Business with emphasis on Baltics: Baku, Vilnius to expand cooperation Caliber.Az Review

In recent years, Azerbaijan has been making every effort to expand economic ties with the countries of Southern Europe, and this trend, driven by the oil and gas track, demonstrates a high level of efficiency.

An equally important task for Azerbaijan is to expand trade, economic and transport ties with European countries, attract investment and know-how, as well as joint high-tech production in the non-oil sector. Plenty has also been achieved in this direction, particularly in cooperation with the Baltic states.

New business vectors were outlined during the official visit of Azerbaijani President Ilham Aliyev to Lithuania on May 22 and the Azerbaijani-Lithuanian business forum organised in Vilnius.

The political contacts between the leaders of Lithuania and Azerbaijan, which have been very active lately, have also had a beneficial effect on bilateral economic ties. Lithuania regards Azerbaijan as an economic leader in the South Caucasus region and an important energy partner for the European Union (EU).

In turn, Baku traditionally considers Vilnius as a partner in transport and logistics operations in the northern region of Europe, a supplier of high-quality food and a platform for the export of Azerbaijani non-oil products. Being strategic partners, including within the framework of the energy partnership, the two countries have formed a strong regulatory and legal foundation for the successful development of business relations by signing 41 documents in various fields.

Azerbaijan is one of the closest partners of Lithuania in the EU twinning program: in 2007-2022, Vilnius participated in 26 Azerbaijani tenders for twinning projects, winning 17 of them (12 projects worth a total of 20 million euros have already been implemented, five more are at the completion stage).

The growth of mutual interest is most clearly evidenced by the dynamics of trade relations, which reached $24.4 million in 2020, which, when compared to the corresponding figures in 2018, indicates a significant increase.

Subsequently, this positive trend in foreign trade dynamically increased, and in 2022 the trade turnover between the countries approached $33 million.

Along with oil and petrochemical products, Azerbaijan exports fresh and canned fruits and vegetables, wine products, cement and other building materials. In turn, Lithuanian imports to Azerbaijan are mainly food, equipment, consumer goods, construction materials, and particularly, wood products.

Business cooperation between the countries is also shaped by transport undertakings: after the conclusion of an agreement on logistics cooperation - in 2016, the Azerbaijani company Karvan Logistics joined the Lithuanian Viking transit route, since the same time there is an active partnership between the subsidiary of Azerbaijani Railways ADY Ekspress and JSC Lithuanian Railways.

In general, two dozen commercial structures with Lithuanian capital operate in Azerbaijan, in particular in the transport, construction, trade and services, and Azerbaijani investments in Lithuania exceed $36 million.

At the same time, the main trend of the last two-three years is related to the fact that the interests of the business communities of the two countries began to extend far beyond the mere trade exchange, and today Lithuanian and Azerbaijani businesses are considering new initiatives interesting for capital investments and implementation of joint investment projects, especially since the potential for is huge and still not fully realised.

Such promising directions were announced at the 7th meeting of the intergovernmental commission on bilateral cooperation held in Vilnius on 8 May 2023: the sides covered promising joint initiatives in the field of global energy transition and "green" energy, in communications and information technology, agribusiness, educational programs, etc. An almost complete picture of the future of Azerbaijani-Lithuanian business cooperation was presented during the official visit of Azerbaijani President Ilham Aliyev to Lithuania on May 22.

“Two weeks ago here in Vilnius, the intergovernmental commission of Lithuania and Azerbaijan met in order to address important issues of our economic agenda. And I think that the role of the Joint Economic Commission is to coordinate the efforts of business circles in order to address the importance of potential cooperation and also to provide a framework for partnership…Both countries have enormous wind potential in the Baltic and Caspian Sea…Today, Lithuania and Azerbaijan are important transportation hubs in our region. So we need to create connectivity between the regions of Caspian and Baltic Sea and this is possible,” President Ilham Aliyev said during the visit to Vilnius.

Speaking at the opening ceremony of the Azerbaijani-Lithuanian business forum in Vilnius, the Azerbaijani leader also stressed that the two countries could cooperate to attract technologies and investments in renewable energy sources (RES). Noting the important role of the two countries in creating even more convenient transport and communication opportunities on the Eurasian continent, the head of state said that the relevant structures would seriously address the issue of optimising and expanding transport cooperation between Lithuania and Azerbaijan.

The sectors of industry mentioned above were also listed as priority areas for cooperation by Lithuanian President Gitanas Nauseda, who, in turn, noted that the development of environmentally friendly, waste-free economies could bring Baku and Vilnius even closer.

The Lithuanian president noted that under the current economic model, energy with a fixed low cost is generated in the RES segment both on land and at sea.

“A green economy will greatly enhance the competitiveness of our manufacturing and service sectors, and Azerbaijani entrepreneurs can join this process to benefit from it...We see Azerbaijan as a growing economic power with a huge energy potential and aspirations to diversify. Various sectors of Azerbaijan’s economy such as information technologies, logistics, manufacturing, advanced food industries and renewable energy attract Lithuanian entrepreneurs” Nauseda stressed.

During a joint business forum in Vilnius, Lithuanian Economy and Innovation Minister Aušrinė Armonaitė called on Azerbaijani companies to take advantage of various investment instruments and preferences to participate in advanced manufacturing, biomedical, pharmaceutical, IT and financial technology projects, emphasizing that Vilnius is recognised as one of the leading capitals in the EU in terms of development of fintech companies.

“Lithuania sees a significant potential for expanding cooperation projects with Azerbaijan and seeks to actively share its best practices, experience and success stories,” Armonaite said.

Azerbaijan is no less interested in joint undertakings and, according to Economy Minister Mikayil Jabbarov, it is also ready to work with Lithuania as co-investors in promising projects, the implementation of which is also possible in the Karabakh region.

For these purposes, during the forum, an investment catalogue developed by the Azerbaijan Export and Investment Promotion Agency (AZPROMO) on Azerbaijani territories liberated from occupation was presented.

“The investment catalogue contains projects for the construction of a winery, hydroelectric power plants and other facilities, and this catalogue has already been sent to the Lithuanian side for consideration and familiarisation. In general, the platform of the business forum will make it possible to find common ground and cooperation with partners in Lithuania, for which about 10 state structures of Azerbaijan, as well as 35 companies representing domestic industry, medicine, agriculture, and a hypermarket network, are involved,” AZPROMO Head Yusif Abdullayev said, emphasizing that Azerbaijan is interested in expanding exports to the Lithuanian market not only of agricultural products but also the industrial ones.

The Memorandum of Understanding between Azerbaijan’s Small and Medium Business Development Agency (SMBDA) and the Lithuanian Innovation Agency, signed in Vilnius on May 22, will serve similar purposes.