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Expanding horizons: Exploring the strategic appeal of Azerbaijan for UAE businesses

Lying at the nexus of Eastern Europe, the Middle East, and Western Asia, it is enriched by the influences of many cultures

The United Arab Emirates is a living testament to innovation and technological progress. The nation’s government is awash with digital agencies and think tanks that guide public- and private-sector entities towards best practice and new opportunities. Non-oil sectors accounted for 71% of 2023 GDP and Foreign Direct Investment (FDI) reached US$23 billion. And recently, the country was ranked top, globally, for the third consecutive year by the Global Entrepreneurship Monitor (GEM). It is the place for business to thrive.

But in a global digital economy, there is always another horizon to pursue. The UAE business environment is so friendly that tech startups can grow to capacity very quickly, absorbing eager customers and scarce talent to become respected and established. So, what’s next? On which horizon should UAE tech brands focus next? Traditional hubs like India and Eastern Europe have earned their established places, but to focus their expansion solely on these regions may lead to missed opportunities for UAE businesses in growth mode.

One such nation where opportunity abounds is Azerbaijan, nestled between the Caspian Sea and Caucasus Mountains. At peace for centuries, today it is home to a young (Azerbaijan has a median age of 33.1 years, slightly younger than the UAE’s 33.6 years), 10-million-strong, multilingual people, who go to work in the same time zone as the UAE workforce.

Shared strengths

Whether outsourcing or expanding its market footprint, a business must weigh its options carefully. One of the great strengths of the UAE, and the principal reason why business founders choose it as a launch pad, is its government’s vision for the private sector. As the Emirates forges a future away from dependence on oil, it continues to stress the importance of innovation — a task for which private enterprise is uniquely suited. Azerbaijan shares this view, having framed a similar strategy that adeptly walks the line between robust regulatory oversight and support for new and expanding businesses. Azerbaijan’s government has taken steps to ensure that setup processes are straightforward and that legal procedures are transparent.

Business leaders are encouraged by tax bonuses for relocation, with rates as low as 0%. But the government believes its obligation to support business goes far beyond favourable laws alone. It runs several programs to identify top talent from among universities’ student bodies and develop that talent in a fast-track system that accelerates time to value for human resources.

As in the UAE, the government plays a central role in establishing the digital infrastructure that underpins business operations. And here too, like the UAE, Azerbaijan’s government takes bold steps to create new agencies that specialise in critical areas of the economy, like technology. With the help of the Innovation and Digital Development Agency (IDDA) — founded under the Ministry of Digital Development and Transport — the country has become one of the fastest growing tech ecosystems in the region. Like the UAE’s many incubators and business-support agencies, IDDA drives a series of initiatives designed to foster an amenable environment for technology companies that journey to Azerbaijan.

The government also recognizes the critical importance of safeguarding this digital infrastructure so as to ensure that modern businesses, which can now be made or broken by IT, are shielded from that constant bane of business — cyber-attack. With Azerbaijan’s commendable ranking as the 40th out of 194 nations in the International Telecom Union’s (ITU) Global Cybersecurity Index (GCI), UAE businesses can rest assured that the critical digital infrastructure on which their operations depend will remain resilient even in the face of constant and evolving threats.

People power

When settling in Azerbaijan, UAE business leaders will find it is not just the government that will make them feel welcome. The country is home to many cultures. Lying at the nexus of Eastern Europe, the Middle East, and Western Asia, it is enriched by the influences of many cultures. This gives the national workforce a strong advantage in working as part of the multinational teams for which the UAE is known. Many Azerbaijanis are multilingual from birth, fluent not only in the nation’s official language, but also English and Russian.

Many UAE businesses have grown to become regionally, even globally, recognized brands. From e& to Emirates to dnata, Emirati companies have inspired others in their nation to dream big and look beyond their shores almost from the moment of inception. It is therefore likely that many UAE entrepreneurs are already casting their eyes towards foreign markets looking for possible entry points. Geography plays no small part in their eventual decision. For a country to have the potential to be a business hub, however, it must do more than have the right longitude and latitude. A strategic bridge between markets must offer the right conditions, transport infrastructure, and legal atmosphere to make branching out to yet more territories a smooth and organic process. Azerbaijan offers these elements, positioned as it is between eastern and western markets, with major ports and airports ready to carry products and people to all compass points. It is for these reasons and more that companies from Türkiye, Israel, and Pakistan are already in process of expanding their operations into the nation.

Safety and prosperity

The UAE understands how a mix of the right laws and a rich, multicultural talent pool can come together with favourable geography and stable government to attract FDI. As UAE business leaders set out to write the next chapters of their success stories, location will matter greatly. Competing in a global world will require choosing regional homes where they can feel safe and thrive.

The writer is Regional VP Soft-landing at Innovation and Digital Development Agency (IDDA) of Azerbaijan