第 ３ 種郵便物認可 (1) Special Economic Reports THE JAPAN TIMES • MONDAY, MARCH 31, 2008 B1 www.panoramareports.com PANORAMA REPORTS AZERBAIJAN circles, but in society at large. Our One of the world’s biggest emergingpolitical marketsstance on bilateral rela- showcases its huge potential tions between various countries coincide and we treat each other as friends and equals, despite the investing substantially in irriga- fact Japan is a leading economy tion, land reformation, and of and Azerbaijan is still small in course, in education.” global terms. Azeri-Japan relations have “I believe the country is been revitalized in recent years. now more attractive in terms benefi ts for everyone so we are I n F e b r u a r y, A z e r b a i j a n ’s D e p u t y of investments in general. We harvesting the welfare policy.” Prime Minister Abid Sharifov have the fi nancial resources, so Indeed, last year’s growth visited Tokyo for the fi fth what we need now is know-how, was $3,600 of GDP per capita,Intergovernmental Commission modern technologies and profes- according to Minister Sharifov.on Economic Partnership with Toward diversifisionalism. Japanese companies cation Banking assets have gone up 50Japan, where he discussed With exponential growth averaging 34.6 percent, the Republic of Azerbaijan is onecan of provide the all of this.” Heydar Babayev, percent on an annual basis anda wide range of cooperation Minister of Azerbaijan is now on track the combined reserves of thematters between the two coun- world’s fast-growing economies, and has enough natural resources to keep on growing. Rich Economic to becoming an open market, Central Bank and Ministry oftries including the fi nancing of Development in oil and gas reserves, and precious metals, the former Soviet republic is now one of thethanks most to a restructured fi nan- Finance are more than $5 billion.infrastructural projects (mainly cial sector, a fl urry of privatiza- The budget for this year willwater-supply and energy) and tions and some important invest- focus on Defence, schools, healthto sign a fi nal protocol. To date, attractive destinations for international business. created in the past four years, ment reforms, but Minister of and infrastructure. “We have $3.5Japan has given Azerbaijan in most were in the up-and-coming Economic Development HeydarWe have passed a law to allowbillion in the capital expenditurethe region of $700 million in sectors of fi nance, construction, Babayev, recognizes the need totax incentives to facilitate this.budget that will be directedloans. telecoms, transport and tourism. toward the three major highways Azerbaijan sits on the most south- convince global economies likeBaku is the only capital on the Tadahiro Abe, the former , A state oil fund, awarded byJapan. “We only have 15 years of connecting to Georgia and easterly border of Europe, a geo- Caspian Sea with a high quality Japanese ambassador, is proud President of the United Nations, ensureshistory, so we cannot create the Russia. I am very proud to say political position that makes it a of services.” that Japanese companies were the Republic of the trickle-down effect is wellsame institutions and mentality that fi nancing for these projects natural bridge between Europe Azerbaijan’s performance in among the fi rst to be investing Azerbaijan managed and transparent. as a developed country in one will not only be provided by the and Central Asia and the Middle t he l a st 10 ye a r s h a s b e e n not h i n g in the country. He says: “Japan Aliyev is keen to change theday. The country, and its democ- Azerbaijan budget but we have East. The country’s proximity but impressive. Reeling from highly appreciates Azerbaijan’s global perception of his country,racy are very young. However, also attracted some loans from to the Caspian Sea, and its well-28, Azerbaijan has important the collapse of the Soviet Union, efforts toward democratization. which is not completely accurate,the returns can be higher as it is international fi nancial institu- connected, modern capital Baku,human resources too, something and a war with Armenia, the Since Japan is a peace-oriented he says. “Now we have achievedan emerging market.” makes it a convenient logisticalthe president is keen to exploit country effectively had to build country, the main pillar for our so many great things domesti- hub for the region’s markets. through improved education a nd “Oil does not Babayev points to A zerbaijan’sup its economy from scratch. foreign policy is for regional and ca lly, it is time to invest a bit more President Ilham Aliyev, whoIT development programs. “We result in a creativity as one of its majorAs Minister of Finance Samir global peace, and in doing so, we have enough oil and gas to last us in promoting the country on the was elected to power in 2003, is strengths. “Our entrepreneursSharifov points out, GDP growth have been supporting various another 100 years and an infl ow diversifi ed international scene.” committed to diverting the huge are creating factories and plants,in 1996 was 1.3 percent, but a sign countries to make an effort of tens of billions of dollars, Japan, he points out, is already revenues generated from the development they are very active in the agri-that things were fi nally going in toward development, social which is a great opportunity,” an important economic partner energy sector into other arms processing sectors. Foreigners cohesion and stabilization.” he says, “Education therefore and has become one of the coun- of the economy. “Oil generates of the country are also investing a lot in this Ali Abbasov, minister of com- receives around a billion dollars try’s biggest investors in energy.sector as they are the poten- tions on a bilateral basis, one of m o n e y,” s a y s P r e s i d e nt A l i y e v. “ It unless used munications and IT, adds: “The every year. When we started this “We have many Japanese con-tial buyers of these products. which is Japan’s JBIC. does not generate knowledge or “Japanese investors can provide key area in which the Japanese program three years ago, we had tractors here and they are veryThere is an excellent market in “Another priority is the new jobs, and it does not result in properly.” can invest is with the regional one computer for every 1,000 stu- integrated, not just in businessKazakstan and Russia for our services to the wholeconstruction region using of Baku electricity a diversifi ed development of the innovation zone project. This dents. Now we have one for every products. Japanese investors generating capabilities and the country unless used properly.” as a center.” will be a tax-free innovation zone 29 students.” Of the 640,000 jobs can provide services to the whole rehabilitation of power transmis- With a population of 8.4 where there is special protection Ilham Aliyev, President region using Baku as a center. sion lines and networks. On top the right direction.Heydar Babayev, “Between Minister of Economic Development for intellectual property. We million, and an average age of of that, we signed a loan agree- 1996 and 2000, the growth would be interested in teaming ment w ith the World Bank for the rate was about 10 percent, and up with Japanese companies to improvement of the water supply when our current president was produce new high-tech products in small towns of Azerbaijan and elected, it was given another in bio- and nanotechnology.” boost. The core element of theare waiting on a rehabilitation of Kapital Bank: Aiming for the sky president’s diversifi cation policythe water and sewage systems in is to change the conditions forthe capital. We are also support- ing agriculture through special When Kapital Bank Board C hairman Rauf Rzayev made a short pres- Azeris and improve the quality incentives to farmers. We are entation on the bank as part of a banking forum in London last year, of life across all spheres. many asked him how Azerbaijan’s only remaining state-owned bank “The signing of a production had achieved so much in such a short period. “One of the drivers was agreement with a group of major corporate governance, introducing 52 different procedures. The bank international companies by the went through a re-engineering process in 2004, and a new structure former President was adopted,” explains Rzayev. in 1994 launched a new era for us. 2004 was the year Rzayev was appointed chairman, and he immediately That strategic step increased the began the task of transforming the bank’s work culture. The bank itself was undergoing the most profound transformation since its foundation in 1874 as the United Universal Joint-Stock Bank, or BUS Bank. In 2000, it was merged with three other state-owned banks and re-branded as Kapital Bank in 2005. Although the bank is still fully state-owned, an offi cially approved privatization process has been under way since March 2005. “Our bank is in the process of privatization,” saysRzayez. “To develop market relations in the banking sphere, the signed a decree to reduce the number of shares in the ownership capital belonging to the state by 50 percent in Kapital Bank. We did our best and in June Open and reliable bank 2007, a 50 percent privatization was successfully completed. Now we are preparing for full privatization in line with another decree signedATMs by and, eventually, “fast cash” money transfers by cell phone. All these for all kinds of clients the president on Oct. 19, 2007. We went through an audit process andfactors have helped the bank strengthen its profi le among the international they priced the bank at $ 60 million. Compared to 2004, we have grownbankingKapital community. Bank’s H.Q. in Baku As an open and reliable bank, Technikabank aims to provide effi cient TEXNIKABANK ten-fold. Our bank has become stronger and more profi table.” As the country opens up to the global economy and foreign companies fi nancial services to its customers through advanced customer service 1107 Ataturk Avenue, After assessing the bank’s income, cash fl ows and changes in operating in Azerbaijan rise, Kapital Bank is also open to the opportu- technologies and a dedicated team of professionals. Baku, Azerbaijan shareholder equity, the audit, by PricewaterhouseCoopers, noted thatnities of foreign business. “Azerbaijan has an open market that attracts the bank delivered a full range of services, including deposits, loans, cur-businesses. We pay very special attention to the energy and the infra- The bank’s vision is to become a retail-oriented fi nancial holding, that Tel:+994 12 447 7744 rency exchange, currency trans- structure sector, and the labor force is cheaper over here. Our economy provides a wide range of fi nancial services to all types of customers, Fax:+994 12 440 4422 fers, safe-deposit boxes, cash is growing quickly. We can see every day economic reforms that are pos- along with its subsidiaries, through a large branch network that spans [email protected] transfers, sale of credit cards and sible because of the country’s political stability. I am sure we will develop the capital and regional centers of the Azerbaijan Republic. www.texnikabank.az Rauf Rzayev, brokerage services at the Baku good relationships and, in the future, close and friendly relationships with Chairman Stock Exchange. Also mentioned many countries. Kapital Bank were Kapital Bank’s correspond- ent relations with international

If we didn’t have this ambition, we wouldn’t be No. 1. We shall see to what extent we will be BAKFEM LLC. is an award-winning hazlenut processing factory that has been successful in Kapital Bank but this is our main goal.Although we are a Muslim-dominant country, our development style is manufacturing the versatile nut in many forms since 1996. Using the most up-to-date technology, the Western,” says Rzayev. company produces 10,000 tons per year, and its commitment to professionalism, high working standards fi nancial institutions such as Citibank, American Express, CommerzbankHaving taken the bank through the fi rst phase of internal transformation Rauf Rzayev, Chairman, Kapital Bank and HSBC. and a re-branding process, Rzayev explains the one mission that he would and quality means it is now a serious international player. Rzayev’s goal is to turn Kapital Bank into nothing less than “the Citibanklike to see done in the bank during his tenure. “When I was vice president Since 2000, Bakfem has honed its image of being a stable, top-quality nut producer in the world market of Azerbaijan.” Right now, he qualifi es the current situation at the bankof as the International Bank of Azerbaijan, someone from Kapital Bank asked and has been awarded with various diplomas and prizes in recognition of the fact. In 2003, it became a a re-engineering operation requiring a supervised top-down moderniza- me what my ambition was. I replied that I wanted to control the open limited liability society with a view to increasing its export potential, as well as establishing branch offi ces tion, to eventually control the open market and lead the country’s bankingmarket. They said that aside from the International Bank sector. So far, the internal restructuring of the organization has included ofthe Azerbaijan, there were 45 more banks. I replied that if in the Gakh, Oguz, Balakan and Khachmaz regions. More signifi cantly, Bakfem began manufacturing its aforementioned corporate governance procedures and priority on effec-we didn’t have this ambition, we wouldn’t be No. 1. We Hazelnut Chocolate Creams line which has become immensely successful. tive risk management. Meanwhile, the bank’s network has been widened shall see to what extent we will be successful in Kapital The company was awarded the ISO 9001:2000 in 2005, after meeting International Quality Standards to include 88 branches and 90 cash-desk offi ces. The recently signedBank but this continues to be our main goal.” contract with the I-FLEX Group, of which Citibank is also a participant, is requirements. It is now a market leader in hazlenut production, producing hazelnut kernels, roasted allowing Kapital Bank to widen the range of its products and services with hazelnuts, chopped hazelnuts, hazelnut fl our, hazelnut chocolate creams, under the “AZIZA” and “BAGIRA” brands, hazelnut dragee under the “MIRVARI” name, and hazelnut paste. Now, we are inviting interested parties to join us in our future ventures.

Bakikhanov settlement, Bunyadov str., 12, Baku, AZ 1040, Azerbaijan Tel: +994 12 425 00 84 Fax: +994 12 447 41 49 offi [email protected]

KAPITAL BANK www.bakfem.com 71 Fizuli Str, Baku AZ1014, AZERBAIJAN. Tel: +994 (12) 493 66 30 Fax:+994 (12) 493 78 95 www.kapitalbank.az B2 THE JAPAN TIMES • MONDAY, MARCH 31, 2008 Special Economic Reports (1) 第３種郵便物認可 GLOBAL INSIGHT AZERBAIJAN ing large-scale infrastructure development in roads, railways, power plants and municipal infrastructure. The bank will also improve its policy dialogue and involve other stakeholders in order to accelerate the reforms with a view to creating a sustain- able business environment.” A wealth Theof Azerbaijan Bankspotential Association (ABA) has seen vast Despite having huge oil and gas reserves, the Azeri governmentchanges in the sector since it was— likely the fastest rate in the established in 1992 to promoteworld— due in large measure There is a serious consolidation self-regulation. “When weto strong energy exports. While is taking a responsible stance and openingprocess up under the waynon-oil in the bank- sectors. started our activities, there weregrowth will stabilize at lower ing system, and today we have 234 different banks here,” sayslevels over time, it anticipates We take a closer look at the full range of manyinvestment banks representing opportunities the ABA President Eldar Ismayilov.double-digit growth for the near U.S., Russia, Europe and Asia. Ismayilov knows 44 banks is stillfuture. As a national develop- that includes banking, agriculture, energy andEven our tourism. neighbors Georgia and too high, although he is sure thatment bank, IBA plays a unique Iran have shown interest. We are with the Central Bank reformsrole in stewarding the economy’s glad to see this, and welcome it, The State Oil Fund of A zerbaijan for consolidation and transpar-future. Jahangir Hajiyev, as it will improve the competi- L a s t y e a r, I B A u n d e r w r o t e h a l f (SOFAZ), which began in ency, this will change. He says: Jahangir Hajiyev, chairman, Chairman of the tiveness in the sector and bring“The ownership structure is still the refurbishment of the Baku- 1999 and became operational explains the IBA’s background: Board, International new technology and innovationa problem, for example. During IBA seeks to demonstrate toTbilisi-Kars rail line through to in 2001, was an integral part “The IBA, which used to be a (Azpromo). HeadedBank of Azerbaijanby Presidentinto the system.” the Soviet period, we only had all sectors of the Azeri economyTurkey’s Eastern Kars region on of former President Heydar subsidiary of a Russian bank, Emi l Majidov, A zpromo ser ves as The European Bankstate ownership, so we had, and that transparency and goodthe Black Sea. For $200 million, Aliyev’s mandate to safeguard emerged after the collapse a bridge between investors, localfor Reconstruction andstill are undergoing a transi- governance enhance valueit has reconnected the Caucasus Azerbaijan’s future, its purpose of the Soviet Union. Since 51 producers and the government. Development (EBRD) hastion phase. The Central Bank’s and profi t. Hajiyev says: “Weand the Caspian to Western to stabilize the vast infl ows of percent of the company belongs invested directly into naturalapproach is very democratic, and have unilaterally committed toEurope by direct rail for the fi rst capital from Azerbaijan’s oil to the Ministry of Finance, it is Growing fi nancial markets resources, fi nancial institutions,I think it will continue over the global accounting standards:time since the 19th century. revenues and invest them for a semi-state-owned bank. The The country’s fi nancial sector isenergy, transport, property,next fi ve years.” publishing online annual “The rail project is a success,” the country’s socioeconomic rest belongs to a diverse number growing dynamically. Despiteagribusiness and industry. “In reports and auditing reportssays Hajiyev. “In some ways development. The International Bank ofof households and companies being in a process of moderniza-addition, we have attracted about by PricewaterhouseCoopers,an even bigger success is the The Azeri government and Azerbaijan (IBA) was the fi rstthat are mainly local Azeri tion in negotiation w ith the World€2.6 billion from other investors, and concentrated on the funda-deepening of political and com- SOFAZ have played a key role to establish an internationalshareholders. IBA takes very Bank, the sector is completelysponsors, commercial banks and mentals to build our Moody’smercial cooperation with our in the Extractive Industries branch and today has a presenceseriously its dual responsibilities open and transparent withother stakeholders,” says Valeriu and Fitch international ratingsneighbors in Georgia and the Transparency Initiative in some of the major fi nancialas a national development bank foreign investors present in 21Razlog, principal banker. “The to assure global partners thatdevelopment of a Baku-Tbilisi Shahmar Movsumov, SOFAZ’s capitals of the world, includingand a private sector fi rst-mover. out of 44 banks. Five of them arecountry is undergoing immense The Grand Hotel Europe …feel atwe home. offer a www.grand-europe.com safe harbor for doingbusiness corridor. executive director, says, “Today London, New York and Dubai.It has used its market position to 100 percent foreign-owned, whilechange at this moment; it has business in the region, and to IBA uses state-of-the-art the fund stands at $2.2 billion The biggest fi nancial institutionestablish world-class fi nancial eight banks have a 50 percent orcompleted a number of large lead by example in our own local and we are investing in three in the south Caucasus region,and technological infrastructure banking technology and has Lorem ipsum dolor sit amet, consectetaur adipisicing elit more foreign ownership. infrastructural programs for the community. different currencies: the U.S. IBA’s professional standingfor a fi nancial service industry around 485,000 customers, Dr. Elman Rustamov, chair-export of hydrocarbons, crude dollar, the euro and the pound. has been recognized by bothspanning banking, credit cards, “A strong marketplace, stablethe majority of which are oil and natural gas. We expect to grow signifi cantly,man of the National Bank of Euromoney Magazine and theinsurance and reinsurance and fi nancial position and the excel-individuals. “Our country strategy defi nes and when we do, we will slowlyAzerbaijan says: “I believe that Geneva Business Institute. leasing. IBA did this deliberately lent future prospect of IBA are Texnika Bank was founded invest in riskier assets withAzerbaijan is one of very fewthe following priorities for the The bank is undergoing ato safeguard the framework for a highly evaluated by internationalin 1993 and is one of the largest higher returns.” emerging countries that has nocountry: fostering developmentprofound economic renaissancemodern economy.” rating agencies Fitch (BB+) and limit on foreign capital. We areof the non-oil sector through The Azerbaijan Investment and is very much open for inter- The bank has helped to Moody’s (Ba2).” experiencing a banking boomproviding loans, equity and Company (AIC) was founded national business. Annual GDPdevelop Azerbaijan’s fi nancial due to our dynamic macroeco-guarantees, with a special focus “The country two years ago using capital from grew 35.1 percent by mid-2007system over the past 16 years by nomic background, economicon developing micro and SME SOFAZ. Its main remit has been providing guarantees for other is undergoing growth, economic developmentcompanies, supporting the to invest in long-term projects local banks to join international and we have consistently imple-development of fi nancial and immense change within the open economy, pro- payment systems such as Visa, mented economic reform overnon-banking institutions and vide support to local businesses, and introducing innovations at this moment.” the last 15 years. In terms ofassisting the state in implement- a nd t o at t r a c t fo r e i g n i nv e s t m e nt . such as chip cards to the market. banking, all our economic indi- “We provide foreign investors IBA provides clients with all cators have increased two-fold. Valeriu Razlog, with a pure equity investment kinds of banking activities, via The sector registered growth of Principal Banker, EBRD in Azerbaijan,” says executive more than 30 branches. It has the more than 60 percent last year. director Anar Akhundov. The biggest international insurance AIC works closely with the company and one of the largest Azerbaijan Export and Invest- local leasing companies. ment Promotion Foundation ing investment to the country’s fl edgling tourism industry. The country has incredible potential in tourism: It boasts a fascinating cultural and historical backdrop, 250 lakes, are probably three years behindincluding the great Caspian Sea, where we are in the market.mountains, nature reserves and This gap gives us a great com-UNESCO World Heritage sites, petitive advantage and forcesand nine climatic zones ensure us to improve. Our organizationtourists can travel there year- is large and sometimes it is around. challenge to stay ahead. We are 第３種郵便物認可 (1) Special Economic Reports Minister of Culture and THE JAPAN TIMES • MONDAY, MARCH 31, 2008 B3 taking specifi c measures to Tourism, Dr. Aboulfas Garayev deal with this. We would be able says, “In 2001 and 2002, we had to produce twice as much as we www.panoramareports.com AZERBAIJAN PANORAMA REPORTS 400,000 people crossing the do and would have no problems private banks in Azerbaijan. border of Azerbaijan. Last year, Dr. Aboulfas selling it.” Over the past few years, it has we had 1.3 million and this year Garayev, Minister of Javadov believes there is great made great strides to maintainirrigated by more than 40,000 we expect 1.4 million visitors. Of Culture and Tourism potential for Bakfem’s quality robust growth, through thoroughcanals and pipelines. A wide course not all of them are tour- product in Japan, adding: “We risk management. As well asvariety of crops can therefore be ists. According to our calcula- are impressed by Japan’s ability providing a full range of moderncultivated. Cotton is the country’s tions, tourists account for close to be able to compete on a top of hotels has tripled in the last to 1 million. We have different Ferlito 2007 Photograph by: Fabio banking services, Texnikamost important cash crop, and fi ve years, but the number of global level and at the same timetypes of tourism: congress, sport, Bank was selected by the StateAzerbaijan also produces most places to stay has only doubled. maintain its strong traditionsrelaxation, cultural tourism… In locations. Program for the Developmentof the world’s caviar. Over 90 We need more international and culture,” he says. comparison with fi ve years ago it “The most important thing for of Entrepreneurship to help thepercent of the country’s agricul- chains to come here. We have tural land is privately owned and The ADA Group, meanwhile,is double. We consider 11 percent t o u r i s t s t o k n o w a b o u t A z e r b a i j a n fi nancing of SMEs in many parts opened our doors to facilitate there is also a modern business characterized by smallholderoperates in transport, trade andgrowth this year and last year a is that we are coming from a very of the country. Chairman of the an international presence: We center, with health club and spa. s u p e r v i s o r y b o a r d , E t i b a r A l i y e v,farming. Broad growth acrossreal estate. Its leading concerngood result. interesting mixture of traditions have reduced taxes, for example, Azerbaijan’s competitive edge says: “If Japanese banks investthe board is needed. is the Almali food retailer, which “At the moment Azerbaijan due to the geographical situa- and we are working on different in tourism is its diversity, the in Japan and earn 3 percent Bakfem, the region’s premierhas 25 stores — 23 in the capitalis a new country on the map of tion. It brings an understanding international programs, such as minister says. “Baku offers a lot per year, it will be interestinghazelnut company, was set up destinations for tourism all over of the mentality of people today our fi rst winter sport resort. The of attractions such as theater, for them to come to Azerbaijanin 1996 and now sells across the the world. Most people have and also a great tolerance toward government has also started a monuments, old and modern because it will be much higher.world, including Hong Kong, already been to a lot of places, all the religions and beliefs. new road transportation system. architecture and traditions. Silk O u r b a n k i n g e c o n o m y i s g r o w i n gAustralia, Europe and the Middle and usually after going to the Originally, Azerbaijan was All of these actions are part of Road tourism is an asset for us; at between 50 percent and 100East, and has a strategic partner- same place several times, people located at the middle of different our infrastructural development Japanese tourists have already percent per year. We cooperate like to fi nd new destinations. The fl ows of cultures passing by. program.” started to come by this route by with international fi nancial number of travelers around the “At the beginning we were — and plans to double capacity The Grand Hotel Europe is a train or bus. Ecological tourism institutions.” world is so high that we are now polytheist, and then came by the end of this year. It is 100 fi rst-class luxury establishment is also interesting; Azerbaijan Unibank is also involved with close to the point when they will Christianity; after seven centu- percent foreign-owned, and 100 in Baku, offering 96 deluxe has various protected areas fi nancing the non-oil and gas look for new destinations, and ries Islam arrived. We had new percent Azeri-managed. ADA’s rooms and excellent views of the for birds and animals, offering sector SMEs, and its clients defi nitely in this region, not only traditions and architecture but ambitious expansion campaign Caspian Sea. Run by Gunesh great opportunities for wildlife include furniture producers, for Azerbaijan but also Georgia, keep in mind respect for other — to open one store every two Inkaya, general manager, the observation. food-processing companies,ship with a holding company. Armenia, Middle Asia and the religions. We have also been weeks — will make an important hotel is in great demand from “The other part of Azerbaijan trading companies and con-Azad Javadov, managing direc- Silk Road.” infl uenced by Japanese and contribution to the agricultural business travelers, mainly is separated because of the struction companies, amongtor, “We says: consider “Today our share 11 percent in the growth this Now that Azerbaijan can Palatial views from the Boulevard, Baku’s main highway. Chinese traditions.” sector and help the people living from Europe, the U.S., Russia war we had with Armenia; we others. During the next one tomarket of Azeri hazlenut exports compete with the world’s most The minister notes that for the year and last year a ingood the result.” rural areas. “We have and Turkey. The hotel’s two- can only fl y there, which makes three years, the bank wants tois 35 percent. We are working stable countries, the ministry is future, in line with world trends, signed agreements with many level Grand Exhibition and it diffi cult for us to attract strengthen its presence, espe-with a turnover of $35 million.” developing international rela- Azerbaijan will be a perfect local farmers, which has marked Conference Center offers 800 sq. new visitors. The cultural and cially in the retail market, due Quality is theDr. key Aboulfas focus Garayev, of this Minister of Culture and Tourism tions and has launched a major setting for wellness and spa the beginning of cooperation meters of exhibition space, and historical heritage is really to the huge wealth coming intocompany. Javadov says that: advertising campaign to raise its breaks. “We have many natural between our company and the important there, however. The the country. Chairman Faig“We were ISO 9001 certifi ed by profi le, promoting the country spas and caves with excavated agricultural mechanisms.” majority of our musicians and Huseynov says: “We can see howa German company which is at international fairs around salt that have a curative effect our artists come from there. We the purchasing power is risingthe best known in the world. As the world and on CNN and Building on tourism potential also have mountain climbing, Lorem ipsum dolor sit amet, consectetaur adipisicing elit among the population and so area result, we have improved our Euronews. Azerbaijan’s stable socio- ice climbing, extreme sports expanding our branch network products, and this has helped useconomic conditions, its mem- “We need to improve our very sharply. enter more demanding marketsbership of the World Travelinfrastructure,” Minister “Today, we are the only bankand achieve further credibility.Organization, participation inGarayev says. “The number with EBRD on board. UnibankWe have never had a problemthe transcontinental Silk Road was their fi rst investment in theselling our products as we havetourism line — organized by fi nancial sector and it has beenachieved a high level of brandUNESCO — and the recently “Baku offers very successful. Today our bankawareness and a high level of sig ned oi l ag reements prov ide a n many attractions is the largest in the country,demand for our products on aexcellent framework for attract- apart from the IBA, and we aregeneral basis. Improving quality such as theater, the largest mortgage and loanand control is a continuous provider.” process.” monuments, Javadov notes how production architecture and Sowing the seeds of the future capacity will be a challenge for As the second-largest sector inthe future. “Other companies traditions.” Azerbaijan, agriculture involves more than 40 percent of the Minister of Culture and Tourism p opu l at ion. T he cou nt r y has n i ne climatic zones and more than a million hectares of arable land

RUSSIA Azerbaijan, centuries to explore GEORGIA C A

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A vast land steeped in history, Azerbaijan promises an unforgettable vacation. Travel along the Great Silk Road, once the world’s most important trading route, visit palaces and historic sites, and marvel at architecture that is truly breathtaking. Azerbaijan is where memories are made: A place where you can fi nd modern resorts and spas, an- A journey through time cient cities and stunning natural landscapes — all in one exotic location.

Ministry of Culture and Tourism of The Republic of Azerbaijan Baku, Azerbaijan, Azerbaijan. Tel: +994 12 492 0592 Fax: +994 12 492 43 15 [email protected] www.azerbaijan.tourism.az are successfully operating in all sectors of oil and gas industry,” says the company president. managed operation within this Last year marked a milestone activity base. “We started as a for SOCAR — whose activities design engineering company, and revenue generation account- of the country that Azerbaijaniand, as is natural in this indus- for approximately 15 percent of oil was exported to internationaltry, we grew more into project the country’s GDP — not only market in a considerably large for Azerbaijan. Today, SOCAR is and construction management. in oil production but in a record- volume. Now, only during the a reliable partner not only for the We are now fairly equally bal- brea k i ng 5 bi l l ion cubic met ers of last year, Azerbaijan sent 40 companies from the neighbor- anced in the design engineering of its gas production, while gas production, quantity which is million tons of oil to customers in ing countries, but also for well- professional services and project construction of a $5 billion oil expected to reach 8 billion cubic N o r t h e r n a n d S o u t h e r n A m e r i c a , known companies of the world.” management,” says FaikRzayev, refi nery in the Turkish port meters in 2008. The company, the Near and Far East, Europegeneral director and founder. “It Since 1994, SOCAR has of Ceyhan, situated near the with more than 50,000 employ- and Japan. We are encouragingtakes us into bigger and riskier gained valuable experience terminus of the BTC pipeline, is ees, keeps minority stakes in effective cooperation with anyprojects but it is a natural pro- in international partnerships planned for late 2008. all 13 production-sharing agree- country, in both the oil and thegression of this company. as foreign investment fl owedments for oil and gas exploration Company President gas sectors,” says Abdullayev. “Our objective is to be the into the country, bringing thein Azerbaijan, as in the case of Abdullayev explains that the $4 With the price of oil at his-leading company in the sector in technology and infrastructurethe country’s largest energy B4 THE JAPAN TIMES MONDAY, MARCH 31, 2008 billion BTC pipeline, 1,769 km toricSpecial highs Economic and the Reports global the Caspian(1) region. 第３種郵便物認可 Being a local • of Azerbaijan’s oil industry up toproducer, the British Petroleum- in length and passing through energy hunger rising steadily,company with 25 years’ experi- date, improving transportationled Azerbaijan International Azerbaijan, Georgia and Turkey, Azerbaijan is confi dent it cane n c e , w e h a v e t h e u l t i m a t e k n o w l - This report can also be read online www.japantimes.co.jp/international-reportsand services, and training theOperating Company (AIOC). GLOBAL INSIGHT AZERBAIJAN plays an important role in provide what the world wants,edge of the society, customs and local workforce to occupy the SOCAR sees clear the path to strengthening regional ties and and is ready to do so. how things work, which can take on people with asthma. We also thousands of jobs created. continue expanding in produc- of oil, SOCARRovnag is Abdullayev, now moving projecting the country’s interna- foreign companies a long time to have waterfalls w ith health prop- “In the past 14 years, SOCARtion and in opening to the global Engineering the future to raise its internationalPresident stand-tional profi le through the strate- work out. The advantage is that erties, and pure natural lakes at has signed 28 production con-markets, moving forward on the ENCOTEC is a 100 percent local ing, opening SOCAR offi ces in Britain,gic involvement of SOCAR. we are always here.” 2,000 meters’ altitude.” tracts with 33 companies forroad map laid out in 1994. “That company providing multi-dis- Switzerland, Romania, Turkey “The operation of the BTC All of which shows how Next on the minister’s agenda investments totaling $30 billionwas the fi rst time in the history cipline design engineering and and Georgia, and researchingpipeline has facilitated access Azerbaijan is open for business will be the establishment of in the oil sector of Azerbaijan. full support services to clients refi ning presence in Centralto the open seas and created an and with a warm welcome from Regional Tourist Information Currently, there are 34 oil and mainly within the oil and gas Europe. alternative transit route to the its people guaranteed. Centers to focus attention on gas companies representing pipelines leading to the Black sector. It employs multilingual, areas outside the capital. “One of the main objectives 15 different countries success- Sea passing through the terri- degree-qualifi ed specialists and of these offi ces is to inquire fully operating in Azerbaijan. tory of Russia,” says Abdullayev. is the fastest-developing Azeri Keeping engines running into the local markets for the Moreover, 27 joint ventures and “It has also created favorable As a small country sitting atoppurpose of investment in the oil seven alliances established by conditions for SOCAR, as a massive oil and gas reserves,and gas sector and to develop SOCAR and its structural units representing company to be the emergence of oil- and gas-further cooperation with those “In the past 14 involved in the regional energy exporting capacities is raisingcountries,” explains SOCAR projects of strategic importance years, SOCAR Azerbaijan’s global profi le as anpresident Rovnag Abdullayev. infl uential regional player. “Another important issue is has signed 28 While economists will argueexportation of gas extracted in the Azerbaijan sector of the production that oil is the lifeblood of any Caspian Sea to the European economy, this is even more true contracts, totaling market, since we have reached a of a country like Azerbaijan, consensus with Turkey to extend $30 billion.” which has large reserves of this the Baku-Tbilisi-Erzurum pipe- most valued commodity. With line to Greece and Italy.” Rovnag Abdullayev reserves estimated at 3 billion to President, SOCAR 5 billion tons of oil and 5 trillion Indeed, over the 14 years since cubic meters of gas, this repub-o p e n i n g t o t he w o rld m a rke t s , t he lic was the fi rst in the region tostate-owned company has made open to international invest-a concerted effort to establish a ment in 1994, with the activestrong distribution network of participation of several Japanesepipeline, rail and ship transport. companies. Now, having con-When in late 2006 gas imports solidated its extraction capaci-from Russia were terminated, ties, Azerbaijan is opening itsAzerbaijan was able to respond own markets by means of therapidly and pass from importing national oil company, andto exporting gas in less than a encouraging neighboring statesyear, as the rich Shahdaniz gas- to take on joint energy-distri-condensate fi eld came on stream bution projects like the Baku-with its 7.7 billion cubic meters’ Tbilisi-Ceyhan (BTC) pipelinereserves. inaugurated in 2006. SOCAR’s fi rst steps in foreign Given the growing push of the energy sector, the government of Azerbaijan is making a priority of bringing the non- oil sectors up to par, and looks toward Japan as a natural ally. “I think that

markets began in the neighbor- ing state of Georgia with the acquisition of the Georgian “We have reached a consensusBlack Sea port with of Kulevi and the opening of 20 gas stations SOCAR inTurkey the energy to sectorextend Japanese thethroughout Baku-Tbilisi- the country, while companiesErzurum are verypipeline active and toalso Greece participating and inItaly.” the privati- a lot has been done but what wezation of the Georgian gas distri- bution network. Powering the nation are waiting for from JapaneseRovnag Abdullayev, President, SOCAR companies now is to develop the non-oil sector with the bestDeveloping regional ties technologies in the world,” saysAnother target of investment Minister of Industry and Energyfor the Azerbaijani oil company Natiq Aliyev. is Turkey, a country to which it is culturally and linguistically The State Oil Fund for the close. SOCAR has obtained a development of the non-oil majority stake in the Turkish sector grows rapidly with the petrochemical Petkim for $2.04 infl ux of oil revenues, holding $5 billion, providing an already- billion and expected to double existing customer base for part this year alone, powered by the growth of the State Oil Company of Azerbaijan (SOCAR). After posting record oil and gas production results in 2007, exporting almost 8 million tons

AZERBAIJAN INVESTMENT COMPANY

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Baku, Azerbaijan Tel: +994 12 437 2909 Fax: +994 12 437 2903 [email protected] www.aic.az

The BIGGESTfood retail chain in Azerbaijan In recent years, Azerbaijan has risen up to secure its place 28 Babeka avenue, 2199 block, AZ 1031, Baku, Azerbaijan Tel: +99412 496 8125 Fax: +99412 496 86 02 as a global player. A billion-dollar oil and gas industry www.almali.az has not only improved infrastructure and services, it has SOCAR also created important opportunities for young people. State Oil Company of Azerbaijan SOCAR is proud to have been a vital part of this change. Baku, Azerbaijan With 25 major production-sharing agreements with Tel: +994 12 492 17 89 foreign oil consortiums already in existence, and more Fax: +994 12 497 11 67 Engineering and Consulting Technologies [email protected] in the pipeline, SOCAR is ensuring a brighter future. J.Jabbarly, 42, Caspian Business Center, Baku, Azerbaijan www.socar.gov.az Tel: +994 12 497 80 80 / 88 • Fax: +994 12 492 98 89 [email protected] www.encotec.az