NEW INVESTMENT OPPORTUNITIES IN AZERBAIJAN ABOUT THE COMPANY Founded: March 2006 Goal: • To develop the non-oil sector of Azerbaijan; • To add value to the economic growth; • To support the development of capital market. • Cumulative project value: 860 mln. USD* • AIC investments value: 180 mln. USD* • AIC equity capital: 102 mln. USD* *1 USD= 1.7 AZN for March, 2021 INVESTMENT PRINCIPLES Investments in non-oil sector Equity investments, including minor growth capital Brownfield and greenfield Minority shareholding projects, as well as the (up to 30%) establishment of joint funds 5-7 years of participation Max. capital – 10% of AIC equity (target) (subject to increase up to 20%) ADVANTAGES OF INVESTMENT WITH AIC PRIORITY DIRECTIONS GREEN ENERGY POTENTIAL COOPERATION – MACHINERY PRODUCTION AND IMPORT IN AZERBAIJAN, $BLN 3.8 3.4 3.5 0.34 0.35 0.34 2018 2019 2020 Production Import Source: Ministry of Economy of the Republic of Azerbaijan/State Statistical Committee of the Republic of Azerbaijan POTENTIAL COOPERATION – PHARMACEUTICALS IMPORT IN AZERBAIJAN, $MLN STATE PROGRAMS BUDGET, $MLN 377.1 290.2 296.5 55.1 55 61.4 2018 2019 2020 2017 2018 2019 Source: State Statistical Committee of the Republic of Azerbaijan Source: Ministry of Health of the Republic of Azerbaijan POTENTIAL COOPERATION – FOOD PROCESSING PRODUCTION AND IMPORT IN AZERBAIJAN, $BLN 1.9 2 2.1 1.07 0.9 1.04 2018 2019 2020 Production Import Source: Ministry of Economy of the Republic of Azerbaijan/State Statistical Committee of the Republic of Azerbaijan POTENTIAL COOPERATION – AGRICULTURE PRODUCTION AND IMPORT IN LOW MARGIN COST OF PRODUCTION* AZERBAIJAN, $BLN 1.40 1.20 4.6 4.9 4.1 1.00 0.80 0.60 0.40 0.20 0.88 0.82 0.7 - Turkey China Uzbekistan Kazakhstan Azerbaijan 2018 2019 2020 Gas price, Kw/$ Logistics, cost per kg Production Import Marginal $ cost of ex-works production per kg. Average Russian prices (last 3 years) Source: State Statistical Committee of the Republic of Azerbaijan Calculations based on real case Tomato producer in Azerbaijan Ministry of Economy of the Republic of Azerbaijan * ex-works prices to Moscow POTENTIAL COOPERATION – GREEN ENERGY Production in Azerbaijan, mln Kw/h 24.3 25.2 26 NUMBER OF SUNNY DAYS IN AZERBAIJAN (2020) 1.8 1.8 1.7 Baku Sumgait Ganja 2017 2018 2019 Total Energy Production 243 243 195 Share of Green Energy Source: State Statistical Committee of the Republic of Azerbaijan OUR SELECTED PROJECTS Logistics Center in Aktau Holcim Azerbaijan (exited in 2015) Baku Shipyard Company AzerTokhum (seed processing plant) Diamed Co (production of syringes) Saba (poultry) Exited in 2020 INVEST IN AZERBAIJAN AZERBAIJAN AT A GLANCE 10 Million Population 99.8% Literacy Rate N21 4.8 M 95% 77% by labor market labor force Employment rate employed by private efficiency sector Source: WEF Global Source: State Statistical Committee of the Republic of Azerbaijan Competitiveness Report 2019 • Around 30,000 students graduate from higher education institution annually • More than 3,500 graduates of about 370 leading universities under the “State of Education of Azerbaijani Youth Abroad” MARKET ACCESS Free Trade Agreements (FTA) allowing free trade without custom duties with : Russia Ukraine Georgia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan Turkmenistan Moldova Belarus. Preferential Trade Agreement with Turkey. AZERBAIJAN AS A TRANSPORT HUB 70% Time Saving China-Europe Maritime Route 60% Time Saving North-south Route (India - Europe) 50% Time Saving North - South • 15 thsd km of Roads and Highways • 2954 km of rail roads China- Kazakhstan - Caspian Sea – Azerbaijan – Georgia - Black Sea – Poland • Baku-Tbilisi-Kars Railroad 6500 km: 14 days, $4100 • 6 New International Airports China - Kazakhstan - Caspian Sea – Azerbaijan - Turkey (Istanbul/Mersin) 6410 km/5571 km: 11/9 days: 3500/3200 $ • New Baku International Sea Trade Port India - Iran - Azerbaijan (Astara) – Russia – Finland 7800 km: 22 days: 2170 $ • Cargo Transportation Via India - Persian Gulf - Iran - Azerbaijan – Georgia – Black Sea – Ukraine – Poland TRACECA Corridor 6900 km; 20 days; 6000 $ INVESTMENT OPPORTUNITIES PREFERENTIAL ACCESS REDUCED TAXATION TO MARKETS WITH RAPIDLY IMPROVING PROGRAMS AND TOTAL GDP WORTH $3 BUSINESS ENVIROVMENT SIMPLIFIED TRILLION AND TOTAL ADMINISTRATIVE POPULATION OF 315 MILLION BURDEN STRONG SIDES OF THE BUSINESS CLIMATE OVER 80 % OF EUROPEAN POLITICAL STABILITY COMPANIES WOULD INFRASTRUCTURE EFFECTIVE REFORMS IN: CHOOSE AZERBAIJAN AGAIN FOR THEIR LABOUR COST TAX BUSINESS OPERATIONS PREDICTABILITY OF CUSTOMS ECONOMIC POLICIES LABOUR AND SOCIAL MIGRATION POLICY PROTECTION ASAN GOVERNMENTAL SERVICE According to the EU Business Climate Reports confidence of EU businesses in Azerbaijan economy has increased. In comparison with 2016 this indicator has increased in 2020 from 60% to over 80%. Source: European Union’s Business Climate Report 2020 SPECIAL CONDITIONS (IPD) 50% Reduced Or 0% No restriction on capital Corporate Tax movement 0% VAT And No Customs Duty On Minimum number of state Imported Machinery, Tech on-site audits Equipment And Installations 0% Land Tax No limits on profit repatriation 0% Property No legal limitations on ownership structure In accordance with the Tax Code and the Law of the Republic of Azerbaijan “On customs tariffs,” the businesses- residents of the industrial parks are exempt from corporate, land, and property tax, as well as value-added tax (VAT) for 10 years. Additionally, there are no customs duties applied for imported equipment and technology for 7 years. STREAMLINED PROCEDURES • 2 business days for business registration; • 10 business days to get investment license; • One-stop-shop (ASAN service) system for: business; registration, customs, construction permits and licensing; • Single window system for inspection of goods and vehicles; • “E-customs” for a few services, including e-declaration; • No export duties; • Automated digital information system determines type of customs entry channel. INVESTMENT CLIMATE Limited Price Control No limits on the amount of foreign capital in companies Temporary residence No restrictions on repatriation allowed upon investments of profits Temporary local No prior authorization of counterpart requirement profits No foreign exchange No prior authorization of restrictions foreign investment required No discrimination between No technology transfer foreign and domestic restrictions investor STATE FINANCING MECHANISMS Entrepreneurship Mortgage and Credit Guarantee Development Fund Fund of the Republic of Azerbaijan 5 % Annual credit rate Credit Guarantee Up to 10 mln. AZN On up to 10 mln. AZN Credit period 3, 5, 10 years EU-Azerbaijan Trade Cooperation Turnover between EU and Azerbaijan 2015-2019, bln $ EU – Azerbaijan has Partnership and Cooperation Agreement signed on 1999 which eliminates trade quotas between the two and aims to gradually approximate Azerbaijan’s standards to those of the EU. AZERBAIJAN IN GLOBAL RANKINGS DOING BUSINESS REPORT 2020 ECONOMIC FREEDOM INDEX 2021 Russia 28 Czech Republic 27 N34 Turkey 33 N38 Azerbaijan 38 Azerbaijan 34 Turkey 76 Czech Republic 41 Italy 68 Italy 58 Russia 92 BB+,Outlook Stable Ba2, Outlook Positive BB+, Outlook Stable Top 5 MOST EFFICIENT REFORMS According to the World Bank’s “Doing Business 2020” report, Azerbaijan joined the top 10 “reformer countries” Source: “Foreign Business in Azerbaijan” – Business Climate Survey 2020, AHK/KPMG EXPECTED REFORMS Source: EU Business Climate Report 2020 Expected reforms include: • Macroeconomic Environment • Governance, Justice, Crime Control • Human Capital & Labor Market • Infrastructure & Utilities • Financial Markets • Investor Protection & Corporations • Foreign Trade Facilitation • Technology & Innovations • Healthcare THANK YOU FOR ATTENTION CONTACT US: [email protected] +994 12 488 80 10 "Baku White City" office building, 25E Nobel ave. Baku, Azerbaijan, AZ1025.