After gaining independence Azerbaijan started to develop strong economic relations with Turkey. Strategic partnership between two states embraces in economic field, too. In order to expand economic relations between Turkey and Azerbaijan such organizations as TUSIAB (International Society of Turkish Industrialists and Businessmen) and TIKA (Turkish Cooperation and Development Agency) have been involving.
According to the treasury department of Turkey, the country invested more than 21.5 billion USD abroad in 2010. The Turkish media reported that the country has invested the largest amount of investment in the Netherlands, Azerbaijan and Malta. Turkish investment could be calibrated as a leader in the non-oil sector of Azerbaijan. Up to this date Turkish investment in Azerbaijani economy prevails 6 billion USD.
Turkish companies became main investors in Azerbaijan, together with American and British firms. According to the Ministry of Taxes of the Republic of Azerbaijan, 1,330 Turkish investment legal person were registered in the state register of taxpayers. The large-scale contract works were carried out by Turkish companies in Azerbaijan. We can show the construction of such buildings as ISR Plaza, European Hotels, the Central Bank, the Central Clinical Hospital, Bina airport, etc. Moreover the construction of Alat-Gazimammad road, Baku-Supsa oil pipeline, Sangachal terminal and others have been facilitated by Turkish companies. Turkish companies are mainly in the fields of banking, construction, food and beverage processing etc.
Coca-Cola Baku plant is one of the largest Turkish investments in Azerbaijan with an investment more than 100 million USD. Azercell, other representative of Turkish capital in Azerbaijan, has invested more than 1 billion USD in this country. According to Azerbaijan’s Ministry of Taxes, Azercell Telecom LLC is the second largest taxpayer operating outside of the country’s oil sector. Company declared that during its first five years of activity, it paid a total of 780 million USD into the state budget and other state funds. Azercell Telecom LLC reports that it currently holds 55% of the market share in mobile telecommunications.
In the field of banking, cooperation between Turkey and Azerbaijan is also developing successfully. For the present there are such banks and credit institutions in Azerbaijan as “Bank of Baku”, “Azer-Turk bank”, “Royal bank”, “Pal bank”, “Bazis non-bank credit organization”, “Yapi Credit bank Azerbaijan” are acting with the participation of Turkish capital.
The number of tourists from Azerbaijan to Turkey tremendously increases and stands for about 530,000 annually. To this end it means rising capital inflow for Turkey.
In its turn Azerbaijan invested 4.5 bln USD in Turkish economy by means of 844 companies were registered in Turkey. Azerbaijani companies in Turkey mainly engaged in the fields as petrochemical, construction, banking, trade etc. "Invest in Turkey" reports that azeri companies account for 136 of the 2,179 companies established by foreigners in 2010, making businessmen from the Turkic nation the fourth largest group of foreign entrepreneurs in Turkey last year.
Promising relationship between Azerbaijan and Turkey has especially helped SOCAR (Azerbaijan’s state oil company) to increase its investment activity in Turkey. Turkey is considered attractive market for the SOCAR investments. SOCAR and Turcas Petrol AS, a Turkish fuel and energy company, own 51 percent of Petkim. SOCAR plans to invest 17 billion US dollar in Turkey in seven years, Dunya reported, citing Sakit Samadov, sales manager at SOCAR’s Turkish unit Petkim Petrokimya Holding AS. The investments will include an oil refinery, petrochemicals plants and a port at the site of Petkim near the western town of Aliaga, Samadov said, according to the newspaper. The refinery will be capable of processing 10 million tons of raw materials, making it one of the most important processing centers in Europe.
In this way SOCAR will use refinery in Ceyhan at the Mediterranean Sea to reach European markets. As oil is not permanent income source, SOCAR softly shifts the centre of gravity to the fields of downstream and upstream. Even in the post-oil period downstream and upstream activities will maintain SOCAR's advantage in the long-term period.
TANAP is one of the promising project which might attract additional waves of Azerbaijani investment to Turkey hitting 6 billion USD.
Over time capital movement between Azerbaijan and Turkey shifts in favor of former. If at the first stage of independence Azerbaijan was receiving huge amount of Turkish capital, recently quite the reverse process could be observed.
In economic perspective leadership of Turkey and Azerbaijan proved the accuracy of the notion of "one nation with two states”.
Dr. Vusal Gasimli
Center for Strategic Studies Under
The President of the Republic of Azerbaijan
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