Connecting North - South & East - West

CONNECTING NORTH - SOUTH & EAST - WEST

An interview about the place of Azerbaijan in the world logistics hub with Mr. Eugene Seah IPOs in Azerbaijan: a new era is here Why logistics and supply chain management is important for an organization

OFFICIAL PUBLICATION OF AMERICAN CHAMBER OF COMMERCE IN AZERBAIJAN ISSUE 23 (2016) New to AmCham Regular Members

Associate Members A Word From Executive Director of AmCham Dear AmCham members and friends,

Welcome to the 23rd edition of AmCham’s magazine – IMPACT Azerbaijan.

Issue 23 In recent period, logistics has been a hot topic in Azerbaijan. Changes to legislation, public and academic discourses, as well as infrastructure development provide a room to zoom world attention Credits to this sector. It should be mentioned that existence of an excellent geographical condition creates an opportunity for Azerbaijan to be a AmCham Executive Director: hub – connecting China and India to Europe. Hence, a spillover effect Natavan Mammadova for further development of the business sector and strengthening bilateral relationship with European and Asian companies are highly expected. Editor: Bearing this in mind, the current edition of IMPACT is devoted to logistics in Azerbaijan. With Aykhan Nasibli contribution of field experts and member company representatives, the content shares best practices, provides various solutions and fresh vision. At the same time, within this edition, you Design: will be able to enjoy reading member contributions about various issues, including taxation, IPOs, Crazy Innovations pharmaceutical market, improving operational efficiency, etc. Lastly, recent activities of AmCham, contribution of committee meetings, short information about research outputs have been indicated.

Articles contributed by: As AmCham it was our pleasure to invite member companies to “Trans-Caspian East-West Asif Zeynalov Trade and Transit Corridor” forum in Washington D.C. on April 28-29, 2016, co-organized Cigdem Duru by the Embassies of Azerbaijan, Georgia, Kazakhstan and Turkey to the USA. The Forum Parviz Azerelli brought together public and private senior executives in the fields of transportation policy, Nuran Kerimov transit, customs, logistics and value-added services from the regional countries, along with Ulvia-Zeynalova Bockin & Kamal representatives of the international freight forwarders, EU-based companies, China and Mammadzada Central Asia-based US manufacturing companies. We look forward to have this event the next Nargiz Karimova & Orkhan Rajabov year as well and hope to see more Azerbaijani companies. Prof. Dr. N.J. Delener Hokuma Karimova Overall, I appreciate to our members with contribution to IMPACT Azerbaijan magazine. I am sure you will find it interesting and informative! Advertisers: Port of Baku Kind regards, PASHA Insurance Natavan Mammadova Yapi Kredi Bank Azerbaijan GRATA Azerbaijan Editor’s Comment: Hyatt Regency Baku Dear friends, Azerfon

YOM Logistics Welcome to the 23rd edition of IMPACT Azerbaijan magazine, ITECA Caspian devoted to “Logistics in Azerbaijan: connecting East-West and North-South”. Printing: Existence of expertise within AmCham enabled us to develop a fresh Bestpack view for logistics. “In Focus” section will drive to various interviews and articles. Our authors cover deep analysis about the current situation with Publisher: development of logistics in Azerbaijan, as well as indicated best practices. American Chamber of Commerce Herein, the topics will be useful for the business sector of Azerbaijan to in Azerbaijan further develop their vision and goals for the upcoming years.

Furthermore, within “Member Contribution” section our members contributed with articles Tel: (+994 12) 497 13 33 about the reforms in taxation system, IPOs, conditions on pharmaceutical market, improving Fax: (+994 12) 497 10 91 operational efficiency and other subjects. As usual, we provided a snapshot of Q2 and Q3 www.amchamaz.org of AmCham activities, with an emphasis to business events, internal committee meeting discussions, research outcome, as well as legal update.

Advertising opportunities: Herein, it is also my pleasure to appreciate one more time to companies who see deep value Please contact the Editor at in IMPACT on advertising their business – Port of Baku, Azerfon, Yapi Kredi Bank Azerbaijan, [email protected] PASHA Insurance, GRATA Azerbaijan, Hyatt Regency Baku and YOM Logistics. Tel: (+99412) 497 1333 Enjoy reading and keep contributing!

The articles in IMPACT Azerbaijan Sincerely, express the opinions of the authors Aykhan Nasibli and do not necessarily reflect the position of the American Chamber of Commerce in Azerbaijan

contents

IN FOCUS DEVELOPMENT AND EDUCATION 4 22 An interview about the place of Why logistics & supply change Azerbaijan in the world logistics hub management is important for an Mr. Eugene Seah Chief Operating Officer of “Port of Baku” organisation Prof. Dr. N.J. Delener Dean, School of Business, ADA University 8 24 International and local experiences in YARAT logistics at a glance Hokuma Karimova Head of PR & Communications Asif Zeynalov YARAT Friends Membership Platform Regional Director of Logistics & Infrastructure, BP Azerbaijan-Georgia-Turkey 10 AMCHAM AZERBAIJAN Green corridor: win-win for customs 26 and trusted companies Cigdem Duru About Us Azerbaijan and Georgia Supply Network Operations Leader, Procter & Gamble 11 An interview with the General Director of YOM Logistics 27 Salih Tufekci Business Events

12 Azerbaijan: new re-export hub of two continents – opportunity for entrepreneurs 30 Parviz Ilyasov Crazy Innovations - CEO & Co-founder Committee Highlights MEMBER CONTRIBUTION 14 Azerbaijan embarks on major tax 33 Trans-Caspian East-West Trade and Transit reforms Corridor Forum Nuran Kerimov 34 Managing Partner Deloitte & Touche LLC AmCham Legal Update

16 IPOs in Azerbaijan: A new era is here Ulvia Zeynalova-Bockin - Senior Associate of Baku office of Dentons 39 Members’ News and Events Kamal Mammadzada - Partner of Baku office of Dentons 40 18 An interview on pharmaceutical Social Events situation in Azerbaijan Askar Talipov Head of Representative office Sanofi in Azerbaijan AmCham Calendar of Events 20 42 Standards as a tool to improve operational efficiency and promote your 43 Seminars & Projects business Nargiz Karimova Partner, Assurance services 44 (M2M) Discount Program Orkhan Rajabov Manager, Ernst & Young Azerbaijan 5 in focus

An interview about the place of Azerbaijan in the world logistics hub with Mr. Eugene Seah Chief Operating Officer of “Port of Baku”

re-exported with minimal bureaucracy intervention as FTZs are prerequisites for generating trade and attracting Foreign Direct Investment (FDI). Thus, planned Alat Free Trade Zone will attract investors from around the world and bringing profits to the government.

Over course of this year, the Port of Baku has hosted many foreign dignitaries. What’s impact of the Port and FTZ to the regional collaboration between the Caspian states? Due to the increasing economic and social dynamics of Caspian economies, stronger transport infrastructure, including vital port developments that make up the Silk Route, will accelerate the trade of goods between Europe and Asia. In fact, the East-West international transport corridor aims to realize an effective, competitive road-rail- sea transit system among Turkey, Kazakhstan, Azerbaijan, Georgia, Turkmenistan and China. Today, ten major ports in the Caspian Sea including Aktau, Turkmenbasi, Astrakhan and Baku offer significant opportunities not only for national economies, but also for region’s sustainable development. The signing ceremony for the advisory service agreement Furthermore, thanks to the unique location of the Caspian on the creation of Alat Free Trade Zone was held on Sea, Caspian Ports have also adequate capacity to create September 7, 2016. In your opinion how this will impact their own economy provided that ports are developed in on Azerbaijan economy in future? tandem in terms of procedures, productivity and efficiency. In I think it’s going to have tremendous impact on Azerbaijan’s this way, there will be no bottlenecks or chokepoints and by economy in terms of its further diversification. We should keep in mind that the advisory service will be provided by renown DP World which operates the largest marine terminal in the Middle East- Jebel Ali Port. Along with Jebel Ali, DP World’s portfolio includes over 65 marine terminals across six continents. DP World has interest in "Baku International Sea Trade Port" CJSC (aka Port of Baku) and in Alat Free Trade Zone (AFTZ). The company believes in its prosperous future. Alone with AFTZ, DP World provides advisory service to the Khorgos Special Economic Zone and Inland Container Depot in Kazakhstan making this route more interesting for the world logistic and transportation companies. (+99412) 599 00 03 The future business hub is planned to become part of a network of free trade zones to develop the economy and to form part of the Eurasian trade corridor. From the strategic 72, Uzeyir Hajibeyov str. point of view, the core of a successful hub policy for Azerbaijan must include Free Trade Zone development, where goods The Ministry of Economy, the Port of Baku and DP World group of companies signed an may be landed, handled, manufactured or reconfigured and agreement to provide consulting services for the establishment of a Free Trade Zone in and fb.com/BakuSeaTradePort around of the new Port of Baku at Alat www.portofbaku.com

6 Issue 23 (+99412) 599 00 03 72, Uzeyir Hajibeyov str. fb.com/BakuSeaTradePort www.portofbaku.com in focus

having an efficient port system tied to rail and road networks, AFTZ into a hub for: the region can be transformed into an efficient hub in global • Common-Use Supply Base – Logistics services to support supply chain which could attract FDIs for the development of exploration and production operations of hydrocarbon sea ports in this region. resources in Azerbaijan and Caspian region; Finally, the development of successful FTZ in Alat will aid • Petrochemical Facilities – Storage and treatment of other countries in the region to establish and further develop respective goods; their own FTZ “nodes” to be able to link up the region as one • Processing and Manufacturing – industries of high creation integrated trade corridor for the facilitation of transit trade. value, such as food processing, building materials, steel In doing so, they will expand their economies and develop treatment, etc. oriented for exporting of goods; necessary logistical infrastructure including ports, logistics • Value Added Services – Additional activities such as centers and advanced transport systems that can contribute assembling, packing, processing, labelling, etc. Such services to the economic diversification of the energy-rich countries in encompass both logistical and industrial activities; the region and stimulate economic growth which by itself spur • Consolidation, Concentration & Distribution Center – serving further investment in the region. the markets of the South Caucasus, Central Asia, Northern Iran, South Russia and Turkey. 2015-2016 has been fundamentally important for development of logistics in Azerbaijan, primarily We can all understand that existence of such a hub is institutional development of Port of Baku. Can you please extremely important for Azerbaijan. What is the added indicate top three issues on your agenda? value of this port for the region in large – in terms of The top three issues, or rather goals we have within our administrative, financial and time considerations? agenda in order to provide our contribution into institutional A key feature of globalization has been the enormous Ferry development of logistics & trade industry in Azerbaijan are increase in international flows of goods and services, and the following: a) Setting up of special legal framework for the Port of Baku and FTZ which will consist of clear and consistent regulations and achieve an efficient transit trade with minimal impedance; b) Establishment of a mutually beneficial investment incentive structure with single point of contact with regulative authorities of the state, full repatriation of capital and international arbitration in order to facilitate and attract Foreign Direct Investments into country’s economy; c) By end of 2017, timely completion of Phase 1 of construction of the Port works that will include RoRo (Roll-In Roll-Out) and other multi-purpose berths for the port that will provide us with a base of strong physical infrastructure to support FTZ, transit of cargo goods and other value added services like assembling, manufacturing.

Can you please elaborate more about the strategic road map? Where do you stand for? The new Port of Baku at Alat The Port of Baku’s grand hub vision includes an integrated countries are now trading more with each other. While ports development model that links the port, FTZ, manufacturing have always been important nodes in the logistics system, industries, the Alat township and other strategic transport globalization of production has sharpened the need for ports and non-transport projects under the umbrella of a Special to be value adders, not value substractors in the supply Legal Regime which is envisioned to be somewhat similar chain. Thus, today, the new Port of Baku’s location has given to Production Sharing Agreement in the non-oil sector of it, under an experienced team of port professionals and Azerbaijan. We believe that the project at large will be a trained specialists, a unique opportunity to become a value brand of the President of the Republic of Azerbaijan, Mr. adding entity. Similar to Port of Singapore’s experience, Ilham Aliyev in non-oil sector of Azerbaijan economy. The the challenge for Port of Baku is to relate to the needs of new Port of Baku in Alat is to become the largest FTZ in potential customer in the region and assist them in improving the Caspian region, fed by growing regional economies and their competitive position by providing low cost, efficient offering comprehensive logistics and value-added services to port services and thus increasing trade flows in the region. the Zone residents and international clients, and serving as The increasing amount of this trade can be due to vertical major regional intermodal distribution hub. integration. Vertical specialization occurs when a country The Port of Baku’s major business strategy is to leverage uses imported intermediate parts to create a good it later on its location served by both excellent port & logistics exports, i.e. a country links sequentially with other countries infrastructure and a pro-business environment to develop the to produce a final good. For example, country 1 supplies

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intermediate goods to country 2 which in turn combines these Author’s biography intermediate parts with domestic and other import parts to Eugene Seah, Chief Operating Officer of “Baku produce a finished or semi-finished product which in turn is International Sea Trade Port” CJSC, has 25 years of then shipped to country 3. Here, country 2 given the right Port experience. In his current position he is in charge conditions can be Azerbaijan, country 1 and country 3 can be of the operations management and running all terminals, any country in Central Asia region, South Caucasus Region, including Main Cargo Terminal, Ferry Terminal, Oil Western China Region and even Iran, Russia. Terminal, RO-RO terminal as well as Marine Station. He The Port of Baku will be the interface facilitator for intermodal is also in charge of planning and development of the New transportation and FTZ in Alat will provide the attractive Port of Baku at Alat. business environment for private investment. Thus, its Mr. Seah worked in two premier ports in Singapore, capability and efficiency can greatly influence the decision PSA Container Terminals and Jurong Port. In PSA, he for locating a plant or distribution center here for production managed terminals in Singapore, Middle East and China. assembly or final distribution for any industry. He was involved in the planning of new port terminals in Pasir Panjang and Jurong Port. Before joining Port of Who are the main beneficiaries among the business Baku, he held appointments at senior managerial level in community of Azerbaijan? both Operations and Commercial in Jurong Port. In Jurong The main beneficiaries within the business community of Port, he was the Vice – President, covering all aspects of Azerbaijan will be transportation, logistics and procurement services commercial and operations in the general cargo, bulk and companies, as well as small and medium enterprises (“SME”) that container terminals. will be able to set-up their businesses within the industrial clusters In his professional career, he has been involved in projects at the Alat Free Trade Zone. It’s planned to develop industry hubs at the national level contributing to the safety standards at AFTZ where SME companies can establish their presence and and raising of productivity levels of certain sectors in the benefit from collaborating with major anchor businesses that on its port and logistic industry. Moreover, he is involved with turn will be mainly international players of their industries that will the associations relating with the maritime sector in port bring expected foreign direct investments. terminal operations, productivity, safety and other issues.

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International and local experiences in logistics at a glance

Asif Zeynalov Singapore’s strategic location in the heart of Southeast Asia Regional Director of Logistics & and at the nexus of major shipping lanes has made it an Infrastructure, important logistics hub and conduit for world trade. With an BP Azerbaijan-Georgia-Turkey expansive base of leading global logistics players, world-class infrastructure and excellent global connectivity, Singapore is one of the preferred logistics and supply chain management hubs for leading manufacturers across different industries. Preserving the country as a globally leading logistics What is Logistics Management? business requires maintaining a strong focus on developing Logistics is defined as a business planning framework for the a knowledge-intensive economy, whereby upgrading of management of materials, services, information and capital flows. skills, innovation and productivity are key focus areas. Logistics management is a supply chain management Singapore’s position as a leading logistics and transportation component that is used to meet customer demands through hub is seen as a critical enabler to its successes in oil & gas, the planning, control and implementation of the effective manufacturing, trading and other service sectors. movement and storage of related information, goods and Dubai, has positioned itself as a world class integrated services from origin to destination. Supply chain management logistics hub. Dubai’s development as an integrated logistics is a crucial process, because an optimized supply chain hub has transformed it into a pivot of business excellence by results in lower costs and a faster production cycle. raising the productivity of economic sectors and maintaining Today’s energy market in this region is more dynamic than high production quality standards. This was necessary if ever, with demand expected to keep rising while resources Dubai was to integrate into the regional and global economy become more diverse and dearer, and competition keener. and achieve its targeted growth. Dubai is now home to some The energy sector tends to operate in harsh and challenging of the leading global companies in the field of transportation conditions, often in remote, difficult to access areas. To meet and logistics and is pushing Singapore to be the leading hub these challenges, companies in the sector must invest in new across the industry. technologies and geographies while always looking for ways to balance risks and costs. In logistics management, unwise decisions can create multiple issues e.g. Non-Productive Time (NPT) which includes downtime to drilling and production operations, thus equating to loss of earnings or volumes of oil & gas produced. Oil and gas logistics require experienced, dedicated services. There is no room for error. Mistakes can be costly; therefore companies demand excellence from their resources. It is a matter of trust and peace of mind you get when you and your customers have complete confidence in your resources. Logistics Hubs Competitiveness is an undeniable phenomenon in liberalised, privatised and globalised business environments. In such conditions, countries tend to engage in more international trade via logistical operations in order to be competitive and to increase economic growth and it is no different here By learning from the industry, AGT will continue on its path in Azerbaijan. AGT L&I though, as a whole are proactive in to be a leading Logistics and Infrastructure business that developing a regional structure overall which encourages drives a competitive and streamlined operation to incorporate support and growth in an evolving economy and learning/ significant growth over the next 10 to 20 years. benchmarking from industry leaders such as Singapore and It is evident that in order to be successful in managing a Dubai that maintain growth within this logistics sector. logistics business, you need to ensure that all the cogs are The World Bank ranked Singapore as the number one aligned and that the central logistical cog runs safely, is logistics hub in Asia in the 2014 Logistics Performance Index. reliable and is cost efficient.

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Experience of BP Logistics & Infrastructure • BP in Georgia – provide support to Export Pipelines, Camps BP’s Logistics and Infrastructure (L&I) organization in and Utilities Management, remote site accommodation and Azerbaijan, Georgia, Turkey (AGT) region is the biggest in catering, Winter Planning for BTC, SCP, WREP pipelines BP globally, with 6000 staff and contactors contributing to • Waste management – efficient facilities to handle waste a business that is based on safe, reliable and cost effective generated offshore operations. The entire operation is supported by a strong combination of AGT L&I operate under one umbrella to standardise and drive internationally and regionally recognised industry leaders and efficiency through various land, sea, air transportation and a competitive pricing structure achieved through benchmarking associated support facilities. The portfolio of the AGT L&I across the industry. This tactic ensures that the services contracted is diverse with respect to people, contracts, and operational by L&I are both competitive and aligned to fair rates in today’s sites. harsh low oil price environment but also takes into consideration • Supply base operation - onshore base which includes the Caspian factors around the difficulty to access an open market. warehousing, outdoor storage, quayside operations, wet In addition, the organization works closely with the contractors to and dry bulk plant, fuel supply together with a large fleet of streamline their respective organisations and thus provide cost articulated trucks efficiency opportunities to both contractors and L&I. • Marine operations operates a mixed fleet of DP2 Platform support and anchor handling tug supply vessels to both meet Author’s biography the supply side and move the mobile offshore drilling units. In Asif Zeynalov works for BP for the last 22 years. He brings addition, primary crew transfer services using purposely built more than 27 years of experience through technical and fast crew boats with integration of the Ampelmann walk to leadership positions across Refinery, upstream onshore work system which is unique to the industry. and offshore Operations, Logistics, HSE which includes • Aviation Services – backup crew changes, P1 med– posts in Azerbaijan, North Sea UK, East Texas USA and rescue, emergency flights to remote locations, TAR Flare Tip Iraq. Mr. Zeynalov is a graduate of Future Leaders program replacement/installation (BP), Operations Academy at Massachusetts Institute of • Sangachal Terminal – operations and maintenance of Technology (MIT), USA, BS at Transportation Engineering ST non-industrial areas, facilities and equipment, catering from Azerbaijan Technical University and Mechanical services and ST Camp management, roads and signs Engineering from Azerbaijan State Oil Academy. In 2004 Asif maintenance and minor repairs for industrial and non- Zeynalov was awarded the Medal of Progress «Tərəqqi» by industrial areas, fuel supply the President of Republic of Azerbaijan.

11 in focus

Green corridor: win-win for customs and trusted companies

Cigdem Duru on top of e-declaration which was implemented within Azerbaijan and Georgia Supply Network this year. Rewarding trusted companies will encourage Operations Leader others to comply with the rules more carefully. Procter & Gamble Companies will be able to reduce logistics costs. Now it is time to convert this theoretical start into well executed practice.

On May 21ˢᵗ 2016, decree on the terms of “Green Corridor” Author’s biography and other gating systems for transportation of goods and Cigdem Duru holds a bachelor degree in Industrial vehicles across customs borders has been approved by Engineering and a minor degree in Management from the President of the Republic of Azerbaijan. The rules are Purdue University, USA. Her career started in TeknoSa, designed to be effective as of August 1st 2016. The main aim an Electronics Retailer in Turkey, in 2009. In 2011, of the decree is to simplify customs operations on the way to she started working for P&G in Supply Planning. After fully developed customs system in Azerbaijan. that she was assigned to a role in Turkish Warehouse With this change, four types of corridors have been introduced Operations until moving to Azerbaijan as Supply into the system. Green Corridor will enable companies fill Network Operations leader for Caucasus in 2016. out electronic declaration ahead of truck arrival which will be assessed within the context of risks. If there is no risk determined, goods can be imported to the country without any additional checks at the border. Goods which belong to companies in the cluster of Blue Corridor will undergo examination at the border. Yellow Corridor will be used for goods which need special importation license and they will be examined for certification compliance. Goods passing through the Red Corridor will be exposed to mandatory inspection of quality, quantity and price compliance. Many benefits come with the introduction of Green Corridor. First of all, some customs procedures will be speeded up thanks to the electronic declaration filled ahead. Once the risk free truck arrives to the border, days long waiting will be eliminated. Less touch will help to escape the risk of subjective interference and abuse of power. Great benefits of this decree are not limited to the ones mentioned above. Companies will be mostly interested in logistics cost reduction. Inventory means cash on hand. The inventory level we keep at our warehouses is mostly determined taking the Cycle Stock, Frozen Stock and Safety Stock calculations into account. The component “Frozen Stock” covers the inventory which we theoretically cannot touch during the Order Processing, Loading, Transportation or Custom Clearance type of operations. Given that Green Corridor will directly reduce the Transportation/ Custom Clearance time, there arises an opportunity of reducing the inventory level at the warehouse.For many FMCG companies, this reduction will be around 2-3 days. Implementation of Green Corridor will create a win-win environment for both the customs and companies. Azerbaijani customs will keep improving the infrastructure

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An interview with the General Director of YOM Logistics, Mr. Salih Tufekci

Salih Tufekci stop-shop provider for its clients and we keep challenging our General Director limits to keep doing best in our field. Besides simple value added YOM Logistics services as stickering, shrinking, bundling or co-packing, we also implement complex supply-chain operations that provide easy service, cost saving and safe operations to our clients. Being 3PL company gives a possibility to manage supply chain starting from international transportation and custom clearance to efficient stock management through inventory forecasting and Since when YOM logistics has been operating reverse logistics. All of these allow companies to spend more in Azerbaijan and what changes did it bring to time on their core business and increase profits. business environment? How do you see the future of logistics in The decision to start business in Azerbaijan has been taken in Azerbaijan? 2010 and since then we introduced new business setup and In recent years infrastructural development for turning the technologies in the field of logistics business locally. Having country into logistics hub in the region can be observed. Plans of Headquarters in Turkey, YOM Logistics has more opportunities Port of Baku moving, organizing free trade zone, improvement to benefit from the experience of our Turkish counterparts. of railway infrastructure will boost the development of freight Because of our previous experience in Turkey and knowledge, operations in the country and definitely increase the number of during less than 6 years we could build integration of 4 companies that outsource supply-chain operations. In YOM we warehouses and additional 4 branches across Azerbaijan. I can intend to expand through differentiation. We thrive to be above proudly say that YOM logistics is one of the few companies in accepted market standards. It shapes a new culture in logistics Azerbaijan that applies 3PL or third-party logistics. Our aim is to business in Azerbaijan. In our own supply chain we also motivate maximize satisfaction of our local and international clients. for competition by working with number of suppliers in different What are the advantages of 3PL? directions. Using brand new technologies we bring state-of- It has been long time ago that logistics cease to be just art service to Azerbaijan. To manage 1326 SKU would not be warehousing. Addition of intermodal approach and number of easier without automated shuttle pallet systems. We care about value added services makes it possible for clients to have more the products in our warehouse, using different temperature space to spend their energy on core businesses. We aim to control systems, fireproof storages for flammable and explosive simplify their everyday business with all up-to date technology goods, at the same time we take care of our employees. With and methods used across the world covering up to 8000 bright young people in our team we pay huge attention to health distribution points. All these assets increase responsiveness of and safety of them. These are all the implementations that leave company towards dynamic market needs resulting in efficient a legacy for Azerbaijan. stock management. Contact us: Baku-Shamakhi highway, 17 km, Baku, AZ1145 You mentioned about “simplifying businesses”. Phone: +994(12) 448 24 01 | Fax: +994(12) 448 24 04 Can you give more details? Mobile: +994(55) 455 14 54/55 It is a nude reality that today’s market requires companies to be www.yomlogistics.az more agile and respond fast to the changing needs. YOM is one-

13 in focus Expert review

Azerbaijan: new re-export hub of two continents – opportunity for entrepreneurs

Parviz Azerelli As an example, Hong Kong, Singapore, United Arab CEO & Co-founder Emirates and the Netherlands can be mentioned. According Crazy Innovations to statistics released by Hong Kong’s Census and Statistics Department in early 2015, 90% of Hong Kong's exports are re-exports and currently totals $451 billion. Singapore is around 242 billion (singstat.gov.sg) and Dubai 63 billion in non-oil re-export (2013, http://www.economy.gov.ae). The Netherlands, approximately 45% of exports, accounted $ 200 Currently, the impact of the crisis affects businesses in our billion is the re-export (Centraal Bureau voor de Statistiek / country and in the region as a whole. Instability of the national www.cbs.nl). Although all these countries are territorially and neighboring currencies resulted with the inertness of smaller than Azerbaijan, they utilize geographical positions businesses. Herein, business people are not inclined to invest in efficient manner. in unstable conditions. A sharp fall in oil prices had a huge Neighboring Turkey is also among the countries which benefits impact to the economy and reduction of GDP production and from the re-export. For instance, Turkish businessmen imports national income in accordance. So, what can be the way out wheat from Russia and after grinding in Turkey exports to of this situation? 80 countries packed flour. Or sunflower oil is imported from Russia and after packing in bottles exporting to 32 countries New era for Azerbaijan: improved logistics worldwide. These all are considered re-export and our system and re-export entrepreneurs can use the rail hub for similar works. Couple of month ago President Aliyev during the 4th Global And how can we benefit from the re-export? It can be Baku Forum announced: the post-oil period has already achieved by exporting the goods to another country with started and we are seeking to diversify our economy. He minor processing or packaging. Each country's legislation said that Azerbaijan is creating a transportation network. reviews re-export differently. In some countries’ legislation, “Azerbaijan has an important geographic location, which minor processing is not allowed. Therefore, prior to start gives an opportunity to develop the transport infrastructure. of re-export, country's legislation should be attractive for The East-West transportation corridor has recently been enterpreneurs. In addition, there is a need to increase the launched. Azerbaijan is trying to create a single transport line, number of logistics centers for re-export, customs offices stressing the importance of the North-South transportation should be established in these centers which will control this route. Transport corridors increase the geopolitical importance process and the necessary paperwork will be in place. In of Azerbaijan.” this case logistics centers will be not only a place of goods Indeed, we are entering the post-oil era and the time has come storaging, but rather deal with registration, packaging, minor to use country's second most important strategic advantage, processing and export documentation. These logistics its geographical position. Actually, we call our country so- centers may be established in special zones or areas of called gateway to Europe and Asia and we could turn these private entrepreneurs. Also, if applicable import duties, during words into reality. It can be possible through East-West and export it must be returned back to entrepreneurs. North-South railway roads which is in completion process. By using the new railway lines connecting the East and the Based on our rail routes, this railway roads will connect West, our country like the UAE could become a second Dubai. Europe and far east China, Russia and (via Iran) Pakistan. After the oil boom, due to towering skyscrapers in Baku city, In fact, strategic and geopolitical importance of the railway our capital often called the second Dubai. However, in fact lines, still don’t cover discussions about benefits for our Dubai is more well-known as transit and re-export hub than oil entrepreneurs. Therefore, I would like to go into the details of city and goods coming from China, Europe and Middle East a number of purely entrepreneurial approach to the spectrum. utilizing city ports as a transit hub. A number of countries who use the geographical position of the country by creating import and export Hubs turned into a Second Dubai major re-export centers and increased their economic power. Dubai before known with the tallest skyscarpers and artifical Re-export means that the product is first imported and islands has been one of the major trading centers of the becomes the property of an Azerbaijani company, undergoes world. It is measured in billions of dollars worth of agricultural, minor processing and, possibly after being repackaged and construction, electronics, etc. The location were trading regrouped, is exported to another country. center of hundreds of good types, and today maintains its

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status. Enterpreneurs from different countries are taking part obtain very good income. It’s will be possible taking goods in the establishment of trade relations in this hub. It is located from Russia, India, Iran, China and EU countries and resell on main trade routes and re-export and transit centers are after processing and packaging to the same countries. For believed to have been the reason for the city's development. example, purchased in bulk chemical products from India If we look at the map of the railway roads connecting Azerbaijan can be used for the processing in Sumgait with the additions and other countries, here is a list of countries (such as China, purchased from Russia and can be sold to Turkey as a packed EU, Russia, Iran, Pakistan, India, Azerbaijan, etc) that trade final product. Or, taking a slight vegetable products from Iran with each other in the worth of $ 700 billion. For example, and sell in Russia after minor processing. Hundreds of such China and the EU trade turnover alone is $ 521 billion and examples can be cited. Herein, our enterpreneurs are able to transportation of cargo from China to Europe is averaging carry out thousands of ideas if they would have an access to 45 days of arrival of the Vessel, which is often implemented such kind of markets. by sea. But the Baku-Tbilisi-Kars railway passing through In the end, it should be noted that the work does not end our country will reduce it to 20 days. As well as cargo ships with construction of the railway. The government should from India to Europe instead of going a long way could be review domestic legislation related to export and re-export brought to port of Abbas (Iran) and from there by rail through and facilitate bilateral trade relations with countries which will our country may be delivered within 15 days to Europe or use this hub for protecting local enterpreneurs during export Russia. All these lines on the basis of new railroads will of goods under "Made in Azerbaijan" brand. Hopefully, re- change in many aspects geopolitical and economic situation export will be the beginning of the post-oil era and the main in the region. financial source of a country.

Born Traders How entrepreneurs can take an advantage from this situation? Author’s biography Of course, as a country the state budget will get a fixed Parviz Azerelli carries more than 10 years of experience amount from the transit revenues, but entrepreneurs are able in International Trade, Business Development and to generate more revenue. To do this, local entrepreneurs Innovations. He travelled to more than 40 countries have to start with construction of logistics centers. As a rule, for business issues, attended different type of several things in these logistics centers must be different from business meetings in USA, Germany, Italy, Israel, the previous ones. If to create production, packaging plants South Korea, China, etc. Currently, as a co-founder and cold storages in logistics centers, they can bring big of Crazy Innovations offers innovative solutions to amount of revenue for already "Born Traders" Azerbaijanian business people. Nowadays, one of the present-day enterpreneurs. new approaches for the entrepreneurs, associated It should be mentioned that it is too early for us to be with ideas and support of Crazy Innovations team, is electronics or ICT country, but we are able to combine the the establishment of modern logistics centers and re- 700-billion-dollar trade geography and our entrepreneurs can export trade.

15 member contribution

Azerbaijan embarks on major tax reforms

Nuran Kerimov, decreasing the tax burden and improving tax administration; Managing Partner further developing the Tax Free system under which tourists Deloitte & Touche LLC can claim VAT refunds at all customs points; applying VAT to profit margins in retail trade; implementing differentiated VAT rates; and introducing a monthly fixed tax (a lump sum tax) for individuals engaged in small-scale entrepreneurship. One of the most anticipated changes concerns the way taxpayers can enjoy the benefits provided under the double The sharp decline in commodity prices has placed Azerbaijan taxation treaties that Azerbaijan has signed with foreign among the countries experiencing new economic challenges. states. Current regulations governing the administration of As the country’s economic model requires substantial double taxation treaties have a number of shortfalls, including revision, so do its fiscal policies. Taxes bringing the lion’s the lack of automatic tax relief and the excessive paperwork share of revenue to the state budget are yielding less as the required in order to claim treaty preferences. We expect a overall level of business activity in the country diminishes. simplification of the current regulations and the replacement Although slightly overestimated in its power, taxation remains of paper-based procedures with electronic alternatives. one of the most effective tools for governments seeking to stimulate economic growth. The Decree of the President of Transfer pricing Azerbaijan “On the Areas for Tax Reform in 2016” signed on 4 Azerbaijan remains one of the last states in the CIS that August 2016 (“Decree”) comes as a logical attempt to adjust has not yet developed comprehensive transfer pricing tax policy to suit the new economic realities. regulations. According to the Decree, we should soon expect Attempts to compensate lost tax revenues from the oil and to see the introduction of transfer pricing rules. While the gas sector manifest themselves in substantial tax pressure on obvious intention for the government is to use the new tax industries other than oil and gas. The ever-increasing number tool to increase tax revenue, businesses can hope to gain of tax assessments resulting from the ambiguity of Azerbaijani much needed clarity in such matters as what the acceptable tax law and the heightened focus on tax collection is adversely profit margin for transactions between related parties is. It is affecting investor confidence. These are just a few observations clear that the transfer pricing regulations should not diminish laying out the background for the announced tax reforms. the country’s investment attractiveness, or the ability of The Decree is undoubtedly a landmark decision in reforming Azerbaijani companies to succeed on international markets, the country’s fiscal regulations, and once implemented, the by excessively increasing the compliance burden. Therefore, 2016 reforms will be the second largest development phase it is important that while drafting the new legislation, the for the country’s tax policy since the adoption of the current government follow the best practices available internationally Tax Code in 2000. The Decree envisages 21 major tax policy and carefully study the experiences of the countries in the reforms and some of them are clearly radical in terms of the region, such as Russia and Ukraine. impact that they could have on doing business in Azerbaijan. It is worth noting that the President has tasked the Ministry of Taxes to develop detailed regulations for the implementation of the 21 tax reforms within just three months, which surely shows how much importance the Azerbaijani government places on the upcoming changes. Easing the tax burden and supporting economic growth In times of economic slowdown, decreasing the tax burden is among governments’ favorite recipes for recovery. Yet, there are substantial number of economists who share quite the opposite view. Broadly speaking, the current tax rates in Azerbaijan are in line with those adopted in the other countries of the region. The Decree includes reform items, such as

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and documents, which at times make desk audits essentially the same as field tax audits (audits conducted by authorities primarily by visiting the taxpayer’s office). Responding to the issue, the Decree limits the period in which desk tax audits may be initiated to 30 days from the submission of a tax declaration. The voluntary disclosure of past tax liabilities without substantial penalties is set to become possible. This change should enhance the trust between the taxpayer and the authorities and benefit the overall tax administration in the country. Fighting the shadow economy Enforcing tax compliance In terms of the scale and degree of the reforms aimed at greater A number of items in the Decree make it clear that the transparency in Azerbaijan’s economy, 2016 is undoubtedly a Azerbaijani government is keen to follow the contemporary remarkable year. Massive reforms easing import and export of international trends of increasing tax control and compliance. goods are having a profound positive impact on easy flow of In addition to the existing CFC (controlled foreign corporation) goods across Azerbaijan’s borders, which have resulted in a regime, additional anti-avoidance rules are to be adopted. substantial increase in transparency throughout the economy. The legislation will also be amended to tighten the control The strict enforcement of customs regulations to ensure the over dealings with offshore financial centers. accurate documentation of import and export operations is The Decree tasks the Azerbaijani Ministry of Taxes with contributing positively to transparency and compliance across facilitating the signing of bilateral agreements with foreign the chain of economic operations. countries for the automatic exchange of financial information The Decree takes a further step in this regard and instructs the to improve the transparency of Azerbaijani tax residents’ Ministry of Taxes to develop regulations promoting cashless financial information. transactions and restricting cash-based business practices. The The Ministry of Taxes has established a good track record expected government measures against the shadow economy in delivering electronic services, such as the electronic VAT will undoubtedly boost transparency in the country, encourage deposit account concept. Now it seems the Ministry is trying more businesses into legitimate and traceable domains, increase to develop a digital platform for the issuance and circulation tax revenue and stimulate business for banks. While various of commercial waybills. The measure is designed to give the approaches toward combating excessive cash operations can authorities’ more control over the flow of commodities into the be identified in international practice, in our opinion Azerbaijan economy and prevent potential tax fraud. should emphasize options that encourage non-cash settlement The Decree also suggests that the Azerbaijani tax authorities as opposed to harsh penalties. It would also be advisable to consider e-commerce to be among the new sources for carry out this particular reform gradually to avoid major shocks. increasing tax revenues. It remains to be seen in what manner the government will tax online trade, but one thing is Conclusions clear—any tax measure should be reasonable and should by The Presidential Decree paves the way for massive no means discourage major international players in this field improvements to the tax system. New concepts such as from working in Azerbaijan or impede new technologies from advance tax ruling and voluntary tax disclosure introduce a reaching Azerbaijan. completely new type of relationship between the state and taxpayer based on trust. The logic behind the announced tax Advance tax ruling reforms is clear and the intent is positive. What is important The introduction of the advance tax ruling concept has long now is that the regulations intended to implement the reforms been on the business community’s wish list for the government. are carefully drafted with the active involvement of the Having greater predictability of making investments certainly business community and by drawing on best international does appeal to many taxpayers. Since the concept embraces practices. an unprecedented approach toward relationships between taxpayers and the authorities in Azerbaijan based on trust, drawing on the best available international experience is an Author’s biography obvious recommendation for the government. Nuran Kerimov is a Tax Partner with Deloitte Azerbaijan. Nuran has devoted most of his professional life to the Improving tax administration practice of local and international taxation. He has significant One of the challenges that taxpayers currently face is the experience in advising both international and Azerbaijani deficiencies in desk tax audit (audits conducted by the companies and individuals on a variety of tax and associated authorities based on available data without visiting the business issues. Nuran is currently serving as a member of taxpayer’s office) procedures. In some cases, such audits can the Board of Directors of AmCham. He is also a member of be lengthy and accompanied by excessive requests for data Tax and Customs Committee of AmCham and takes active part in policymaking initiatives of the organization.

17 member contribution

IPOs in Azerbaijan: A new era is here the issuer is not required to repay the capital to its investors; Ulvia Zeynalova-Bockin, these equity investments are interest free; there is no security Senior Associate of the requirement in order to raise capital; and, if a company suffers Baku office of Dentons losses, they would be shared with new investors. It is true that the company may decide to pay dividends, but it will not Kamal Mammadzada, be obligated to do so. And if a particular investor wishes to Partner of Baku office of Dentons exit, it will be able to sell its shares freely on the market with minimal effects on the capitalization of the company, i.e. the We would not reveal a secret by saying that sufficient working old investor will be replaced by a new one. capital is essential to the success of any business. And in the In other words, an IPO is recognized globally as a cost- lifetime of any business, there inevitably comes a time when it effective mode of raising capital, which is currently needs additional financing to support its further development underutilized in Azerbaijan. But thanks to the latest legal and and growth. There is, of course, a plethora of choice when it regulatory developments, Azerbaijani businesses may now comes to modes of financing—shareholder loans, borrowing take full advantage of this mode of financing in both local and from a bank, issuing debt securities, raising funds from foreign capital markets. While the local capital market can private equity and initial public offerings—to name a few. In still be characterized as developing, it definitely has potential, this article we will attempt to demystify the IPO for our readers and significant efforts have been made by the Government of and offer qualified encouragement for businesses thinking Azerbaijan over the past several years to boost its structural about taking the IPO path in Azerbaijan. efficiency and competitiveness. The latest examples of such efforts include the launch of the Listing Advisory Program by the Baku Stock Exchange in 2014 and the adoption of the Securities Market Law in 2015 (the latter has now become the cornerstone of capital market regulation in the country). Latest legal and regulatory developments The adoption of the Securities Market Law created a comprehensive legal framework for the development of capital markets. Namely, the law has introduced new categories of professional participants in the securities markets (such as investment companies, investment fund depositories and a nationwide central depository), created a sense of stability by Initial Public Offering – why bother? issuing licenses for an unlimited period of time (previously, First things first, what is an initial public offering or an IPO? they were issued for a period of five years), increased the An IPO is a type of offering in which shares of a company are level of trust in capital markets by setting forth rules for sold to the general public on a securities exchange for the previously unregulated activities (such as investment advisory first time. IPOs are typically used to raise additional equity services, preparing investment analysis, etc.), and increased capital to fund the expansion of current activities, attract the quality of services by requiring that executives and certain strategic investors, monetize the investments of early “angel" employees of professional participants in securities markets investors, determine the market value of the company, realize possess relevant educational qualifications and relevant a novel business idea or simply boost the reputation of the professional experience, as well as making it easier and less company on the market. expensive to attract capital from certain institutional investors. There are several advantages of undertaking an IPO over In the months following the adoption of the Securities Market other modes of financing. Namely, once the money is raised Law, the State Securities Committee1 has introduced a

1 The State Securities Committee has recently, among other governmental authorities, been reorganized into the Financial Markets Supervision Chamber, which was established further to Decree of the President of Azerbaijan “On Establishing the Financial Markets Supervision Chamber of Azerbaijan Public Legal Entity”, No. 760, dated February 3, 2016.

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number of regulations, which regulate a wide range of areas Mechanics of an IPO related to issuing, placement and circulation of securities An IPO in Azerbaijan involves two main phases—the (inside and outside of Azerbaijan), as well as licensing in the preparatory phase and the issuing and placement phase. securities market. The preparatory phase should involve an initial assessment of Additionally, efforts are currently under way to complete the company’s corporate structure, and that of its capital, to allow establishment of a single regulator of financial markets, for taking the necessary actions to prepare the company for the the Financial Markets Supervision Chamber, which has IPO, for instance, reorganization of the company into a proper replaced the State Securities Committee, the State Insurance corporate form (under Azerbaijani law, only open joint stock Supervision Service, under the auspices of the Ministry of companies may issue publicly-traded shares). At this stage it is Finance, and the Financial Monitoring Service, under the very important that the company engage a legal advisor and an auspices of the Central Bank. The Chamber is stated to be investment company to guide it through the process. created for the purposes of licensing, regulation and oversight The second phase commences after the preparatory phase over the securities market, the activities of investment has been successfully completed and the company is ready funds, insurance companies, credit institutions (banks, for the IPO. It specifically encompasses the following steps— non-bank credit institutions and the postal operator), and adoption of a resolution on the emission of shares, the payment systems, as well as improving controls in the field drafting of a Prospectus or, where applicable, an information of prevention of the legalization of proceeds from crime and memorandum, the registration of shares with the Financial terrorist financing. Markets Supervision Chamber and the approval of the Further, new and flexible listing categories have been Prospectus (information memorandum), the disclosure of the introduced in the Baku Stock Exchange, allowing companies Prospectus (information memorandum), the public offering of to choose from among a Tier I Listing, a Tier II Listing or shares on a stock exchange, and, finally, the registration and an Alternative Markets Listing according to their needs and disclosure of the report on the results of the IPO. abilities. Once the company has issued and listed its shares In relation to each of the above-mentioned steps in the issuing with the Baku Stock Exchange, it may also list up to 40% of and placement phase, the Securities Market Law sets forth a its shares with foreign stock exchanges, subject to obtaining specific list of instructions to be followed, as well as content the consent of the Financial Markets Supervision Chamber. requirements in relation to the resolution, the Prospectus Finally, the Baku Stock Exchange has initiated the Listing (information memorandum), and the report on the results of Advisory Program within the framework of the State Program the placement. Some of these requirements have already for the Development of the Securities Market in Azerbaijan been included in the law, while some are expected to be in 2011-2020. The Program is intended to encourage the promulgated by the Financial Markets Supervision Chamber development of local capital markets, listings by local in the near future. companies and the offering of stocks and bonds by local issuers to the general public in Azerbaijan. The program Authors’ biography has attracted high-level interest and has the backing of the Ulvia Zeynalova-Bockin is a senior associate in Dentons’ leading audit firms, local licensed brokers and law firms. Baku office. Her practice includes banking law, Islamic Dentons’ office in Baku is one of the earliest partners of the finance, real estate finance, mergers and acquisitions as Listing Advisory Program and, as such, offers various free well as corporate law and finance. Ulvia also has experience and fee-based services to potential issuers in Azerbaijan. in securities and financial regulation, including work with Free services include assessment of the adequacy of the the Corporation Finance Division of the U.S. Securities& issuer’s corporate structure for the purposes of a listing Exchange Commission in Washington, DC. and providing relevant recommendations, providing general Kamal Mammadzada is a partner in Dentons’ Baku office. Kamal information about the process of issuing securities, including has extensive experience in corporate, privatization, banking any required approvals, as well as general tax advice related and securities law. His work has involved advising on company to issuing securities. management and corporate governance, the structuring of transactions, foreign investment, financing and other matters. Kamal and Ulvia have provided legal support to local and international clientele in high-profile matters, including advising on the first IPO to be listed on the Baku Stock Exchange; advising major investment banks on the enforceability of ISDA Master Agreements, Global Master Repurchase Agreements and Global Master Securities Lending Agreements; and participating in the privatization of the largest bank in Azerbaijan.

19 member contribution

An Interview on pharmaceutical situation in Azerbaijan Askar Talipov, • Common rules for all players in the market • Affordable prices for patients Head of Representative office Sanofi in Azerbaijan • Decrease of unethical promotion level • Improvement of the services in pharmacies

Could you please share you view about the diabetes market? The prevalence of diabetes in Azerbaijan is 2053.4 per How do you assess the dynamics of the phar- 100000 of population (2014)1 and more than 204 thousands maceutical market of Azerbaijan? patients are registered in Republican Endocrinology Center2. Today the pharmaceutical market of Azerbaijan is experienc- According to WHO the number of people with diabetes in the ing the period of rearrangement. It carries many advantages, world has risen from 108 million in 1980 to 422 million in 2014 including lots of perspectives and opportunities, as well as, and diabetes prevalence has been rising more rapidly in mid- new conditions for the considerable increase of the services’ dle- and low-income countries3. Type 2 diabetes comprises quality. Now when all the prices are regulated, in order to be the majority of people with diabetes around the world, and is competitive in front of the patients, there is a necessity to in- largely the result of excess body weight and physical inactivity. crease services in pharmacies, to have high-level pharma- Azerbaijan introduced a State program on control of diabe- ceutical professionals, the quality and the quantity of medica- tes, clinical protocols (but these protocols adherence are not ments presented and the effective supply scheme. monitored) and registration of patients. The key strategies According to BMI report, the devaluations of Azerbaijani within the framework of the State program on control of dia- Manat in 2015 led to short-term economic challenges, includ- betes are following: primary prevention of type 2 diabetes, ing an adverse impact on consumer spending power. Since providing of an adequate medical care to patients, training the pharmaceutical market is reliant mostly on out-of-pocket programs for patients (self-control of the disease) and an ef- spending, the companies suffer financially. The country is fective medicines provision and diagnostic products. almost entirely reliant on imported medicines, and therefore The government covers insulin (injection pens for children; BMI envisages demand for medicines to fall as patients can’t ampoules for adults) and medical observation on the annual access or afford them. Pharmaceutical imports fell by over basis (half of the people with diabetes are taking part). 20% in 2015 and are forecasted to fall by over 30% in 2016. We suppose that we still have many people in Azerbaijan with Currently the wholesale sector is very fragmented, with many undiagnosed diabetes, many patients with diabetes still need companies supplying a relatively small population. the improvement of their treatment and it requires collabo- Despite of price regulation, it should be mentioned that Azer- ration of all stakeholders: medical community, government, baijan pharma market is very attractive, as it carries big po- pharmaceutical companies etc. tential driven by high GDP level per capita and number of population. Today, it is a difficult period for establishing new price strategy, but afterwards the market will continue to grow at small double digit. What can you say about the pricing for medicines on the pharmaceutical market? Which factors influenced on medicines price decrease? In Azerbaijan, since the last year the government regulates prices for medicines. The regulation of the pharmaceutical market will help Azerbaijan in the following aspects: • Decrease of unfair competition level • Possible decrease of the parallel import

1http://www.stat.gov.az/source/healthcare/ 2http://report.az/sehiyye/azerbaycanda-sekerli-diabet-xestelerinin-sayi-aciqlanib/ 3http://www.who.int/mediacentre/factsheets/fs312/en/

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Could you please tell about the strategy of Sanofi in Azerbaijan? What transformative actions are you taking given the challenging economic environment? First of all, the company still sees its presence on Azerbaijani market and makes every effort to provide the medicines to our patients. However, it should be also mentioned that the company needs to assess and adapt its long-term objectives in the market. This will include approval of our current portfolio and introduction of new medicines, bearing in mind changing market needs and development prospects. Taking the path of preserving and strengthening our presence in the market, we also see the need for a rational approach in spending and more focused investment volumes. Under these conditions we also count on the loyalty and support of our commercial partners, through which we carry out the distribution of our products, at the same time we are taking on a significant portion of the costs associated with the devaluation and other risks.

Author’s biography Askar Talipov joined Sanofi in 1997 since the start of the business in Central Asia. During 19 years in the company, Mr. Talipov has been working in many departments and in different countries, including Kazakhstan, Uzbekistan, Eastern Europe and Azerbaijan. Before the appointment to the current position, Mr. Talipov was Commercial and Supply Chain Director of Sanofi Central Asia.

21 member contribution

Standards as a tool to improve operational efficiency and promote your business

in different sectors in the UK that can be associated with stan- Nargiz Karimova dardisation. Partner, Assurance services Ernst & Young Azerbaijan

Orkhan Rajabov Manager Ernst & Young Azerbaijan

As defined by the British Standards Institution (BSI) “stan- Source: ONS Supply-Use Tables 2012, ONS GDP Low-Level Aggregates 2014 dards present the consensus view of products and services, Q4, BSI Standards in Industry Survey, Cebr Analysis managing process or even improving behaviours”. They help companies to ensure that their products, services and inter- Another indicator that is influenced by the application of stan- nal processes comply with internationally accepted practices. dards is GVA (Gross Value Added) which shows the amount In other words, standards are a series of requirements that of money contributed by the products or services towards the can be national, which are established by the corresponding costs of the company. Estimated increase to GVA (billions) body within the country, and international that can be applied of various industries can be observed in the graphic below. by any company all over the world. Examples of standards organisations are the International Organization for Stan- dardization (ISO), the International Electrotechnical Commis- sion (IEC), the International Telecommunication Union (ITU), American Bureau of Shipping (ABC), Fair Trade, and so on. Among the most common and widely accepted standards, there are the Environmental Management Systems (EMS) Standards, the Total Quality Management (TQM), Human Rights Management, and so forth. Benefits of standards for companies Standards help companies to constantly improve the quality and increase efficiency by helping them to design time-saving processes and to reduce operational deficiencies which in turn will decrease costs and expenses. Source: ONS GDP Low-Level Aggregates 2014 Q4, Cebr analysis Complying with standards ensures not only the quality of the products, increases operational efficiency but also facilitates To indicate the effect of ISO 9000 certification on financial the international trade. Most of the products in the market indicators, a research was conducted in Singapore among need to be standardised in order to be easily exported. 70 companies (Sharma, 2005). The study compared pre- and Additionally, standards assist in spreading technical informa- post-certification periods in two groups of companies: certi- tion to the suppliers. Most of the time big manufacturers have fied and non-certified groups. The results demonstrated that several suppliers if not hundreds. Therefore, it is crucial for the certification has a strong positive impact on the compa- them to standardise the components and adopt both internal nies’ financial and non-financial indicators. The figure below and international standards for effective distribution of neces- depicts the comparison of the amount of total revenue in sary information about products to the suppliers. these two groups (year 0 is a year of certification). The figure below illustrates an increase in the revenue (billions)

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To conclude These findings prove that compliance with standards has a positive impact on companies and macroeconomic situation in the country as during the crisis businesses have an opportunity to increase their profit with a quite accessible solution as standardisation. Subsequently, this will improve the overall image of Azerbaijani market that can attract overseas investors and foreign direct investment (FDI). On the other hand, taking into account that today Azerbaijani government pays much attention to support exports, standards can be one of the means to open the door of foreign markets for the national products and services.

Source: D. S. Sharma, the International Journal of Accounting 40 (2005), 151-172 Impact on exports As already stated compliance with standards has influence not only on reputation and revenue but also on the ability of companies to export their products. Domestic companies will have an opportunity to compete with foreign firms in the market in terms of product quality, and barriers to trade will be lowered as the result of internationally accepted standardisation and standards. That may lead to economies of scale, as the amount of produced goods will increase. The figure below compares the percentage of exporting companies that use and do not use standards.

References Hogan O., Sheehy C., Jayasuriya R. (2015). The Economic Contribution of Stan- dards to the UK Economy. The Centre for Economics and Business Research Ltd. London: British Standards Institution. Sharma S. D. (2005). The association between ISO 9000 certification and financial performance. Illinois: The International Journal of Accounting. 9001 Simplified | business-friendly tools for ISO 9001. (n.d.). Retrieved September 07, 2016, from http://www.9001simplified.com/iso-9001-resources.php?section=1

Authors’ biography Source: Annual Business Survey 2012 – Export and Import Activity, BSI Stan- Nargiz Karimova: Partner, Assurance services dards in Industry survey, Cebr analysis Ms. Karimova is an assurance partner at EY Baku office. She joined EY in 2002. Nargiz holds Bachelor and Master’s degree in Contribution of standardisation to GDP growth International Economic Relations from Azerbaijan State Economic In consequence of positive impacts on the companies’ University. She has more than thirteen years of work experience at financial indicators and opportunity to increase exports, EY Baku practice, with focus on IFRS, US GAAP and Azerbaijani overall economy of any country can benefit from com - statutory, and PSA audits. Nargiz is a member of the Association of plying with standards. According to the research con - ducted in Germany, 0.72% of GDP per year between Certified Chartered Accountants. 1992 and 2006 is a contribution of standardisation, Orkhan Rajabov: Manager which is equal to 16.77 billion per year. On the other Mr. Rajabov leads Cleantech and Sustainability Services in Azerbaijan hand, 0.81% of GDP in France per year between 1950 and specializes in sustainability reporting assurance and advisory. and 2007 is associated with standards (Hogan et al, Orkhan holds a Bachelor degree in Accounting and Audit and an 2015). Another research was organised in Canada, MBA in Finance from Azerbaijan State Economic University, as well which determined that 17% of an increase in labour pro - as MSc in Finance from Durham University. Orkhan specializes ductivity and 9% of economic growth between 1981 and in sustainability strategic advisory and sustainability reporting 2004 was achieved with the help of standardisation. assurance and advisory. He is taking an active part in forming the professional sustainability community in Azerbaijan.

23 development & education

Why Logistics and Supply Chain Management is important for an Organization

Prof. Dr. N.J. Delener employers seek employees with an abundance of Dean, School of Business LSCM skills and knowledge. Logistics and supply chain ADA University management is critical to business operations and success for the following reasons: [1] Basically, the world is one big supply chain. Supply chain management touches major issues, including the rapid growth of multinational corporations and strategic partnerships; global expansion and sourcing; fluctuating Logistics and Supply Chain Management (LSCM) is gas prices and environmental concerns, each of these the critical backbone to business organizations today. issues dramatically affects corporate strategy and bottom Effective market coverage, availability of products at line. Because of these emerging trends, supply chain locations that hold the key to revenue recognition depends management is the most critical business discipline in the upon the effectiveness of supply chain management rolled world today. out. Very simply stated, when a product is introduced in [2] Logistics and supply chain management is necessary the market and advertised, the entire market in the country to the foundation and infrastructure within societies. LSCM and all the sales counters need to have the product within a well-functioning society creates jobs, decreases where the customer can buy and take delivery. Any glitch pollution, decreases energy use and increases the standard in the product not being available at the right time can of living. Specifically, a society with a highly developed result in the drop in customer interest and demand which supply chain infrastructure that includes interstate highways, can be disastrous. Transportation network design and a large railroad network, ports and airports is able to trade management assume importance to support sales and many goods at low cost. Business and consumers are marketing strategy. able to obtain these goods quickly, resulting in economic Inventory control and inventory visibility are two very growth. Clearly, the impact that SCM has on business is critical elements in any operations for these are the significant and exponential. Two of the main ways SCM cost drivers and directly impact the bottom lines on the affects business include: balance sheet. Inventory means value and is an asset to • Boost Customer Service the company. Every business has a standard for inventory LSCM impacts customer service by making sure the right turnaround that is optimum for the business. Inventory product assortment and quantity are delivered in a timely turnaround refers to the number of times the inventory fashion. Additionally, those products must be available in is sold and replaced over a period of twelve months. the location that customers expect. Customers should also The health of the inventory turn relates to the health of receive quality after-sale customer support. business. • Improves Bottom Line In a global scenario, the finished goods inventory is held LSCM has a tremendous impact on the bottom line. Firms at many locations and distribution centers, managed value logistics and supply chain managers because they by third parties. A lot of inventory would also be in the decrease the use of large fixed assets such as plants, pipeline in transportation, besides the inventory with warehouses and transportation vehicles in the supply distributors and retail stocking points. Since any loss of chain. Also, cash flow is increased because of the inventory anywhere in the supply chain would result in delivery of the product can be expedited, profits will also loss of value, effective control of inventory and visibility of be received quickly. Furthermore, it reduces inventory inventory gains importance as a key factor of logistics and costs, provides efficient manufacturing strategy as well supply chain management function. as better medium for information sharing between parties. Logistics and supply chain management is an essential Supply chain management helps streamline everything element to operational efficiency. It can be applied to from day-to-day product flows to unexpected natural customer satisfaction and company success, as well disasters. With the tools and techniques that LSCM offers, as within societal settings, including medical missions; you`ll have the ability to properly diagnose problems, disaster relief operations and other kinds of emergencies; work around disruptions and determine to efficiently move cultural evolution; and it can help improve quality of life. products to those in a crisis situation. Because of the vital role LSCM plays within organizations,

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ADA University School of graduate degree of its kind-and hone Business Logistics and Supply their supply chain expertise through an intensive program that includes: Chain Management Program • a challenging curriculum The MBA in Logistics & Supply Chain • cutting-edge research, including an industry Program provides learners with an in-depth related project insight into logistics and supply chain. The • communication skill development logistics skills and business knowledge you • leadership training will gain in the Logistics and Supply Chain GRATA International is an international law firm • extensive industry interaction founded in 1992 and it is now a leading legal counsel in Management program at ADA University Effective Logistics and Supply Chain the Eurasian region. Lawyers of GRATA International School of Business can be applied to any practices have become essential to have been recognized by leading international industry. The program provides unique firms in many industries, particularly ratings including The Legal 500, Chambers Global, opportunity for practicing Logistics & Supply since globalization has widened the Chambers Asia-Pacific, IFLR 1000, Who’s Who legal, Chain professionals who aspire to move Asialaw Profiles, Chamber Asia Pacific 2016. GRATA geographic distance between suppliers, International team aims to set the standard for legal up their career ladder by acquiring a right manufacturers, and customers. support and to online monitor the needs of our clients mix of technology and managerial skill and With the business world stretching into and to provide them with individualized legal solutions knowledge sets to tap the fast emerging the global marketplace, employers are in order to help them carve out a leading market niche. opportunities on the one hand and lurking actively seeking professionals with a mix Having been at the cutting edge of regional threats on the other. This program provides of supply chain and logistics knowledge. developments ever since its establishment, and a practical, management perspective of Once students graduate from the Logistics constantly striving to extend the scope of its services to the following areas of logistics: distribution, and Supply Chain program, they will be clients, at the beginning of 2005 GRATA International transportation, international logistics, able to contribute logistics expertise to opened its office in Azerbaijan. inventory control, sustainable logistics ensure business success. The attorneys of GRATA Azerbaijan (Grata Azerbaijan practices, key performance indicators, LLC), relying on their versatile expertise and supply chain finance, leadership in a supply Author’s biography qualification in Azerbaijani law and ability to draw on chain role among others. Prof. Dr. N.J. Delener is the Founding the internationally recognized expertise of the GRATA Supply Chain focuses on efficiently Dean of the School of Business at ADA International network, provide legal support to clients’ activities in various sectors and industries, including managing systems of people, resources, University. Degrees earned include a Ph.D. from the Graduate School at the City FMCG manufacturing and sales, the pharmaceutical information, that deal with the movement industry, real estate and construction, banking and of a product or service from supplier to University of New York and an M.B.A. as finance and subsoil use. They are also able to provide customer. Logistics entails planning and well as Advanced Professional Certificates assistance in connection with cross-border M&A organizing all movement of said product or (APC) in Marketing and Strategic Planning and financial transactions, capital markets projects and project finance in the CIS and Caspian region, service. The aim is to optimize the supply from the Stern School of Business at New York University. Professional activities and thus demonstrating the key strengths of the firm: the chain the most cost-effective way, helping ability to handle the most complex multi-jurisdictional significant accomplishments in scholarship companies to build a competitive edge. assignments in a cost-efficient manner while delivering include publication of the recent book Logistics & Supply Chain (LSC) program high-quality results. “Service Science Research, Strategy The lawyers of GRATA International provide access attracts business professionals from and Innovation: Dynamic Knowledge to top-tier legal talents with experience in the following across the globe to experience its unique Management Methods” which explores sectors: combination of master's level coursework, strategy development, leadership, professional development, and industry ∙ Banking & Finance management, marketing, service interaction. ∙ Construction & Infrastructure contracts, e-government, e-commerce, ∙ Industry & Trade and human capital management as well ∙ Natural Resources as publications of about 20 books and ∙ Telecommunication & Transport

more than 100 articles in prestigious, CONTACT PERSON refereed journals including the Journal of Business Ethics, the Journal of Advertising Ms. Ummi Jalilova Research, the Journal of Academy of Marketing Science, the Journal of Business Partner, GRATA law firm Director for Azerbaijan Research, the Journal of Emerging Markets, the Journal of Marketing Theory 13A, Koroglu Rahimov street and Practice, the Public Administration ABU Park, Baku, AZ1072, Journal, the International Journal of Republic of Azerbaijan In just twenty-four months, LSC students Bank Marketing, the Journal of Marketing Tel: +994 (12) 465 43 65 earn a Master's of Business Administration Fax: +994 (12) 465 43 66 Management, the Journal of International E-mail: [email protected] in Logistics and Supply Chain degree- Consumer Marketing, and the Journal of www.gratanet.com Azerbaijan`s first logistics & supply chain Euromarketing among others.

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Hokuma Karimova, workshops, lectures, screenings and a specific program Head of PR and Communications/ for artist residencies, YARAT aims to give access to broad YARAT Friends Membership Platform audiences of all ages. The public program invests proactively in building communities and nurturing a wider understanding of, and participation in, contemporary art. From January, 2016, YARAT had more thank 120 events, 5000 participant, more than 20 schools and 80 class groups involved to its different educational activities. YARAT is an artist-founded, not-for-profit art organization based in Baku, Azerbaijan, established by Aida Mahmudova YARAT Freestyle is a free and democratic platform for music, in 2011. YARAT (which means ‘create’ in Azerbaijani) is film, discussion, architecture, theatre and dance. Since dedicated to contemporary art with a long-term commitment December 2015, YARAT had more than 1800 visitors and 18 to creating a hub for artistic practice, research, thinking and events that happened within this frame. education in the Caucasus, Central Asia and surrounding region. YARAT comprises of the YARAT Art Center, ARTIM YARAT FRIENDS: it is a community and part of the YARAT project space, YARAT FRIENDS, YARAT Freestyle, YARAT family. Through membership at YARAT, you become Studios, Yay Gallery and an extended educational program. part of an art community and connected with the best of contemporary culture in Azerbaijan and abroad. Friends are YARAT invests in developing Baku as a cultural capital. given the privilege of experiencing YARAT like no other visitor It is a unique institution in the Caucasus and Central Asia and they enjoy a greater level of engagement with the Centre, that actively builds bridges and partnerships with institutions our curators and exhibitions. This platform members receive throughout the region. With 4 different venues in Baku and a exclusive benefits, including invitations to unique art-focused multitude of educational programs, it reaches broad audiences events, dinners, artist talks, previews, special discounts from in a sustainable way throughout the year. One year after the different places in Baku, ART Travels and many more. launch of the Art Centre we encountered an exponentially growing audience and an expanding art scene in Azerbaijan. YARAT Contemporary Art Space gives greater level of support During the first 4 months of 2016, our public grew with 73% to young artists. ARTIM is directed at young Azerbaijani artists in comparison with 2015. We reached to 11.800 visitors and with an intention to support and encourage emergent talent to engaged nearly 5000 participants into educational projects. grow. The program has a designated exhibition space in Icheri Sheher that was conceived as a platform for experimenting and professionally showcasing art. The artists are selected through an open call, which YARAT announces at the end of each year. Applications to this project are free and open to all. ARTIM invites all creative individuals to participate in this project, and the project is open to any artistic practice.

YARAT is also a hub for residents coming around the world. YARAT Contemporary Art Space introduce residency programme based in Baku. Each residency lasts three months. There will be three residency ‘periods’ available across the year, each of which will include a group of approximately ten artists. YARAT Residency program is intended for artists who are engaged in open, research-based practice across disciplines and show an interest in discovering the Caucasus region. The program will allow residents to develop their work and to share a dialogue with a range of other artists, curators and collectors. Education has been at the heart of YARAT’s activities since More information about the activities of YARAT Contemporary Art its creation. With a dedicated public program, including Space is via www.yarat.az, YARAT Instagram and Facebook page.

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open to school, universities, companies and all other interested groups. Register by calling 0502461413 Reading club Reading club hosts series of events featuring the works by young authors and writers. All selected texts are closely linked with the theme of current shows. Once a month, Wednesday at 19:00 Admission is free Literature nights Our goal in organizing literature nights is to introduce wide public to new books and experimental literature forms. These events are often combined with theatrical performances and music. Once or twice per exhibition block Admission is free Live Music Programs The live music program features popular bands and young The main exhibition program at YARAT Art Center: musicians who are asked to perform in surrounding of June – October 2016 artworks. - Little Lies: with Soren Thilo Funder (DK) and David Claerbout (BE) Once in a month, Wednesday at 19:00 - 300 words on resistance: including 7 emerging Azeri artists Admission is free combined with works from the 60s and 70s from Azerbaijan. Film Club November 2016 – January 2017 YARAT Film Club aims to become an informal meeting point - Faig Ahmed (AZ): his first major solo exhibition. Including for the viewing and discussion of contemporary art videos and major new productions. films. It features works by outstanding local and international - Oscar Murillo (Colombia): the first large scale solo exhibition filmmakers in the Caucasus and Central Asia. Presenting only new work Every Tuesday at 19:00 make in and for Azerbaijan. Admission is free A traveling show for the regions YARAT Academy From July onwards, the Yarat collection travels through the YARAT Academy is a course taught by local and international region. Every 3 months it opens doors in a new city. The show experts that aims to explore the arts for serious college-bound is always together with a local partner and strong education students as well as those with a simple curiosity about the program. creative process. YARAT Public Programs: 3 October – 11 December, 2016 Little YARAT Registration at [email protected] The main goal is to raise interest in contemporary art and help children improve their imagination and creative skills. Author’s biography The program is tailored for children of all ages and their family Hokuma Karimova has diverse experience working in different members. fields, such as the Embassy of Israel (Head of Economic and Register by calling 0502180629 Trade relations department), Director of Mission of Portugal Every Saturday 11:00 – 18:00; every Sunday at 11:30 Office, Baku, Executive Director at Junior Achievement Weekly Talk Azerbaijan and Board Member at AAA. She carries BA in Weekly Talks is a platform for informal discussions around International Relations from Khazar University and University current exhibitions presented by YARAT Contemporary Art of Wartburg, USA, as well as, MBA with concentration to Space featuring well known writers, musicians, researchers, Communications and Marketing from ADA University. entrepreneurs and others. Every Thursday at 19:00 Admission is free Art Yoga Art yoga aims to introduce participants to the meditations techniques for brain and body relaxation, easy yoga poses, breathing techniques for creating inner balance. Saturdays at 18:30 Admission is free Guided tours Special guest program provides an overview of current shows at YARAT Contemporary Art Centre. Participation is

27 AmCham Azerbaijan

The American Chamber of Commerce in Azerbaijan is a About Us private, non-profit business association supporting and promoting the interests of business in Azerbaijan.

Established in 1996, AmCham is composed of over 260 members and asso ciates active in every sector of the Azer baijani economy. We represent 80% of all foreign investment, as well as a significant portion of local investment which allows us to promote American, Azerbaijani and multinational corporations. This includes leading companies in Energy, Banking, ICT, Legislative/ Financial Consulting, Professional Ser vices, Education, Real Estate Develop- ment, Health, Transportation, Travel and Production fields.

An active and positive influence in Azerbaijan, we conduct our mission with integrity and respect for the country, observing all local laws and insisting on the highest ethical standards in all relationships and transactions. Membership To apply Why join? There are two types of affiliation with To apply for affiliation with AmCham, AmCham: Member and Associate. a candidate must submit a written Key member benefit – Member status includes voting application in the form adopted by best networking opportunities in privileges and eligibility for Board and the Board of Directors. Membership Azerbaijan! committee chairmanships in addition applications are available at the to the privileges granted to Associates. AmCham office or on our website at As a member of AmCham, your company For affiliation as a Member, a candidate www.amchamaz.org. The application has access to a vast network of business must be a legal entity, registered and form should be completed and sent to information and contacts in Azerbaijan and doing business in Azerbaijan and be our office with the company registration in the US government, as well as valuable in good standing in the community, as certificate issued by the Ministry of information on US businesses across determined by the Board of Directors. Justice of Azerbaijan. Europe through ECACC (European A legal entity, branch or representative A candidate meeting the objective and Council of American Chambers of office of a legal entity is eligible to subjective requirements for affiliation Commerce) and US Chamber of be affiliated with AmCham as an with AmCham is accepted as either a Commerce. Associate, subject to the Board of Member or Associate upon receiving Directors’ determination of good an affirmative majority vote of the Additional Member Benefits include: standing in the community. Board of Directors and paying the first Associates are eligible to participate in year’s fee for the candidate’s category • Annual Employee Salary Survey various activities; receive our regular of affiliation. • Quarterly Inflation Survey publications, including the Membership To maintain affiliation with AmCham, • AmCham Membership Directory Directory, Annual National Employee Members and Associates must • AmCham Resource Library Salary Survey and Quarterly Inflation continue to meet our eligibility Survey. Associates, however, are not requirements, be in good standing in For more detailed information please entitled to vote or serve on our Board the community, and be current with all visit our website www.amchamaz.org of Directors. financial obligations to AmCham.

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Business Events Conference on "Energy, Renewables and and Renewable Energy Sources; Mr. Ilgar Veliyev, President of AmCham in Azerbaijan; Mr. Robert Cekuta, Ambassador Sustainability" of the USA to the Republic of Azerbaijan; Mr. Bakhtiyar On April 22, diverse stakeholders gathered for “Energy, Aslanbeyli, Communications, External Affairs, Strategy and Renewables and Sustainability” conference. AmCham Region Vice President of BP AGT Region; Mr. Taleh Kazimov, Azerbaijan organized the event in cooperation with the U.S. CEO of PASHA Bank; Tom Weirich, Senior Vice President at Embassy in Azerbaijan, ADA University, State Agency on the American Council on Renewable Energy (ACORE); Mr. Alternative and Renewable Energy Sources, the European Massimo Cugusi, Secretary General of European Network of Network of American Alumni Associations (ENAM) and the American Alumni Associations delivered their vision, outlook U.S. Educated Azerbaijani Alumni Association (AAA). and recent works in this regard. The conference addressed key issues, including sustainability, transition to a low-carbon economy, environmental regulatory legislation and compliance, education and promotion of green Strategic Vision on Agriculture: energy objectives. Herein, it was believed to incorporate Competitiveness, Food Security and the experiences of countries already applying successful Social Aspects renewable energy strategies and furthering research and On June 21, AmCham Azerbaijan in cooperation with the development area. The messages stressed the need for all ADA University and the Center for Analysis of Economic Reforms and Communication, Service of the Assistant to the President for Economic Reforms, with support of KPMG Azerbaijan organized a conference on “Strategic Vision on Agriculture: Competitiveness, Food Security and Social Aspects”. The ultimate goal of the conference was to discuss the main aspects of the vision on agriculture under the “Main Directions of Strategic Roadmap on National Economy and Major Sectors of Economy”, focusing on competitiveness, food security, social aspect (employment, regional development etc.). The conference gathered in tripartite format, composed of relevant representatives from the government, private sector and academicians. Ambassador Hafiz Pashayev, Rector of ADA University and Deputy Minister of Foreign Affairs spoke about the importance of the event. Mr. Pashayev stated that according to the main countries to develop a national renewable energy policy and directions of strategic road map on national economy and corresponding legislative framework, as well as the need to major sectors of economy, agriculture is one of the priority invest in building scientific and technical capacity building. areas of the national economy. Herein, the aim is to provide Ambassador Hafiz Pashayev, Rector of ADA University and sustainable economic growth and to enhance the well-being Deputy Foreign Minister of the Republic of Azerbaijan; Mr. of the people. Akim Badalov, Chairman of the State Agency on Alternative

29 AmCham Azerbaijan

Mr. Elkhan Mikayilov, Head of the Division for Agrarian Issues efficiency gains and competitiveness”. Then, Dr. Christophe under the Department of Agricultural and Industrial issues of Cordonnier, representing Frankfurt School of Finance and Service of the Assistant to the President of the Republic of Management, Team Leader of the EBRD/EU AzAFF project, Azerbaijan on Economic Reforms, stressed the importance delivered presentation on “Economic diversification and of the event and informed participants about the goal and agriculture development: prospects and challenges.” Ms. activities of the Working Group which has been established Melek Chakmak, Head of Partnership and Liaison Office of to implement development plans within six months. Mr. FAO informed participants on “Food Security and Nutrition” Mikayilov said that population of Azerbaijan is expected to issue. Afterwards, Mr. Ilya Strokin, Director, Agribusiness, grow up to 12.1 million people by 2050. Increasing country’s KPMG CIS, made a speech on “Food security in Azerbaijan: challenges and opportunities”. He suggested measures for strengthening food safety. The session was concluded by Mr. Savash Uzan, CEO of Azersun, who talked about agricultural activities, achievements and barriers for Azersun.

Luncheons and Cocktail 15 April Luncheon During the Luncheon Mrs. Natavan Mammadova delivered highlights to the past successful events, with an emphasis to the meeting with H.E. Mr. Ilham Aliyev and stressed its importance for the business community, including the member companies. Then, speech by Mr. Kurt Tong, Principal Deputy Assistant Secretary for the Bureau of Economic and Business Affairs at the Department of State, was featured. Also, the demand for food supplies in the future will make development floor was passed to member presentations by Park Inn, of agriculture vital for food security. Herbalife International RS, Cybernet, Baku City Circuit which Mr. Vusal Gasimli, Executive Director of Center for Economic provided portfolio and activity direction presentation. Reforms and Communication, emphasized the significance of agricultural reforms. Mr. Gasimli said that the amount of consumed kilocalories will increase from 2,800 to 3,050 per capita (daily), which also leads to demand for food products by 70% in Azerbaijan until 2050. Afterwards, Mrs. Natavan Mammadova, Executive Director of AmCham, underlined importance of tripartite format of discussion with active participation of business community and academicians in order to address expectations of all relevant parties. Overall, AmCham provides support to the reforms being implemented in the country and further commitment for fruitful cooperation. Mr. Vugar Aliyev, Partner, Financial Services Industry Leader for KPMG in Russia and CIS informed the participants on favorable tax regime for agriculture and recent law on investment promotion which provide excellent opportunities for the development. Later on, Mr. Firdovsi Fikratzade, Head of Analysis and Statistics Department of the Ministry of Agriculture, delivered presentation on “Agriculture in Azerbaijan: current trends, new reforms and opportunities”. Mr. Fikratzade talked about the activities being implemented by the Ministry, as well as, current obstacles and barriers they face with. 31 May Luncheon Subsequently, Mr. Tariyel Mirzoyev, Executive Director of the Guest speaker of the Luncheon was Mr. Aydin Aliyev, Center for Entrepreneurship, Trade and Innovation of ADA Chairman of the State Customs Committee of the Republic University, presented the case of Netherlands as the top of Azerbaijan. Mr. Aliyev shed light to the introduction of a exporter of agriculture products. system of customs operations through the “green corridor” During the second session, Vitaly Sheremet, Partner, Head of and work on improvement of risk management center is Agro sector in KPMG CIS presented “Agriculture in Azerbaijan: underway. Also, “e-declaration system has been organized

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fully and the participants of foreign trade operations do not model and achieve growth through the private sector. Earlier, face with any problems while using it,” said Mr. Aliyev. Herein, Azerbaijani economy was very depended on oil. But now, there is no problem with application of 3-year moratorium on many will agree with the fact that Azerbaijan has been imposition of road tax for foreign trucks, trailers and semi- conducting major reforms to support non-oil sector, especially trailers since 1 June. Afterwards, Mr. Aydin Aliyev introduced private enterprise.” Mr. Lars Karlsson, President of KGH Border Services, INCU Advisory Board Member, who delivered a presentation on “Custom Policy as the Lead Factor for the International

28 June Luncheon The gathering launched with a brief of Mrs. Natavan Mammadova about the key events of the past business year and shared the plans for future development of organization`s Development”. Mr. Karlsson stressed that Azerbaijan is policy. Then she passed the floor to the Editor in Chief of developing rapidly and it is a model in the region for customs IMPACT, Mr. Aykhan Nasibli. He informed the members service development. about the last edition of the journal devoted to intensive Afterwards, the floor was passed to member presentations. economic diversification. Later on Mr.Nasibli thanked to all Mr. Sanan Hasanov talked about the new player of banking contributors and encouraged other members to benefit from sector - Caspian Development Bank. Later on, Ms. Aysel this opportunity. Later on, company presentations were Suleymanova from PwC, delivered a presentation on delivered by Chenot Palace, AutoStar Kaukasus and Alstom “Adaptability in turbulent times”. The last member presentation Transport representatives. They presented portfolios and the was by Ms. Parvin Gurbanova, from JTI Azerbaijan, who activity directions of the companies. made on the topic “JTI – Global Top Employer”. Afterwards, guest speaker, Mr. Vusal Gasimli, Executive As a follow up, the floor was passed to Mr. Mohammed El Director of Center for Analysis of Economic Reforms and Qorchi, Assistant Director in the Middle-East and Central Communication delivered presentation on “Azerbaijan: Asia Department of IMF. He gave a speech on economic Strategic Road Map of Economic Development”. Mr. Gasimli development and reforms. “The negative effects of volatility started his speech with an outlook to the world economy and in world economy are a good chance to change the economic mentioned three actual issues - new technologies, world crisis and stagnation. Then, he emphasized that economic reforms in Azerbaijan are aimed to support sustainable economic growth and prosperity of the country through economic diversification and stimulating non-oil sector. 15 September Back to Business Cocktail After the summer vacation, AmCham members met together on the occasion of “Back to Business Cocktail Reception”, the joint event with Deloitte & Touche. The guests not only enjoyed from chatting and networking, but at the same time legendary rock music and delicious food at the recently opened Hard Rock Cafe. Mrs. Natavan Mammadova and Managing Partner of Deloitte & Touche Mr. Nuran Kerimov expressed the pleasure to see all the guests after the summer vacation and wished everybody a successful business year.

31 AmCham Azerbaijan

Committee Highlights

ICT Committee – 27 April Meeting benefits of multiskilling for employee and organizations, During the April ICT Committee gathering guest speaker Mr. RAPID decision model, effective delegation, ‘monkey Abzettin Adamov presented about IEEE, activities of Azerbaijan management’, etc. Later on Ms. Lala Abdurahmanova from Chapter and AICT2016 Conference which is planned for Fircroft Partnering Trainers, presented “Navigating People October 12-14, Baku. The agenda of business oriented Transition for efficiency and effectiveness of restructuring”. Conference is following: ICT in Business Administration, Furthermore, Ms. Tatyana Mikayilova talked about the 1st Finance and Economy; ICT in Governance and Government “Mentoring Walk” (April 8), which was conducted by AmCham Policy Making; ICT in Education, Humanities, Social Sciences in cooperation with 100 Business Women of Azerbaijan at and Research; ICT in Medicine and Health Care. ADA Campus. It was aimed to promote women leadership. Chairperson Murad Seyidov informed the Committee Then, Ms. Leyla Novruzova presented HR Program 2016, members about cooperation between IEEE and AmCham which was updated based on inputs from the Committee (as a General Partner) during ICETA 2015 International members. Conference, which held in Slovakia. The Committee Vice- Chair, Mrs. Kamilla Shakhbazova proposed to implement a CSR Committee – 24 May Meeting new format for Conference. It includes use of modern setup for Committee Chairperson, Ms. Aynura Piriyeva, indicated reaching the main goal – increase of IT presence in different importance of providing recommendations to company areas, including Education and Health Care. The Committee management on activity directions in the time of crisis and the Curator, Farid Ismayilzade, emphasized the importance of role of CSR. Afterwards, Mr. Jeyhun Atayev, Leading Manager cooperation with the Ministry of Communications and High on Sustainability and CSR at PASHA Bank presented “CSR in Technologies and involving them for organization of AmCham the Time of Crisis and Partners in Mission matchmaking fair”. ICT Conference, as well as, expanding ICT in education Then, Mr. Bahruz Hidayetzade, Executive Director at and modifying the upcoming AmCham ICT Conference Caspian Event Organizers provided information about the 2nd composed of round-table with ICT company executives as international conference on “Sustainable Development and key-note speakers and government officials and mass-media CSR” which will be organized in November. as audience. As a follow up, Ms. Aysel Suleymanova, Marketing and The Committee members agreed having two separate Communications Manager at PwC Azerbaijan, presented events: (i) round-table with ICT company executives and “Addressing Bigger Expectations”. She informed on global government officials (with participation of mass media), (ii) CSR vision, future corporate projects, awards granted and IEEE Conference with possible participation of AmCham Talent Club, as well as “Big 4 for Big Change” which was Azerbaijan Chapter as a partner. The Chair proposed to designed to make a difference in lives of talented youth. The establish two Task Forces under ICT Committee: Innovations core mission of this project is to help the talented youth to and Information Security. grow and integrate into real business life.

Travel, Hospitality and Tourism Committee – 28 April Meeting During the meeting, “Bill on Tourism” which will be prepared by the Parliament of the Republic of Azerbaijan was discussed. Guest speaker Ms. Nigar Arpadarai, Head of Marketing and Communications team from Baku City Circuit, presented profit and tourism opportunities of F1 races within the Baku Grand Prix. Later, KMPG’s legal team shared the main concepts and trends included in newly drafted bill on tourism: new definitions in the legislation; occupational certification of tourism operators; classification of fields of tourism activities; state Regulation of tourism sector – creation of corporate governance standards; developing and implementing tourism security concept; insurance of consumers in tourism sector; adoption of state development programs; conclusion of contracts for the purposes of offering tourism activities.

HR Committee – 29 April Meeting HR Committee – 27 May Meeting Guest speaker Mr. John Kurz, Efficiency and Cost Performance Guest speaker of the meeting was Mr. Idris Isayev, Deputy Vice President at BP talked about “Increasing Organizational Minister of Ministry of Labor and Social Protection. Mr. Efficiency”. He has covered important points, including Isayev talked about the social reforms led by the President

32 Issue 23 AmCham Azerbaijan

of Republic of Azerbaijan, HE Ilham Aliyev, in particular the and labor force among 141 countries, according to The recent changes to the social protection legislation. Thanks Travel & Tourism Competitiveness Report 2015 of the World to the recent decrees and orders of the President, social Economic Forum. Currently, around 300 travel companies payments have increased by 10% for 35% of the population. and more than 570 accommodations operate in the country. 40% increase of social payments to unemployed and other The number of tourists visiting Azerbaijan has increased social support was budgeted by the government. At the same fivefold in the last 10 years”. Azerbaijani President HE Ilham time, the insurance system towards unemployment was Aliyev signed a decree on simplification of e-visas issuance initially drafted based on international best practices. The procedure and the creation of the ASAN Visa system on June recent innovations at the Ministry, including social support 1. It will create an impact for increasing the number of tourists. assessment, electronic registration of labor contracts, Minister Garayev also said that Azerbaijan’s goal is to host 5 e-request for social supports, transparent infrastructure for million tourists annually. handicapped people and others were highlighted. He has also mentioned that the changes in the pension system will continue. Going forward, regardless how long you’ve worked, if you have gathered the minimum required in the pension pot under your name – you are automatically eligible for pension. It is expected that the government will introduce a bucket of “self-contributed pension scheme”. This amount can be paid out once the individual reaches retirement age. He has also confirmed that the Ministry is looking into ways to minimize paperwork – by recognizing e-tools. Afterwards, Ms. Nazmira Shirinova from Absheron Hotels Group and Mr. Ilgar Musabaliyev from AGBank presented “HR Business Partnership Model”. The Committee meeting was concluded by guest speaker, Ms. Shafag Tagiyeva from the State Migration Service. Ms. Tagiyeva spoke about “Determination of Labor Migration Quota” and provided practical advice on new requirements of State Migration Service.

BFI Committee – 3 June Meeting During the meeting, guest speaker Mr. Javanshir Abdullayev, Director of Azerbaijan Bank Training Centre, presented “Financial Stability: Problems and Solutions”. Mr. Abdullayev indicated the main problems of financial stability: lack of trust to the national currency and banking system; worsening of loan repayment rate; deposit outflow; worsening of capital adequacy and liquidity; absence of market tools for liquidity Tax & Customs Committee – 10 June Meeting management; indebtedness of population; reducing demand Committee Chairman, Mr. Bakhtiyar Aslanbayli, introduced for financial products, especially for loans. Moreover, Mr. guest speakers from the State Customs Committee - Mr. Abdullayev proposed solutions based on international Anar Suleymanov, First Deputy Head of Performance practices on anti-crisis management, such as establishment Measurement and Development Programs Department of financial stability committee, use of Islamic banking tools and Mr. Rauf Quliyev, Head of the Project Management as alternative and financial support to SMEs”. Department. Mr. Suleymanov presented “Paperless Trade in Azerbaijan: State of Affairs.” He talked about simplified Travel, Hospitality and Tourism Committee – 9 June Meeting procedures and practices in the World Customs Organization, Guest speaker of the meeting was Mr. Abulfas Garayev, including risk management and risk assessment; post Minister of Culture and Tourism. Tourism is considered to be clearance audits; maximum use of information technology one of the priority areas within non-oil sector of Azerbaijani automation; pre-arrival declaration/ information; partnership economy. Mr. Garayev stated that as a result of activities with the trade; single window approach and cooperation with conducted in recent years, tourism industry is experiencing other border agencies; advance rulings; system of appeals; development path: “Today, tourism as one of the three authorized Traders. Moreover, innovation projects in Custom preeminent areas of global economy, is rapidly flourishing. Committee (UAMS, Single Window, GPS trade and track, After the independence great projects have been realized Customs Web Portal) and challenges of e-Declaration for the development of tourism industry. Globally well-known System, launched from May 1st 2016, were indicated. Then, brand hotels are put into place. At present, the share of tourism Mr. Rauf Quliyev made a speech on “Formation principals of revenues in GDP constitutes 4.5%. It is not a coincidence Customs e-declaration” and provided some practical advice that Azerbaijan is on 36th place in terms of human resources on new requirements of the system.

33 AmCham Azerbaijan

ICT Committee – 10 June Meeting The Committee Chairman, Mr. Murad Seyidov (Chief Information Officer, CRA) updated the Committee members about the progress with regard to ICT Conference, its format and ongoing negotiations with the Ministry of Communications and High Technologies, as well as possible participation of AmCham at 10th IEEE International Conference of “Application of Information and Communication Technologies”. Then, leadership of Information Security Task Force - Mr. Rustam Bunyatov (TD/Security Section Manager, Azercell) and Mr. Ilgar Aliyev (Information Security Director, CRA) were introduced. Mr. Aliyev delivered a presentation on “Cyber-security: Global and Local trends” and Mr. Bunyatov commented on importance of cyber-security related regulation which will affect the industry/ market, i.e. regulation on Cloud services provision. Later on, Mr. Seyidov presented leadership of Innovations Task Force - Mr. Fuad Malikov (Chief Sales Officer, BEST Solutions) This order covers approval of direction of reforms, which will and Mr. Rufat Guliyev (Business Development Manager, RISK). be held in the tax sphere in 2016, and an improvement of tax Mr. Malikov emphasized the importance of e-government and administration. The main directions of ongoing tax reforms will e-society. He stated that Azerbaijani economy has stepped include preparation of the proposals regarding improvement of into a new era which goes towards oil-and-gas free economy. the legislation, improvement of the administration of completion “Currently there are public e-services mainly for the specific of tax audits, improvement of tax administration in determining, clusters of the population, such as, entrepreneurs and business conducting and hearing the result of the tax audits, as well people. However, we don’t have the concepts of e-medicine as, ensuring the participation of taxpayers in the tax audit, and e-education, which are the sectors forming the basic social determination of criteria of bona fide taxpayer, simplification needs of every individual. We think the concept of e-government of tax administration and expansion of the coverage of the should deeply penetrate into the social life. We live in a time targeted services in respect of such taxpayers, expansion of when all required actions can and should be done electronically the scope of electronic tax audit, aiming to minimize direct without leaving our homes and offices. These are the challenges contact between taxpayers and tax authorities, improvement of which the Innovation Task Force of AmCham could intensively the quality of the audit conducted in this regard, implementation work to overcome.” Mr. Guliyev pointed attention to government of Tax Free system not only in airports, but in other border support to Techno Parks, Cloud solutions and regulation gaps, checkpoints as well, application of whistle blow mechanism in Combined Data Centers for Ministries and other issues. order to prevent tax evasion, etc.

HR Committee – 30 June Meeting Tax and Customs & Banking, Finance and Insurance The committee meeting was gathered with guest speaker Mr. Committees – 5 September Meeting Idris Isayev, Deputy Minister of Labor and Social Protection The recent Decree of President Ilham Aliyev on main directions of Population. Mr. Isayev welcomed all participated and of tax reforms in 2016 was discussed with key officials from introduced Mr. Elnur Suleymanov who delivered presentation the Ministry of Taxation, Ms. Samira Musayeva and Mr. Natiq on “Unemployment Insurance”. At present, draft of the Shirinov. Mr. Musayeva, the Head of Tax Policy and Strategic “Unemployment Insurance” Law was submitted to the Research Main Department, gave information about the recent relevant authorities by the Cabinet of Ministers. Afterwards, Decree signed on August 04, 2016, on main directions of tax Ms. Nushaba Jafarova from Azercell talked about “Azercell reforms. Representatives of private banks raised different Academy as the best practice of knowledge management & issues, including property tax, digital economy, bank credits, establishment of Corporate University”. Also, Mr. Umit Duman electronic payments, tax free, increase of post terminals. Later from HayGroup delivered a session on “Future proof your on, issues covering non-cash sales, bulk selling, excise tax, Tax workforce with strategic workforce planning”. The Committee free, advance tax ruling, whistle blowing mechanism, voluntary meeting was concluded by Mr. Ruslan Agayev, who delivered tax disclosure, common reporting standard, anti-avoidance “AmCham Salary Survey 2016” and informed all participants rules, offshore countries and transfer price have been on improvements made to the questionnaire and forthcoming discussed and raised opportunities for potential improvements process. to tax legislation. The representatives of the Ministry of Taxes took all proposals into consideration, and thanked for open Tax & Customs Committee – 10 August Meeting dialogue and promised to cooperate on subsequent draft law During the Committee meeting, AmCham Board member, in the future through such fruitful discussions. Mr. Nuran Kerimov delivered presentation on August 4, 2016 order, signed by the President of Azerbaijan, H.E. Ilham Aliyev.

34 Issue 23 AmCham Azerbaijan

Trans-Caspian East-West Trade and Transit Corridor Forum “Trans-Caspian East-West Trade and Transit Corridor” forum was held promotion of trade and transit capacity of the region, as well as facilita- on April 28-29, 2016, with support of AmCham Azerbaijan and other tion of cooperation with US companies in this field. representatives of the US Chamber of Commerce, as well as the Em- Ambassador of Azerbaijan to the United States of America, Mr. Elin bassies of Azerbaijan, Kazakhstan and Georgia in Washington, World Suleymanov thanked the participants and spoke about the major in- Bank, US Chamber of Commerce, Boeinq, USA-Azerbaijan Chamber frastructure projects implemented in the region with the leading role of of Commerce. Azerbaijan and touched upon the regional security environment. The forum was hosted by the Central Asia and Caucasus Institute, Ambassador of Turkey Mr. Sardar Klij, Ambassador of Kazakhstan Mr. Johns Hopkins University. The goal of the Washington Forum was Kairat Umarov and Deputy Chief of Mission of Georgia Mr. George to introduce projects and investments along the modern Silk Road to Khelashvili, who took the floor, indicated the significance of the Trans- business leaders across a variety of industries. Caspian rout for the countries involved and the intention of those coun- Central Asia, South Caucasus and Black Sea region form a strategical- tries to build on and deepen relations existing with Azerbaijan. ly important trade and transit corridor between China and Europe. Con- Mr. Gary Litman, Vice-President of US Chamber of Commerce made necting trade, people and local economies, the modern Trans-Caspian opening remarks. trade and transit routes envision an extensive and integrated network Panels dedicated to “Trans-South Caucasus Customs and Trade Fa- of infrastructure, special economic zones, harmonized customs, cross- cilitation”, “From Sea to Sea: integrated regional transit and logistics border procedures and more. infrastructure” and “Investment opportunities” have been moderated The Forum brought together public and private senior executives in the by Mr. Michael Lally, Deputy Assistant Secretary, Department of Com- fields of transportation policy, transit, customs, logistics and value-add- merce, Dr. Frederick Starr, prominent expert on Silk Way and professor ed services from the regional countries, along with representatives of of Johns Hopkins University and Mr. Jorg Frieden, Executive Director, the international freight forwarders, EU-based companies, China and The World Bank Group. Central Asia-based US manufacturing companies. The “Tans-Caspian East-West Trade and Transit Corridor” forum drew The moderator of the event Mr. Curt Tomng, Aid to the US Secretary interest of US Government and business community, igniting discus- of State, delivered a speech highlighting the importance of the forum in sion on social networks.

35 AmCham Azerbaijan

AmCham Legal Update

1. Presidential Decrees and Orders Centre for Economic reforms. The Centre is a public legal entity, a. Presidential Decree dated April 11, 2016, on establishment conducting research and analyses on micro and macroeconomic of State Agency for Apartment Building under the President levels, making proposals on reforms based on these analyses, of the Republic of Azerbaijan and organization of its activity preparing medium and long-term forecasts and providing state A new State Agency for Apartment Building (the “Agency”) has bodies with these forecasts. been established by the Presidential Decree. The Agency is a central executive power body, responsible for building residential c. Presidential Decree dated May 04, 2016, on measures for buildings and other construction projects; for providing citizens establishment of ASAN Utility Centre of Azerbaijan with an opportunity to purchase housings at dis- For the purposes of optimizing and bringing transparency to public counted price and ensuring efficient use of funds allocated for the utility services, the Presidential Decree established ASAN Utility construction of residential buildings. A new “MIDA” Limited Liabil- Centre on the platform of ASAN Service. ASAN Utility Centre will ity Company (“MIDA LLC”) should be also established under the provide utility and other related customer services using modern State Agency for Apartment Building. In fact, MIDA LLC should information and communication technologies and will provide ser- act as the State-owned developer, selecting contractors by way vices performed by Azerishiq, Azersu and Azerigaz to legal enti- of competition in accordance with the Law on State Procurement. ties and individuals. The payments for the works done by contractors to be allocated by MIDA LLC and stages of construction works and payment con- d. Presidential Decree on speeding up the privatization of the ditions to be determined by the Agency. The contractors will be state-owned property required to provide to the Agency bank guarantee in the amount According to the decree dated May 19, 2016, the Cabinet of Min- equal to the value of the contract signed between MIDA LLC and isters is commissioned based on the proposals of the State Com- the contractor. mittee for Property Affairs and other relevant bodies, to define a medium-list of state owned enterprises, which will remain state- b. Presidential Decree dated April 20, 2016, on establishment owned, in order to carry out the reconstructing to take measures to and operation of Analysis and Communication Centre for privatize non-core business and assets that are in their disposal. In Economic reforms addition, the Cabinet of Ministers is instructed to submit proposals Current global economic conditions require further expansion of to the President of Azerbaijan for improvement and settlement of economic reforms, the introduction of new conceptual approaches the debt of state enterprises preparing for privatization. and more efficient use of existing economic potential. Therefore, for the purpose of expansion of the scope of economic reforms e. Presidential Decree dated May 20, 2016 on amendments to and effective work assurance in this area, President of the Re- the rules of Consideration of the Azerbaijan Republic citizen- public of Azerbaijan has established Analysis and Communication ship and their resolution.

36 Issue 23 AmCham Azerbaijan

Amendment added grounds that may suffice for the loss of Azer- implement measures to ensure the macroeconomic and financial baijani citizenship. The volunteer service of Azerbaijani citizens in stability on the regular basis. the foreign state municipal or armed forces, participation in ter- rorism or damaging Azerbaijan’s security, performance of actions i. Presidential Order on Areas of tax reforms in 2016 dated aimed to force change of Azerbaijan’s Constitution, participation in August 04, 2016 religious extremist groups are some of these grounds. The infor- The President of the Republic of Azerbaijan Mr. Ilham Aliyev mation about performance of noted above actions by the Azerbai- signed an order on August 04, 2016 to approve direction of re- jani citizen is gathered by the State Security Service, Internal and forms, which will be held in the tax sphere in 2016, and an im- External Exploration Services and presented to the State Migra- provement of tax administration. tion Service, which prepares its opinion and presents case to the In accordance with the relevant order, the main directions of ongo- court. ing tax reforms will include preparation of the proposals regarding improvement of the legislation, improvement of the administration f. Presidential Decree dated May 21, 2016, on approval of the of completion of the tax audits, improvement of tax administration green corridor rules for the border crossing of goods and in determining, conducting and hearing the result of the tax audits, vehicles as well as ensuring the participation of taxpayers in the tax au- The rules have been established to make customs clearance pro- dit, determination of criteria of bona fide taxpayer, simplification of cedures more transparent, flexible and to develop official – en- tax administration and expansion of the coverage of the targeted trepreneur relationships in accordance with modern management services in respect of such taxpayers, expansion of the scope of principles. Below are presented the definitions of established by electronic tax audit, aiming to minimize direct contact between tax- the rules “corridors”. payers and tax authorities, improvement of the quality of the audit Green corridor – is a system of goods and vehicles border cross- conducted in this regard, implementation of Tax Free system not ing that does not include the physical inspection of the products; only in airports, but in other border checkpoints as well, applica- procedure provides goods and vehicles release from the border tion of whistle-blow mechanism in order to prevent tax evasion checkpoints without any customs clearance procedures. Blue cor- and etc. ridor – is a system of goods and vehicles border crossing that requires presentation of certain customs forms after goods have j. Presidential Order on increase of effectiveness in state- crossed the border. owned companies’ activity dated September 05, 2016 Yellow corridor – is a system of goods and vehicles border cross- Based upon the proposals of the Ministry of Economy, the Min- ing requiring check of existence of all necessary certificates and istry of Finance and the Analysis and Communication Centre for import documents with the products. Economic reforms, the Cabinet of Ministers is to confirm the rule of Red corridor – is a system of goods and vehicles border crossing evaluation of effectiveness of the state-owned legal entities’ activ- involving operation of all required inspections. Corridor for each ity, as well as corporate management rules and standards in the good is determined based on the short declaration indicating all state-owned JSCs taking into account the international practice necessary information submitted in the electronic form. and features of national economy, and Actions Plan on gradually application of those rules and standards within four months by g. Order of the President on establishing industrial district of agreeing with the president of Azerbaijan. Masalli The Cabinet of Ministers is also to confirm the rule on making bo- The President of Azerbaijan Mr. Ilham Aliyev signed the order “On nus payments to the members of management structures of the creation of the Masalli Industrial District” on June 13, 2016. Ac- legal entities on the basis of Performance Based Remuneration cording to the document, it is established in order to support small System of the state-owned legal entities within four months by and medium enterprises in the industrial sector, to ensure a sus- agreeing with the president of Azerbaijan, take measures for grad- tainable development of the non-oil sector and boost employment ually application of International Financial Reporting Standards of the population in the industrial sector. President Ilham Aliyev (IFRS) in the state-owned legal entities and inform the president enacted to establish the Masalli Industrial District in the territory of twice a year. Masalli region. Measures related to management, development, organization and operation of activities of Masalli Industrial District 2. Laws are carried out by the “Azerbaijan Investment Company” JSC. The a. Amendments to the Law On state registrar of real estate resolution of issues arising from the order is tasked to the Cabinet dated April 05, 2016 of Ministers and the Ministry of Economy. According to the introduced amendments, for the purpose of obtaining information related to mortgaged immovable property, h. Presidential Decree on establishment of the Financial Sta- connection between databases of the Central Bank of Azerbaijan, bility Board the financial market supervisory authority, mortgage companies, According to the decree dated July 15, 2016, Financial Stability mortgage holders, banks and other credit organizations the con- Board is established in order to provide favourable business and tact between these systems and database of the State Registrar investment environment, create opportunities for entrepreneurs of real estate shall be established. Period for registration of real and protect their rights, increase the reliability of the banking sys- property and other proprietary rights and inventory operations tem, ensure access to finance. The main goal of the Board is to therewith, which is necessary in connection with the registration of

AmCham Azerbaijan

real property rights, may be extended by five (5) business days. In passing the nearest customs point to the first railway station of this case, the applicant must be provided with a notification. In ad- Azerbaijan and transported out. dition, the amendments touched on the statutory periods. So that: - state registration of rights to immovable property and the ap- f. Amendments to the Tax Code dated May 17, 2016 propriate application for the issuance of the registration statement The amendments introduced changes to the article of the Tax and the documents attached to it are defined as ten (10) working Code related to the road tax. Thus, foreign countries’ trucks, motor days effective the date of submission. Previously, this period was vehicles with trailers and semi-trailers effective 1 June 2016 shall twenty (20) days; be exempted from road tax for a period of 3 years in the following - in case if reasons for the suspension of registration were estab- cases: lished, the official inquiries on doubtful documents shall be sent - when goods transported by railway are loaded to trucks, vehicles to the relevant authorities, who should respond to inquiries within with trailers and semi-trailers and transported to other country seven (7) days. Previously, this period was ten (10) days; from the nearest customs point in the first railway station on the - registration of mortgage shall be done within three (3) working territory of Azerbaijan; days from the date of submission of the application for registration. - when goods transported by foreign countries’ trucks, vehicles Previously, this period was five (5) working days. with trailers and semi-trailers from the territory of other country passing the nearest customs point to the first railway station of b. The amendments to the Law “On customs tariffs” Azerbaijan and transported out. Azerbaijan exempted its industrial parks’ residents from customs duties on imports for five years from May 01, 2016. This was g. Amendments to the Tax Code of the Republic of Azerbaijan envisaged by the amendments to the Law “On customs tariffs”. Cargos carried by railway will be exempted from road tax starting The amendments were adopted on May 06, 2016 at the plenary from June 01, 2016 for 3 (three) years when they are carried to an- session of the Azerbaijani parliament. Meanwhile, the parliament other country through the nearest customs checkpoint by transfer- adopted amendments to the Law “On Social Insurance”. Foreign ring to the trucks, trailer and semi-trailer trucks of foreign countries residents of Azerbaijan’s industrial parks are also exempt from the in the last railway station provided by Azerbaijani relevant execu- payment of compulsory social insurance for five years (from May tive power. This change was reflected in the amendments made to 01, 2016). the Tax Code of the Republic of Azerbaijan at the plenary meeting of Milli Mejlis dated May 17, 2016. c. The amendments dated May 03, 2016 to the “Civil Code” According to another amendment, the cargos will be exempted of Azerbaijan. from road tax starting from June 01, 2016 for 3 (three) years when According to the amendments, loan agreement is concluded in they are carried by the trucks, trailer and semi-trailer trucks of for- verbal and written form with consent of parties. If the subject of the eign countries to the first railway station in Azerbaijan, provided loan agreement is more than three thousand manats or the party by relevant executive power, through the nearest customs check- of the agreement is a legal entity regardless of the amount of the point. loan, loan agreement is concluded in written form. h. The Amendments to the law “On Grain” and “On tea grow- d. Amendment to the Code of Administrative Offences dated ing” dated June 14, 2016 May 17, 2016 Azerbaijan is set to prohibit imports of genetically modified tea and Amendment adds penalties for violation of the transaction rules grain products. In this respect, amendments and additions to the between related persons and for failure to submit the informa- Law “On tea growing” and the Law “On grain” came into force. tion on these transactions in the manners prescribed by the law. According to the amendments Articles 10.3 (Genetically modified The penalty for legal entities has been determined in the range of plants or agricultural plant materials created by modern biotechno- AZN500 - AZN20,000. logical and genetic engineering methods are prohibited from use in the production and circulation of tea and tea products) and 18.3 e. Amendments to the Law on State Duty dated May 17, 2016 (Tea and tea products produced using genetically modified plants The amendment provides that the car carriers of the states apply- or agricultural plant materials created through modern biotechno- ing extra state duty to the car carriers of Azerbaijan will be sub- logical and genetic engineering methods are prohibited from being jected to the state duty (not defined by this law) in Azerbaijan. In imported to the Republic of Azerbaijan) were added to the Law addition, according to the amendment foreign countries’ trucks, “On tea growing” . motor vehicles with trailers and semitrailers effective 1 June 2016 Addendums to the Law “On Grain” were indicated as follows: shall be exempted from state duty for a period of 3 years in the - Article 6.8 the use of plants genetically modified in the produc- following cases: tion and circulation of grain products or agricultural plant materials - when goods transported by railway are loaded to trucks, vehicles created through modern biotechnological and genetic engineering with trailers and semi-trailers and transported to other country methods are prohibited; from the nearest customs point in the first railway station on the - Article 11.5 Grain products produced using modified plants or territory of Azerbaijan; agricultural plant materials created through modern biotechnologi- - when goods transported by foreign countries’ trucks, vehicles cal and genetic engineering methods are prohibited from being im- with trailers and semi-trailers from the territory of other country ported to the Republic of Azerbaijan.

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A note of each bill envisages that those who violate the ban will bring to responsibility in accordance with the Criminal Code and 3. Ministry of Taxes of the Republic of Azerbaijan Administrative Offences Code. a. Azerbaijan introduces Tax Free system in a test mode On June 17, 2016, the Ministry of Taxes established a mechanism i. The amendments to the ‘Migration code’ of Azerbaijan. for crediting the Value Added Tax (VAT) paid by foreign citizens Rules of issuing e-visas for foreigners and stateless persons ar- in the Republic of Azerbaijan. Thus, the foreigners who purchase riving in Azerbaijan have entered into force. Amendments come from trading malls with special TAX FREE stickers will be able into force with the order of President Ilham Aliyev, dated June 14, to get credit for the paid VAT for goods which are not intended 2016. According to the rule, foreigners and stateless persons ar- for commercial or production purposes, at the airport, when they riving in Azerbaijan will be able to obtain e-visas through the ASAN leave the country. The TAX FREE mechanism will be used only for Visa system. The period of stay with a single-entry visa is up to the value of goods purchased for not less than 300 AZN including 30 days. Foreigners and stateless persons, who wish to obtain the VAT. an e-visa, must enter information into the system of “ASAN Visa”, and after receipt on acceptance of confirmation pay online a state 4. State Customs Committee fee in the amount prescribed by law “On state duty”. The relevant a. Customs clearance is practiced through e-declaration sys- executive authority verifies the information not later than three tem days from the time of appeal in “ASAN Visa”, checks restriction The State Customs Committee informs entrepreneurs that with list of the “Entry-exit and registration”. Then a visa is sent to the the view of simplifying procedures on declaration of goods and ve- e-mail address of the contact person. In case of failure the person hicles passing through the customs border, ensuring transparency is also informed. The electronic visas are not stuck in the passport of customs services, creating favourable business environment but presented together with the passport while crossing the bor- for entrepreneurs and promoting foreign trade operations, starting der check-point. Foreigners and stateless persons may apply for from May 04, 2016, customs clearance is practiced through e-dec- a new e-visa only after they will leave Azerbaijan. Prior to launch laration system. It is especially noted that the applicant is directly of ASAN Visa system, the tourists may obtain e-visas to through responsible for the correct preparation of the documents and the tourism companies. customs declaration basing on these documents. After the e-declaration signed by “Electronic signature” and sent to the customs j. Amendment to the law on Notarial actions dated June 14, body is approved by customs authorities, it enters into force and 2016 any change in these declarations is inadmissible. Therefore, cus- Amendment adds the notarization of the contracts on lease and toms authorities will examine any error in the declaration seriously use of agricultural land plots not exceeding five hectares conclud- and any customs offense will be subject to a special investigation. ed for the period not exceeding period of one year and notarization of power of attorneys for the lease or use of privately owned 5. Inter-territorial agreements agricultural land plots given for the period not exceeding two years a. U.S-Azerbaijan Open Skies Agreement enters into force to the list of notarial actions carried out by persons equal to notary The U.S. Departments of State, Transportation, and Commerce and other officials conducting notarial acts in accordance with the announce that on June 14, the US and Azerbaijan completed an Civil Code of the Republic of Azerbaijan. exchange of diplomatic notes that brought into force the U.S.-Azer- baijan Open Skies Agreement, which was signed on April 6, 2016. k. The amendments to the law ‘On State Duties’ The Agreement, which liberalizes bilateral aviation relationship, Amendments to the law “On State Duty” have come into force. will facilitate trade and travel between the US and Azerbaijan. The The President of Azerbaijan signed the decree on June 24, 2016. signing of the agreement was the result of more than three years According to the amendments, the state duty when getting a of negotiations, led by the Department of State, with the Depart- single entry and transit visa has been set in the amount of $20 ment of Transportation and the Department of Commerce which (earlier $50) (Article 16.1.6 of “On State Duties”). In addition, some deepens commercial and economic ties between the countries. state duties for consular operations carried out in Azerbaijan and The agreement will benefit US and Azerbaijani airlines, travelers, the diplomatic missions of Azerbaijan abroad (Article 17.8 of “On businesses, airports, and localities by allowing increased market State Duties”), the state duty when registering tourist visas and access for passengers and cargo. By allowing air carriers to better visas for students who study on the basis of an individual contract meet increasing demand in both countries, the Agreement will cre- (state duty was $20) ( Article 16.1.8 of “On State Duties”), transit ate opportunities for economic growth in sectors beyond aviation, visas (state duty when registering a single entry transit visa was including tourism and manufacturing. $20, double entry transit visa - $40) ( Article 16.1.9 of “On State Duties”) were abolished. 6. International Conventions a. Azerbaijan joined the United Nations Convention on Con- l. Amendment to the law on “Citizenship” dated June 24, 2016 tracts for the International Sale of Goods. The period of a foreigner’s permanent residency in Azerbaijan is Convention envisages the unification of international trade rules. calculated from the day of residence permit or refugee status ob- For Azerbaijan, this Convention will come into force on 1 June tainment. Prior to the amendment, the period of a refugee’s stay on 2017. the territory of Azerbaijan was not counted as a residency period.

40 Issue 23 AmCham Azerbaijan

Members’ News and Events TransCaspian Exhibition- the hub of meeting of transport specialists

In Azerbaijan, the development of the transport sector is held at each stand. The exhibition received a lot of positive one of the necessary and important conditions for economic feedback. development and to improve of the competitiveness of our As the leading event of the transport sector in the Caucasus transport services in world markets and to support the further region, the exhibition contributes to the development of transport integration of the country in the rapidly changing world of infrastructure in Azerbaijan, it demonstrates the potential of international relations. The swift socio-economic development attracting cargo for transit through Azerbaijan and helps to find of the country constantly forces us to upgrade the infrastructure the best transportation options for cargo owners. Transcaspian to meet the demand. The successful reforms now being 2017 exhibition will be held from 26th to 28th of April at Baku Expo implemented have already transformed this sector into one of Center. It will represent great opportunities for professionals, the most promising areas. Major transport projects such as the sector specialists and private individuals too, opening a world of North-South Transport Corridor, the Trans Caspian International new technology, ideas and, finally, a stream of new information Transport Route, and the multimodal Viking and Kars-Tbilisi- for a new generation. They will provide the opportunity to find out Baku projects are currently being implemented and will help about goods or services, to meet their producers or providers turn Azerbaijan into the main link between Europe and Asia. face to face. They will not only share with you their experience There are four main branches in our country’s transport sector: but may become your useful partners and colleagues. vehicles; rail; air and marine transport. Each of them has its own particular requirements, which need specific targeted developmental initiatives, and the annually held Transcaspian exhibition contributes to this purpose. TransCaspian exhibition is an effective platform for uniting various areas of the transport sector such as railways, marine industry, aviation, commercial vehicles, transport and logistics services. This is a unique opportunity to meet with leaders and specialists of public transport structures from Azerbaijan and other countries within the region. It is also a great platform for demonstrating the latest developments in transport technologies, learning about promising public infrastructure projects, finding new distribution channels, as well as exchanging experiences regarding the construction of railways, seaports, airports, logistics centres, Testimonials: manufacturing rolling stock and shipbuilding. TransCaspian is Ziya Mammadov, the Minister of Transport of Azerbaijan also a business platform for cargo owners to meet with freight “I have no doubt that the products, services and equipment carriers and an effective way to promote your logistics and that are presented at the exhibition will be of interest to foreign transport services in the Caspian and Caucasus regions. Since experts and will promote international cooperation." the day of its foundation, the exhibition has been supported by Robert Cekuta, the US Ambassador to Azerbaijan Ministry of Transport of the Azerbaijan Republic, TRACECA, “The exhibitions can be considered as an example of diversified Azerbaijan Export and Investment Promotion Foundation and economy and development of Azerbaijan.” the National Confederation of The Entrepreneurs (Employers) Taleh Ziyadov, General Director, Baku Port Organizations of Azerbaijan Republic (AEC). “The aim of Baku Port is to become the main trade and logistics The sector traditionally views the exhibition as the key event of centre in the Eurasian area. In this regard, participation in the year, and one that offers an accurate view of the status of such exhibitions is an excellent opportunity to demonstrate the the cargo transportation market. The anniversary TransCaspian latest transport technologies and to determine new markets to exhibition gathered 75 companies from 9 countries: Azerbaijan, sell products and exchange experience. Baku Port regularly Austria, Belarus, France, Germany, Kazakhstan, Lithuania, participates in exhibitions organised nationally and abroad, Russia and Turkey. speaks to potential local and foreign investors, and will continue The Minister of Transport of Azerbaijan Mr. Ziya Mammadov this trend in the future." attended the Exhibition and took part in the official opening Mircea Ciopraga, Secretary General of the PS IGC TRACECA ceremony of the exhibition. “TransCaspian Exhibition 2016 is an important transport Forum More than 2000 people from 32 countries attended the most in Eurasian region and a business platform for meetings, recent exhibition, and 90% of all visitors were transport industry exchange of experience and knowledge in the field of transport, professionals. On average, 7-8 business meetings per day were logistics and mobility.”

41 AmCham Azerbaijan

Social Events The 21st Annual Independence Day Picnic

Mambo Beach Club & Restaurant, as well as, background live music by “Dervish” band. Moreover, kids’ club entertainment, various games and competitions for adults and Tanura show The grandiose 21st Annual Independence Day Picnic was organized on July 9th, 2016 with attendance of 600 guests. It is a traditional event uniting people in a relaxed informal ambiance. All guests enjoyed delicious food provided by

42 Issue 23 AmCham Azerbaijan

amazed the guests. The highlight of the event was “Miss and show. Picnic guests also had a chance to experience a test drive Mister Picnic 2016”. The competition participants passed of an amazing Mercedes-Benz. The culmination point was the through three stages and honorable jury selected the best raffle draw with fabulous prizes. We are sure that all guests couple. The guests were impressed by stunning laser violin enjoyed from food, networking, shows and prizes and will consider taking part at this event in the upcoming years.

43 AmCham Azerbaijan

AmCham Calendar of Events

Award ceremony at Luncheon

Agriculture conference at ADA University BFI Committee June Meeting – 3 June 2016

AmCham Members` April Luncheon – 15 April 2016 THT Committee June Meeting – 9 June 2016

Conference on “Energy, Renewables and Sustainability" – Tax & Customs Committee June Meeting – 10 June 2016 22 April 2016 Tax and Customs Committee Meeting – 5 September 2016

ICT Committee April Meeting – 27 April 2016 Tax and Customs & Banking, Finance and Insurance Committee Meeting – 5 September 2016 THT April Committee Meeting – 28 April 2016

Picnic

Networking ICT Committee June Meeting – 10 June 2016 Conference on "Strategic Vision on Agriculture: Competitiveness, HR Committee April Meeting – 29 April 2016 Food Security and Social Aspects" – 21 June 2016 HR Specialist Program – 20 May 2016 AmCham Summer Closeout Luncheon – 28 June CSR Committee May Meeting – 24 May 2016 HR Committee June Meeting – 30 June HR Committee May Meeting – 27 May 2016 The 21st Annual Independence Day Picnic – 9 July AmCham Members` May Luncheon – 31 May 2016 Back to business cocktail – 15 September

44 Issue 23 AmCham Azerbaijan

Seminars Projects HR Specialist Program – 20 May 2016 Index of Prices On May 20, AmCham organized HR Specialist Program by The Consumer Price Index (CPI) is designed to measure the involvement of guest speaker, Ms. Mehriban Eyyubova, HR change in the average level of prices paid for consumer goods Manager for BP. She has addressed the topic on “The role and services by private households. AmCham Azerbaijan of HR function in overall business.” At this session, human has established its own CPI index and reports changes in resource employees and potential specialists among the AmCham Azerbaijan Index of Prices (AAIP) on a quarterly AmCham members have participated. The presentation of basis since 2006. Ms. Eyyubova touched to the evolution of human resources, The survey is conducted collecting the prices of a fixed including shift from welfare officer to HRM, changing business representative group or ‘basket’ of goods and services every environment, various models, best practices, trends and quarter. These prices are then compared to the prices of expectations of businesses from HR leaders. the same goods and services from the previous quarter and the price change calculated. The prices of these goods and HR Specialist Program – 9 September 2016 services are then combined into a single index measuring On September 9, HR Specialist Program of AmCham involved the overall level of prices. Different ‘weights’ are attributed to Associate Client Partner for Korn Ferry Hay Group, Mr. Umit various goods and services to reflect the average expenditure Duman. Mr. Duman conducted presentation on Performance by households. The sample of representative goods and Management session for HR employee and specialists services for which the prices are collected each period is among the AmCham member companies. The presentation held constant and the set of weights is fixed to reflect the touched to Megatrends (such as digitalization, globalization) importance in typical household budget of particular good or which require shift in performance management, problems service. of performance management systems, as well as trends and As before, AmCham reports two AAIPs – one for Expatriate strategies, targets and objectives in businesses’ performance households (AAIPE) and one for Azerbaijani households management issues. (AAIPA). Prices were collected in Baku. Over the last year (the base is 100 at 30 June 2015) the AAIP rose by 23.61% Seminar on Cold Chain Efficiency – for Azerbaijani consumers and 24.02% for Expatriate 9 September 2016 consumers. In the 2nd quarter of 2016 the AAIP rose by AmCham Azerbaijan had a pleasure to support the U.S. 0.02% for Azerbaijani consumers and 0.01% for Expatriate Department of Commerce’s Special American Business consumers. The upward effect on the AAIP rate came from Internship Training Program (SABIT) and Global Cold public utilities & transportation, where Index of Prices rose Chain Alliance for conducting cold storage and cold chain by 3.45%. The downward effect on the AAIP rate came from assessments at select industrial facilities in and around Baku, Fruits & Vegetables where Index of Prices went down by as well as professional seminar. 8.93% due to seasonal affects. The industry experts performed industrial facility visits where Full version of Index of Prices is uploaded to the AmCham they met with staff, conducted walkthroughs of the facilities web-page. to assess their cold storage, and discussed their findings and recommendations. At the completion of the assessment, these companies received a summary of the experts’ recommendations. In addition, Cold Storage and Cold Chain Logistics seminar led by the Global Cold Storage Alliance experts, covered global trends and best practices in cold storage. Also new cold storage innovations and technologies and ways to optimize efficiency and conserve energy were covered. Considering the importance of economic diversification, around 50 company representatives, including AmCham member companies, took part at this highly important seminar.

45 AmCham Azerbaijan

(M2M) Discount Program

DISCOUNT CONDITIONS food and beverage outlets. This Am- M2M Plus as well. it was a demand driven initiative to We do believe our members appreci- Cham initiative is recognized as a M2M – INDIVIDUAL DISCOUNTS expand M2M to something bigger and ate an opportunity to benefit from Am- strong promotional vehicle aimed to This program allows two people from tangible. With this in mind, we devel- Cham M2M and M2M Plus Discount add more value to companies’ mem- each Member company to obtain dis- oped M2M+ Discount Program en- Programs exclusively designed for bership by helping to increase the counts in below mentioned companies visaging corporate discount rates not our Member Companies to obtain as volume of sales and to save costs. To upon presentation of special M2M cards. only for two delegates, but for a whole well as for the Associates to provide become a discount provider you need M2M+ CORPORATE DISCOUNTS company within AmCham Azerbaijan discounts on a wide range of products to complete M2M Discount Program AmCham Azerbaijan has a ground- network! Please contact AmCham of- and services from the hotel stays to Agreement, print it out and return the breaking commercial initiative to make fice, to receive more information about signed copy to us. Please membership in the Chamber even corporate discount packages repre- mention in the agreement more valuable. Analyzing our mem- sented in M2M Plus Program. if you wish to participate in bers businesses and daily operations,

ABSHERON HOTEL GROUP - 15% SPA STMARK MARKETING AND CONSULTING - 10% Retail/rack price of room - 10% discount on each service TRAVEL, HOSPITALITY AND LEISURE - 15% Laundry - 15% Food and Beverage (Only Boulevard Hotel) EDUCATIONAL SERVICES

QATAR AIRWAYS - Up to 20% discount on flights to more than 150 directions (excluding Doha and Tbilisi) CHENOT PALACE ADA UNIVERSITY - 20% discount on Chenot Programs (Full Board -10% on Executive Education Corporate Bio-Light or Detox food is included in the program) Trainings Programs - 15% discount on Room Rates

ABSHERON BAKU -10% discount on all Food & Beverages – Discount is applicable maximum for 20 people per card. The card cannot be applied for meetings & events held in hotel A-LEVEL EDUCATION CENTER -10% discount on all Spa Treatments – The limit is HOLIDAY INN BAKU -15% discount for education and support 20 guests per card. Discount does not apply for spa • 10% Discount on Food and Beverages at services products retail Holiday Inn Restaurant Marina 18 and Sagi Bar -30% discount on Laundry & Cleaning – Discount is • 15% Discount on Holiday INN Spa annual OTHER applicable for minimum on 3 days service subscription (fitness center and swimming pool) • 10% Discount on “Your Special Day” events inclusive Weddings, Engagements, Henna Parties

PROFESSIONAL SERVICES

HYATT REGENCY BAKU - 15% discount on restaurant and bar AZQTEL LLC - 15% discount on laundry and dry cleaning SIAR RESEARCH AND CONSULTING GROUP • 20% discount for SkyPort Wireless Leased Line - 20% discount on Spa treatments at Armaiti Spa - 10% discount on a number of services and & Fitness projects

SEABAK LLC FOUR SEASONS HOTEL BAKU - up to 10% on IT Support Services - FREE migration to CLOUD.AZ Services -10% off for Zafferano Restaurant & Bentley`s Bar OFFICE SYSTEMS - up to 5% on IT Equipment, Cartridges and -10% off for Jaleh SPA (treatment, gym offer, retail • 10% discount for office chairs Software Licensing products) • 15% discount for hard furniture - up to 15% on Internet Services at LandMark • 40% discount for office partitions and other business centers

46 Issue 23 AmCham Azerbaijan

47 AmCham Azerbaijan

48 Issue 23