A Word from the Executive Director of AmCham Dear Readers, This issue, focusing on Travel and Tourism, was one of the Winter / Issue 8 most difficult we have made so far. This seemingly light and easy topic has been unwrapping layers and layers of issues Credits that we wanted to highlight and explore. Some of them, like the education in the tourism sector, developments in the Old Editor-in-Chief: City and merger of two major European carriers we managed Nargiz Nasrullayeva-Muduroglu to cover. Some, like the major issue of the airport development are yet to be elaborated on. A high level meeting with the Editor: management of "Azerbaijan Airlines" (AZAL), which is operating Emma Triller the country's main air hub - Heydar Aliyev International Airport, Design & layout: has been held, which will hopefully lead to the establishment of a working dialogue QuadroM Media Agency where AmCham members will have an opportunity to suggest ways to improve the airport operations as well as learn of any changes that will take place first hand. Photographer: As always, the issue also includes a number of articles contributed by our members, Huseyn looking at the questions of current importance such as the Competition Code, compulsory insurance and the transition to IFRS. It also gives you an overview of Journalist: AmCham's own activities including our relentless efforts to facilitate our members' Faina Hanifayeva interactions with the State Migration Committee and the establishment of an unprecedented cooperation with the Parliament of Azerbaijan that will give AmCham Contributing Editors: members an opportunity to review and comment on the business related legislation Deloitte Azerbaijan Jeyhun Huseynzada (PWC) to be considered and adopted by the Milli Majlis. Mushfig Aliyev (PWC) Enjoy your reading and do let us know what you think! Samir M. Hadjiyev (MWP) Kind Regards, Advertisers: Nargiz Nasrullayeva-Muduroglu Austrian Airlines Azercell Azerfon-Vodafone Editor’s Comment Bakcell Gaz de France Dear Readers, Hyatt Hotels Iteca Caspian I think we all agree that Azerbaijan has tremendous Landmark Hotel potential for tourism. Stretches of the country which are Mozaik LLC largely unspoiled offer possibilities for eco-tourism, as Nobel Oil Park Inn/ Radisson Blu do the beautiful and rugged Trans-Caucasus Mountains Pasha Construction with their string of ancient Alban ruins. The experience of Pricewaterhouse Coopers Azerbaijan’s unique range of climatic zones and migratory Procter and Gamble bird populations, to say nothing of the value of this country as Royal Bank a fascinating melting pot of ancient cultures and civilizations, SilkWay Business Aviation will all appeal to travellers looking for new sights and Shieldbearer adventures. I see Azerbaijan as waiting to be discovered, a bit like a gem embedded in a rock and requiring careful extraction and much cutting Cover artwork: and polishing before it can be properly admired. Mark Triller However, we must be patient. This country is still relatively young, and there is much Printing: to do to turn its natural potential into an international tourism magnet. We should Nurlar not compare Azerbaijan to countries which have been honing their tourism industry for decades. The government has expressed a firm commitment to stimulating the Publisher: tourism sector. Developments such as the all important establishment of infrastructure American Chamber of Commerce and educational programmes geared to preparing much needed personnel for the in Azerbaijan hospitality sector are under way. It is to be hoped that these developments will Tel: (+994 12) 497 13 33 continue and expand to provide more opportunities and also to include national Fax: (+994 12) 497 10 91 www.amchamaz.org parks not simply as a matter of pride, but also as ecosystems to be protected and as a viable source of income. The development of a service culture, (not to be confused Advertising opportunities: with the inherent hospitality of the Azerbaijani people), the streamlining of travel Please contact the Editor procedures, and the regulation of prices in relation to services in the tourism sector, Emma Triller will be invaluable in putting Azerbaijan firmly in the ranks of countries confidently [email protected] competing in the very lucrative international tourist trade. Tel: (+994 12) 497 13 33 Thanks to all our advertisers and contributing editors for your support. The articles in IMPACT AZERBAIJAN express the opinions of the authors and do not necessarily reflect the position of Best wishes, the American Chamber of Commerce in Emma Triller 1 Azerbaijan. contents IN FOCUS 7 Interview: Deputy Minister of 20 Interview: Puneet Tandon, GM, Tourism & Culture Hyatt Hotel, Area Director, Caucasus A candid look at the hospitality industry in Azerbaijan, realistic solutions and some very positive signals as Hyatt Hotel continues to upgrade its facilities. Customers can expect a new look in many areas. Teymur Mehdiyev speaks to Impact about 24 Interview: Hakan Tin, Manager, Lufthansa government initiatives to stimulate tourism in Lufthansa has merged Azerbaijan. with Austrian Airlines and bmi. What does this 9 Gila Altman: Tourism in Azerbaijan mean for the 3 airlines expedition into an unknown environment and their customers? Principal Advisor in ATI’s Research and We find that there’s still Development Department Gila Altmann draws on no better way to fly. her years of experience in her frank appraisal of the tourism industry in Azerbaijan, and her belief in the vast potential of this country to develop a 26 Interview: David Morris, GM, domestic as well as international market. Radisson Blu and Park Inn. 12 Interview: Mikayil Jabbarov, Welcome Radisson Director, Icheri Sheher BLU. An interview about Radisson BLU’s new New plans for the branding - the reasons for Old Town. Director the change and the fact Jabbarov talks to that Radisson is a name Impact about recent and that people will continue future developments in to identify with quality Azerbaijan’s open-air service. museum. 29 Interview: Kaan Baral, P&G Country Director 16 Interview: For all the consumers of Jafar Jafarov, Rector, ATI Procter and Gamble’s impressive range of The Rector of Azerbaijan healthcare, beauty and Tourism Institute describes hygiene products, here’s the achievements and a candid and informative challenges of a new interview with Kaan university preparing young Baral, on Doing people to take their place Business in Azerbaijan. in the hospitality industry. 2 Winter / Issue 8 contents 32 Interview: Randolph Decker, Pasha Construction AMCHAM AZERBAIJAN 42 About us Baku, Azerbaijan is undergoing a facelift. Construction is booming and the company leading the way is Pasha Construction. As a member of AmCham, your company has access to a vast network of business MEMBERS information and contacts. 34 Competing for Azerbaijan 44 AmCham & the Azerbaijani Parliament Alum Bati, Wicklow Corporate Services Ltd. comments on the draft for Azerbaijan's new 45 AmCham Projects Competition Code, some aspects of which are likely to impact on the business sector. 48 Business Events 38 Compulsory Insurance in Azerbaijan: What’s new? The existence of a sound insurance market is an essential component of any successful economy. Comments on the main changes to the proposed draft law On Compulsory Insurance. From Michael Wilson & Partners. 39 Transition to IFRS: 51 Committee Highlights 52 Members’ News and Events 56 5th Annual Black and White Ball PricewaterhouseCoopers provides an overview of the technical and procedural aspects of the transition to International Financial Reporting Standards in Azerbaijan. 41 Tax News Deloitte Azerbaijan Tax News on new draft protocols to the ACG Production Sharing 58 M2M Discount Program Agreements, amendments to the law ‘On Labor Pensions’ and a new double-tax treaty. 60 Funny Business 3 in focus New Members The American Chamber of Commerce is proud to announce that the number of our members has now exceeded 200. We would like to congratulate everybody on this achievement and say that we are committed to supporting our members in working together to build a strong future for business in Azerbaijan. Geoplay Pasha Insurance International MMC CNIM Azerbaijan Language LTD Services Direct Representative AZ Insurance Office of ATR Caspian Ltd. GoldenPay BJ Services Company Middle East Limited Region Consult MMC GDF SUEZ K.M.Dastur & Exploration Company Caspian B.V. 4 Winter / Issue 8 in focus Message: Dan Matthews, President of the Board of Directors will set out the scope of our mutually communities to alert the government beneficial cooperation. to the harmful effect the law would have on Azerbaijan’s attractiveness as Even in advance of signing a a destination for foreign investment. memorandum of understanding, we We were pleased that the President have already begun to intensify our ultimately vetoed the law. cooperation. The Milli Majlis has asked for our commentary on the new draft As every expatriate in Azerbaijan Antimonopoly Law currently working its knows, extensive changes to the way through the legislative process. To system of issuing visas, work permits that end, we have established a working and residency permits were introduced group from among our membership to in mid-2009. From the beginning, prepare commentary on the draft law. AmCham has been actively engaged This is an important opportunity for us, with the State Migration Service to help the local business community, to share our members understand the new rules our views on the impact of the specific and make compliance easier. Thus provisions of this key draft legislation. far, in addition to having the head of We are committed to providing the State Migration Service, General comments that are practical, balanced Arzu Rahimov, speak at one of our and constructive to be as useful to the monthly luncheon meetings, we have Milli Majlis as possible and ensure our met privately with him on five occasions continued cooperation. to discuss issues of concern and have hosted a seminar at which our It is my hope that this cooperation members were able to ask questions will help to avoid the situation we directly to migration officials.