Azerbaijan, Uzbekistan forge stronger economic partnership Trade, logistics, production initiatives take center stage

Business circles of Azerbaijan and Uzbekistan have been developing business and logistical ties for many years, seeking to significantly increase trade turnover. Cooperating both bilaterally and within the framework of the Organisation of Turkic States (OTS), Baku and Tashkent intend to considerably strengthen the investment component, implementing joint business initiatives in petrochemical, mining, agrarian, car assembly, textile and transport sectors.

Thus, an Azerbaijani delegation headed by Economy Minister Mikayil Jabbarov paid a working visit to Uzbekistan to discuss new opportunities for the development of business cooperation. The 13th meeting of the Joint Intergovernmental Commission on cooperation between Uzbekistan and Azerbaijan was held as part of the visit. 

Seeking to expand economic ties with Central Asian (CA) states, the government of Azerbaijan pays attention to the development of Azerbaijani-Uzbek business cooperation. This interest is mutual; market transformations and the policy of openness and regional integration pursued by Uzbek President Shavkat Mirziyoyev have contributed to a tangible increase in bilateral trade turnover and the implementation of joint business projects. Over the years of cooperation, the two friendly states have formed a powerful legal framework of over 130 interstate, intergovernmental and interdepartmental agreements.

Baku and Tashkent are very closely involved in the integration endeavors of the OTS, cooperate in regional transport and transit and logistics projects, and actively increase passenger air traffic. Thus, since last year the airlines of the two countries have been making 15 flights a week.

In turn, Uzbekistan, which does not have direct access to the Caspian Sea, is a significant cargo carrier and partner of the countries participating in the Trans-Caspian International Transport Route (TITR) and other routes of the Middle Corridor, and today the positions of Baku and Tashkent on expanding transit and increasing cargo volumes at the Trans-Caspian Corridor fully coincide.

Not long ago, agreements were reached to provide Uzbek companies with a site for the establishment of their own terminal at the Baku International Sea Trade Port (BISTP), which will be used for transit shipments of sugar to Uzbekistan, as well as for other export-import operations with Azerbaijan. In turn, ADY Container, an Azerbaijani subsidiary of Azerbaijan Railways, and vessels of the Caspian Shipping Company (ASCO) carry out block train deliveries of mineral fertilisers produced in Uzbekistan to the Romanian port of Constanta.

The high dynamics of transport and logistics cooperation is also reflected in trade indicators: thus, while in 2017, Azerbaijan's trade turnover with Uzbekistan was a relatively small $31.2 million, at the end of last year this figure exceeded $178.771 million, having increased almost six times over the past five years. Positive trends in trade have continued this year: in January-May 2024, Azerbaijan-Uzbekistan trade turnover exceeded $70 million.

In the structure of Uzbek imports to Azerbaijan, along with agrarian products - beans, raisins, peanuts, nuts - chlorine hydrogen, silk, cotton fabrics, as well as cars, buses and lorries prevail. In turn, Azerbaijani exports are mainly represented by sugar and sucrose, canned goods, tea, paint and varnish products, polyethylene, copper concentrate, building materials.

In the future, the two countries plan to expand trade turnover by diversifying trade nomenclature, increasing mutual supplies of pharmaceutical and petrochemical products, plastic products, polymers, products of mining industry, agricultural sector, etc. The two friendly countries are also planning to establish a joint commercial online platform to expand e-commerce.

Along with the expansion of the nomenclature of supplied goods, Baku and Tashkent have outlined a six- to seven-fold increase in the volume of bilateral trade over the medium term.

"Uzbekistan expects to increase the volume of trade turnover with Azerbaijan to $1bn in the next few years," Uzbek Minister of Investment, Industry and Trade Laziz Kudratov said at the 2nd Azerbaijan-Uzbekistan Interregional Forum held in Guba in May 2024.

Prospects for such a breakthrough were also discussed last year in Shusha, during the 12th session of the Azerbaijan-Uzbekistan Joint Intergovernmental Commission. The participants of the 13th meeting of the Azerbaijan-Uzbekistan Joint Intergovernmental Commission on Cooperation also focused on this issue.

"We had productive discussions at the 13th meeting of the Azerbaijan-Uzbekistan Intergovernmental Commission in Bukhara today. Emphasized the importance of implementing joint large-scale investment projects and optimizing export-import potential.

It was a pleasure to reunite in Bukhara with my colleague Laziz Kudratov, Minister of Investment, Industry, and Trade of Uzbekistan. We had productive discussions on the positive outcomes of Azerbaijan-Uzbekistan economic cooperation and outlined the next steps to further strengthen our partnership.

During the meeting of the Supervisory Board of the Azerbaijan-Uzbekistan Investment Company, we reviewed prospects for expanding bilateral strategic investments, fostering private sector growth, and boosting business activities. We are confident that our cooperation will produce positive outcomes," Azerbaijani Economy Minister Mikayil Jabbarov made a post on his official X account.

According to information provided to Caliber.Az by the Ministry of Economy, during the meeting of the Supervisory Board of the Azerbaijan-Uzbekistan Investment Company the importance of successful joint projects and mutual investments was underlined, emphasising that the investment company with a total capital of $500 million will give a new impetus to the development of cooperation and trade relations between business circles of the two countries.

In the medium term, the two friendly states are working out joint industrial and agrarian projects totalling $800 million, and the use of resources of the investment company will play a significant role in their financing. Thus, 10 potential projects in the non-oil sector are currently being considered for joint financing.

In particular, the two friendly states intend to pay special attention to the development of agro-industrial cooperation, expanding cooperation in the energy and transport sectors. Thus, over the past few years, the business circles of the two countries have embarked on joint production projects in the automotive industry, agrarian sector and light industry. In particular, the Azerbaijan-Uzbekistan joint venture for assembly of Chevrolet cars has been operating in Hajigabul Industrial District for the third year already, and 5,300 passenger cars have been produced here as of July 1. The project is also producing pickup trucks, lorries and buses.

Cooperation between Baku and Tashkent on the road map in the agro-industrial sector is very productive: Uzbekistan provides Azerbaijan with seeds of highly productive varieties of cotton, as well as seedlings of silkworm varieties resistant to unfavorable climatic conditions, shares rich experience in cocoon processing, breeding of productive breeds and hybrids of mullberry silkworm.

Azerbaijan, in turn, assists in providing Uzbek partners with seedlings of high-yielding hazelnut varieties and training Uzbek specialists in this field. Baku and Tashkent plan to establish joint production of textiles and silk, electrical engineering and construction materials. In particular, entrepreneurs from Uzbekistan intend to establish a joint venture for joint production of household appliances and aluminium radiators in the territory of the Alat Free Economic Zone.

Azerbaijani business is offered the most favorable treatment for the implementation of projects in Uzbekistan to create trade facilities, a zone for packaging, processing and finishing of products that will be oriented to the Afghan market.

According to the Ministry of Economy, more than 90 Uzbek companies are registered in Azerbaijan in the fields of industry, trade, transport, construction, agriculture and services. Another promising area of bilateral cooperation is the energy sector: companies of the two countries - the State Oil Company of Azerbaijan (SOCAR) and Uzbekneftegaz OJSC - cooperate in the joint development of oil fields in Azerbaijan and Uzbekistan, and are preparing to implement projects in the oil and gas sector.

And in the future, the possibility of exporting "green" electricity from Central Asian countries to Europe through the territory of Azerbaijan is being considered, and in this regard, a Memorandum of Cooperation on the Integration of Energy Systems between Azerbaijan, Kazakhstan and Uzbekistan was signed in Tashkent on May 1, 2024.

In particular, it is about the future Azerbaijan-Uzbekistan partnership under the Black Sea Energy project, which envisages the laying of a power cable on the bottom of the Black Sea with a capacity of 1,000 MW and a length of 1,195 kilometres.

At the end of the Intergovernmental Commission meeting in Bukhara, a final protocol was signed, which envisages the key points on strengthening partnership in trade and economic, energy, transport and transit, agricultural, innovation and other spheres.