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Dubai-Azerbaijan ties to grow
Abdul Basit / 20 November 2012
The Dubai Chamber of Commerce and Industry opened its first overseas office in Azerbaijan, with the Dubai Chamber chief confident that there will be a significant boost in trade and investment flows between both sides.
Following a successful trade mission to Azerbaijan, director-general Hamad Buamim talked to Khaleej Times about the business synergies that exist between these two countries and how the Dubai Chamber is helping to facilitate and increase two-way trade and investment.
Why has the Dubai Chamber focused on enhancing ties with Azerbaijan?
Azerbaijan is an economic leader in the Caucasus region. It accounts for nearly 73 per cent of the whole economy of this region and is one of the leading economies in the CIS in terms of FDI per capita. The main sources of FDI for Azerbaijan are mainly from the UK, US, Japan, Norway and Turkey. The cumulative FDI in 2011 amounted for approximately $4.4 billion. After declaring independence from the former USSR, Azerbaijan reinforced its economic potential and established strong and firm macroeconomic stability. Today, Azerbaijan is one of the leading economies globally and the second fastest growing economy among 179 countries in terms of GDP per capita between 2001 and 2010.
Trade is a good indicator of the strength of economic ties between the two countries. How strong is this between Dubai and Azerbaijan?
Last year, Dubai’s non-oil trade with Azerbaijan amounted to Dh1.62 billion, making the country the emirate’s 70th largest trade partner. While this is not remarkable in itself, what is worth noting is the growth between 2010 and 2011. During this time, non-oil trade jumped by 92 per cent, which is a significant leap and one that demonstrates the huge potential there is for enhanced trade and investment flows between Dubai and Azerbaijan. If you look at the UAE as a whole and not just Dubai, the picture is also extremely positive, with total trade between the UAE and Azerbaijan during the first nine months of this year exceeding $300 million. This is a growth of 24 per cent in comparison to the same period last year, with the main goods traded including raw materials, information technology and agricultural products, and items for light industry.
To what extent has Dubai and UAE companies invested in Azerbaijan and vice-versa, and how do you expect this to grow?
Between 2002 and 2012, UAE companies have invested over $200 million in Azerbaijan, while at present there are 218 Azerbaijani companies operating in Dubai. We envisage that this number will increase following the opening of our overseas representative office. This office will provide Azerbaijani entrepreneurs and investors with access to information about business opportunities in Dubai and will act as a point of contact on the ground.
What are the areas that present opportunities for economic cooperation?
While others do exist, we have focused on six major areas of joint economic cooperation. These are transport and logistics; construction and infrastructure; tourism and hospitality; agriculture and food processing; financial services; and information and communication technology.
Taking each in turn, Dubai’s status as a major global re-export hub can offer Azerbaijani traders an air-sea route to a number of high-growth consumer markets in the Middle East, Southeast Asia and Africa. We have expertise in supply chain management and greening the supply chain which we could export to Azerbaijan as well as assistance in developing road and rail transport systems.
Opportunities exist for Dubai-Azerbaijan collaboration on sustainable housing and construction projects in Azerbaijan and the wider Central Asia region. Likewise, the Dubai industry could partner with Azerbaijani companies to set up manufacturing facilities, producing bricks, cement and marble.
On investments in the fast growing tourism sector, Azerbaijan has strong growth potential with a forecasted 7.5 per cent growth per annum between 2012 and 2022. Dubai has significant experience in building hotels and developing infrastructures for tourism, eco-tourism, medical tourism and other leisure facilities, which can be utilised by Azerbaijan. Due to its rich bio-diversity and many climate zones, Azerbaijan could be an ideal location to secure fruit and vegetable supplies to Dubai, which would help meet food security needs. Dubai businesses can contribute by investing in the development of agricultural machinery, techniques and production of fertilisers that will help improve food productivity. Meanwhile, agri-businesses provide another area of cooperation for Dubai businesses, especially in the production of bakery and flour products, frozen vegetables and fruits, canned fruits, condiments, meat and dairy products, honey processing and packaging for confectionery production.
Moving on to the financial sector, Dubai has seen robust growth in this area and can transfer its expertise with regards to SME financing, insurance, Islamic financing and stock and commodity exchanges to Azerbaijan.
Finally, Azerbaijan’s ICT market offers prospective investors the opportunity to profit by bringing quality high-speed internet connections across the country as well as working on projects to increase computer literacy thus increasing the demand for ICT products and services. Dubai is well placed to facilitate the provision of hardware and software to Azerbaijan schools and universities as well as software for risk management, fund management, accounting and compliance. Opportunities also exist in the exchange in expertise in e-government technology.
Russia, Turkey partnerships offered
The UAE and Azerbaijan can form joint investment partnerships in the markets of Russia and Turkey, according to Azerbaijan President Ilham Aliyev during a meeting with the visiting Dubai Chamber delegation in Baku.
The president lauded the Dubai Chamber’s efforts in establishing its first overseas representative office in the CIS region in Azerbaijan, according to a statement issued by the Dubai Chamber on Monday. Aliyev stated that the opening of the new office will help in strengthening economic cooperation between the two countries in the long run.
He said that Azerbaijan’s finance and infrastructure sectors need Dubai’s expertise, while food processing and agriculture are the industries in which the UAE can benefit from, stating that Azerbaijan is known for the quality of its food products while the UAE seeks its food supplies from the overseas markets.
He also stressed on the potential offered by the tourism sector that he said is a lucrative area of investment for UAE businesses as he looked forward for joint investments, particularly in the prestigious Baku White City, which is one of the largest modern development projects in the world.
Hamad Buamim, director-general of the Dubai Chamber, said that the trade mission has achieved its objective of reaching out to promising markets of the world, especially through the successful opening of the Dubai Chamber’s first overseas representative office in Baku, as well as the sharing of synergies in the areas of investment potential such as agriculture, construction, tourism, hospitality and logistics by large companies from both countries.
The Dubai Chamber successfully concluded its trade mission to Azerbaijan as it opened its first overseas representative office in Baku, and organised the UAE-Azerbaijan Business Forum as well as important business meetings between the UAE and Azerbaijani businesses.
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