Azerbaijan-Denmark: Focus on investments and sustainable development Caliber.Az review

In recent years, Azerbaijan has made significant progress in diversifying its trade and economic relations, expanding non-oil exports, and attracting foreign investments. The country has placed a strong emphasis on finding partners for the development of green energy, the digital economy, agricultural processing, and the implementation of joint industrial projects. These efforts are being driven by the Export and Investment Promotion Agency (AZPROMO), which plays a pivotal role in fostering new cooperation with EU countries. Among the notable achievements is AZPROMO's initiative to strengthen business relations between Azerbaijan and Denmark. This partnership has shown positive developments over the past year, with trade turnover rising and investment activity increasing.

In the past decade, AZPROMO has made significant strides in expanding the sales of domestic agricultural and petrochemical products to new markets in distant countries. These efforts have been particularly successful in China, the Gulf states, the Middle East, and North Africa. With the support of the Agency and the Ministry of Foreign Affairs' trade missions, various presentations and seminars have been conducted, and Azerbaijani agricultural companies and SMEs have participated in international exhibitions and forums. 

Additionally, consulting services are provided to study market trends and international certification procedures. As part of these initiatives, numerous Azerbaijani trade and wine houses have been established in these regions, playing a crucial role in promoting exports and the "Made in Azerbaijan" country brand. AZPROMO is also taking similar steps in Eastern and Southern Europe, including Latvia and Poland, where Azerbaijani trade houses have been operating for nearly seven years. These trade houses serve as a base for promoting Azerbaijani products in the Baltic region of the European Union.

In this context, it is worth noting that recently, AZPROMO has been focusing on expanding trade and investment activity between Azerbaijan and Denmark, a country located in Northern Europe. Economic mission visits have taken place between the two nations, and joint projects are being developed in the non-oil sector of the economy.

Denmark was one of the first European countries to recognise the independence of Azerbaijan. Diplomatic relations between the two countries were established on April 2, 1992, and a Danish consulate was later opened in Baku. During the early stages of cooperation in the 1990s and 2000s, the legal framework and business initiatives between the countries were limited. The involvement of Danish contractors and service companies in the implementation of the "Contract of the Century" projects was relatively small. However, at the time, the Danish company AkvaMiljo Caspian AS served as a partner of the State Oil Company of Azerbaijan (SOCAR) in environmental monitoring in the Caspian Sea and on land-based oil fields. In turn, the Danish company Haldor Topsoe A/S played a key role as a partner to SOCAR in the construction of the nitrogen fertiliser plant in Sumgayit, providing design services for the SOCAR Karbamid enterprise.

Currently, there is an interparliamentary working group between the two countries, and several intergovernmental agreements have been signed, including a treaty on the elimination of double taxation in February 2017. The main focus of business relations between Azerbaijan and Denmark lies in the trade sector. Over the past five years, Azerbaijan-Denmark trade relations have shown fluctuations. In 2020, trade turnover reached a peak of $74.153 million, but a significant decline was observed in 2021–2023. However, in 2024, bilateral trade began to rise again, exceeding $51.9 million. Danish exports to Azerbaijan are dominated by high-tech equipment, meat and other food industry products, as well as pharmaceuticals. The pharmaceutical sector remains the most stable component of trade, with the presence of the leading Danish pharmaceutical company, Novo Nordisk, operating in Azerbaijan.

A significant step towards diversifying bilateral business cooperation and expanding the investment component came in 2008, when the global brewing giant, Danish Carlsberg Group, acquired a brewery in the city of Khirdalan. Over the years, Carlsberg Azerbaijan has invested over 75 million manat ($44.1 million) into the facility, and today its investment program focuses on localising raw material production in Azerbaijan and expanding the export of local products.

In recent years, Danish capital has targeted investments in Azerbaijan's agriculture, including the expansion of areas dedicated to barley and hops cultivation. Another initiative in the agricultural sector was implemented in 2017 with the establishment of an Azerbaijani-Danish joint venture for turkey meat production in the Ismailli region. Danish contractors have also been involved in large-scale projects aimed at modernising the country's irrigation systems.

Today, Baku and Copenhagen are also collaborating in the field of renewable energy (RE), with cooperation in energy efficiency having been underway since 2018. Denmark is one of the European leaders in the implementation of RE and in driving the "Great Energy Transition" for 2030. As a result, cooperation in "green" energy and climate policy has been identified as a long-term goal in the Azerbaijan-Denmark agenda. Specifically, just recently, the topic of "green" energy and aspects of the upcoming COP30 conference were discussed during a meeting between Azerbaijan’s Presidential Envoy for Climate Issues, Mukhtar Babayev, and the King of Denmark, Frederik X.

Azerbaijan-Denmark cooperation in the transport sector looks highly promising. Since 2022, the largest Danish transport and logistics group, A.P. Moller-Maersk, has launched an updated rail service connecting China and Europe, transporting goods via the Middle Corridor. In this regard, Azerbaijan's port and railway infrastructure is actively involved, facilitating the transit of container and bulk goods from China and Central Asia, such as urea, sulfur, and more, through Azerbaijani territory, to A.P. Moller-Maersk’s terminal at the Georgian port of Poti, and then onward to Europe.

In conclusion, it can be stated that the economic cooperation potential between Azerbaijan and Denmark, developed in recent years, is mainly focused on the non-oil sector. Moreover, the balance of investment cooperation between the two countries has recently become more balanced, with Azerbaijan not only attracting investors but also acting as a donor. For comparison, while Azerbaijan's total investments in the Danish economy amounted to $3.9 million in 2023, this figure increased by 7.3 times in the following year, reaching $28.4 million.

Economic cooperation between Azerbaijan and Denmark will likely continue to grow, driven by the increasing activity of business circles and relevant government structures in both countries. In April, a delegation from the Danish Export and Investment Fund visited Baku and held detailed discussions with Azerbaijan's Ministry of Agriculture on cooperation in agricultural digitalisation, the introduction of innovative agrotechnologies, and the implementation of advanced Danish practices and know-how.

Recently, AZPROMO specialists also met with the financial director of the Danish Export and Investment Fund, Kaare Stamer Andreasen, to discuss prospects for collaboration with Danish companies in areas such as "green" energy, food and agriculture, machine engineering, and more. During the meeting, AZPROMO's Executive Director, Yusif Abdullayev, provided Danish partners with information on measures to support entrepreneurs, including the "single window" service, export promotion mechanisms, the development of the "Made in Azerbaijan" brand, and the newly developed logistics subsidy mechanism. These and other incentives are crucial for attracting Danish entrepreneurs and encouraging their participation in industrial and agricultural cluster projects, as well as in the Alat Free Economic Zone in Azerbaijan.