. “We are also developing our relationships with other countries, including the U.S. and the European Union, while we continue our efforts to act fast on diversifying our economy and lessen our dependency on oil.”
Oshakbayev noted, however, that SMEs are filling an increasing key role in building Kazakhstan’s economy. In fact, he said SMEs are the current backbone of his country’s economy.
“In addition to their role in creating job opportunities, SMEs are contributing 17 percent to Kazakhstan’s overall economy,” Oshakbayev said. “We believe that developing the SME sector is key to the economy and therefore the government has launched various initiatives to support it.”
In order to appeal to foreign investors, leaders of Azerbaijan and Kazakhstan have designed an advantageous hub for potential investors to utilize in hopes that will open new avenues of business.
In an effort to simplify the initiation of business to both countries, Azerbaijan enacted a liberal tax structure for SMEs and reduced their costs to financing last year. Offering visas upon arrival for some people has also increased opportunities for business.