Doing Business in Azerbaijan: 2018 Country Commercial Guide for U.S

Doing Business in Azerbaijan:

2018 Country Commercial Guide for U.S. Companies

Table of Contents Doing Business in Azerbaijan ______4 Market Overview ______4 Market Challenges ______5 Market Opportunities ______6 Market Entry Strategy ______7 Political Environment ______7 Political Environment ______7 Selling U.S. Products & Services ______7 Using an Agent to Sell U.S. Products and Services ______7

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Establishing an Office ______8 Franchising ______9 Direct Marketing ______10 Joint Ventures/Licensing ______10 Selling to the Government ______10 Distribution & Sales Channels ______11 Express Delivery ______12 Selling Factors & Techniques ______12 E-Commerce ______13 Trade Promotion & Advertising ______13 Pricing ______14 Sales Service/Customer Support ______14 Protecting Intellectual Property (IP) ______14 Local Professional Services ______15 Principal Business Associations ______15 Limitations on Selling U.S. Products and Services ______15 Due Diligence ______16 Leading Sectors for U.S. Exports & Investments ______16 Energy Sector ______16 Agricultural Sector ______20 Information/Communications Technology ______22 Banking and Finance ______23 Transportation ______25 Travel and Tourism ______26 Customs, Regulations & Standards ______28 Trade Barriers ______28 Import Tariff ______28 Import Requirements & Documentation ______28 Labeling/Marking Requirements ______29

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U.S. Export Controls ______30 Temporary Entry ______30 Prohibited & Restricted Imports ______30 Customs Regulations ______31 Standards for Trade ______31 AZERBAIJAN INVESTMENT CLIMATE STATEMENT 2018 ______34 Executive Summary ______34 1. Openness To, and Restrictions Upon, Foreign Investment ______36 2. Bilateral Investment Agreements and Taxation Treaties ______39 3. Legal Regime ______39 4. Industrial Policies ______43 5. Protection of Property Rights ______44 6. Financial Sector ______46 7. State-Owned Enterprises ______49 8. Responsible Business Conduct ______50 9. Corruption ______51 10. Political and Security Environment______52 11. Labor Policies and Practices ______53 12. OPIC and Other Investment Insurance Programs ______54 13. Foreign Direct Investment and Foreign Portfolio Investment Statistics ______55 14. Contact for More Information ______56 Trade & Project Financing ______57 Methods of Payment ______57 Banking Systems ______57 Foreign Exchange Controls ______58 U.S. Banks & Local Correspondent Banks ______58 Project Financing ______58 Business Travel ______59 Business Customs ______59

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Travel Advisory ______60 Visa Requirements ______60 Currency ______61 Telecommunications/Electric ______61 Transportation ______62 Language ______62 Health ______62 Local Time, Business Hours and Holidays ______63 Temporary Entry of Materials or Personal Belongings ______63

Doing Business in Azerbaijan

Market Overview

2017 was marked by the stabilization of the Azerbaijani economy following the economic crisis in 2015 and associated stagnation in 2016. Low world oil prices from 2014 to 2016 hit Azerbaijan’s economy hard, resulting in two currency devaluations in 2015, inflation at 13% in 2017, and the closure of several banks. Azerbaijan's GDP grew 0.1% in 2017, recovering from a 3.8% contraction in 2016 as the price of oil recovered, growth in the non-oil sector increased, and the government raised public investment. According to Asian Development Bank (ADB), IMF, and EBRD forecasts, GDP is expected to grow by 1.7% to 2.5% in 2018, and by 2% to 3.5% in 2019. Exports rose by 34% and imports by 3% in 2017, resulting in a trade surplus of $5 billion.

As a result of the economic downturn, Azerbaijan decided to diversify its economy, targeting the agri