Azerbaijan, Latvia eye expanding cooperation in IT sector Review by Caliber.Az

Quite active political contacts of the leaders of Latvia and Azerbaijan in recent years have had a favorable impact on bilateral economic ties as well. The interests of the business circles of both countries have long ago extended far beyond a simple trade exchange, and today Latvian and Azerbaijani businesses are considering interesting initiatives for capital investments and joint investment projects.

The trend was evident at the meeting of Azerbaijani and Latvian Presidents Ilham Aliyev and Egils Levits in Baku on the eve of the X Global Baku Forum and the Azerbaijani-Latvian round table on March 8, devoted to the expansion of bilateral business cooperation.

Latvia traditionally regards Azerbaijan as the economic leader of the South Caucasus region and the EU's most important energy partner. Baku, in turn, sees Riga as a leading transport and logistics hub in the northern region of Eastern Europe and an important export platform for Azerbaijani non-oil products. All this has been an excellent basis for a consistent expansion of economic cooperation between our countries, especially since there is a huge, far from the fully realized potential for this.

"An active political dialogue has been established between our countries. I have made several visits to Latvia, including official ones, and the Latvian presidents have visited Azerbaijan several times. Latvia has always played a very important and very positive role in ensuring closer cooperation between the EU and Azerbaijan, as well as in the successful cooperation between NATO and our country," Azerbaijani President Ilham Aliyev said in a joint press statement with the Latvian leader. Thanking Latvia's friends for this ongoing support, the Azerbaijani leader recalled the Declaration on Strategic Partnership signed several years ago, as well as the positive effect of efforts made within the joint inter-governmental commission on trade and economic cooperation, which operates very actively and holds regular meetings.

The prospects for further expansion of Azerbaijani-Latvian trade and economic cooperation are confirmed by the good start made by businessmen of the two countries in 2022. Mutual trade turnover last year increased by 70 per cent and reached $46 million, with a significant surplus in favor of our country. "Azerbaijani exports to Latvia increased nearly three times and amounted to $28 million, and almost 98 per cent of deliveries to Latvia were non-oil products. It also means that Latvia is the most important country in Northeast Europe in terms of supplies of our non-oil products," head of the Export and Investment Promotion Agency (AZPROMO) Yusif Abdullayev said during a roundtable held in Baku with representatives of Latvian and Azerbaijani business circles.

It is noteworthy that, relatively recently, in 2018, trade turnover between our countries barely exceeded $22m, but the trade dynamics have subsequently begun to steadily increase. The situation changed dramatically after AZPROMO launched its trade diversification programme, which saw the establishment of Azerbaijani trade and wine houses in a number of countries around the world. In July 2018, such a trade house opened in Riga, eventually becoming a kind of transshipment hub for further promotion of food and other non-oil products to neighbouring Baltic countries and then to the vast European market. In particular, Azerbaijani wines and brandies, jams, compotes and fruit juices, canned fruits and vegetables, narsharab, olive and lavender oil, tea, as well as fresh tomatoes, pomegranates, persimmons, melons, and hazelnuts have been systematically exported to Latvia in recent years. In fact, such a foreign trade structure, where food products absolutely dominate, is evidence of Azerbaijan's strong trade potential and the ability of our country to increase export revenues without relying on the oil and gas factor.

However, in the future Baku and Riga do not intend to limit themselves to trade expansion - investment projects are on the agenda. Here it is worth recalling that from 1995 until October 2022 Latvia invested $151.7 million in Azerbaijan's economy, while Azerbaijani business investments in the Latvian economy during the reporting period amounted to $166 million. "By early February this year, 59 commercial structures with Latvian capital are registered in Azerbaijan, of which 46 companies are active. At the same time, today there are many opportunities to attract investors to the Karabakh region: we would be glad to see Latvian companies on the liberated territories as contractors and investors," Abdullayev said.

The Memorandum of Understanding between AZPROMO and the Latvian Investment and Development Agency signed the day before should also become a significant help in the diversification of Azerbaijani-Latvian trade and economic cooperation. Among other things, the articles of the memorandum provide for the expansion of experience exchange in the field of regulations, mechanisms for export support, and investment attraction. Thus, the Latvian agency has accumulated more than 70 mechanisms of export support, and it is planned to study and implement these tools in Azerbaijan, AZPROMO, in turn, is ready to share its own experience with the Latvian side to support exports and exporters.

"The memorandum will serve as a legal basis for the development of our trade relations and will also create more opportunities for Latvian companies in Azerbaijan and for Azerbaijani companies in Latvia," said Latvian President Egils Levits, stressing that, as a growing economy in the north of Europe, his country is also interested in expanding cooperation in transport and logistics. - Increased supply of Azeri energy resources is in the interests of Europe, including our country. Azerbaijan is our important trade partner and today we are delighted to see in Baku representatives of Latvian companies and businesses that want to expand their business in various areas, such as "smart cities", logistics, and "green energy".

Particularly, according to the Director General of the Latvian Investment and Business Development Agency Kaspars Rozkalns, the two friendly states could set up joint production of competitive goods with which it would be possible to enter third countries' markets, including the European market. The five priority areas are biomedicine, "smart" energy technologies, "smart cities" (including those based on IoT technologies), and other IT technologies and photonics. "Latvia is ready to share the experience with Azerbaijan in the production of optical cables. Also, the whole territory of Latvia is already covered by 4G internet, and the availability of a high-speed mobile network has saved us from the need for wireless internet via WiFi, and this is an important part of the digital reconstruction," Rozkalns emphasised.

The tourism sector is seen as another important area where business circles of the two countries could find opportunities to expand investment cooperation and establish joint ventures. In particular, the Latvian national airline AirBaltic is preparing to resume direct flights between Riga and Baku in May this year. The resumption of direct AirBaltic flights will make it easier for Latvian tourists to travel to Azerbaijan and for Azerbaijani citizens to travel to Latvia, as well as facilitate contacts between business circles.