BAKU, Azerbaijan, October 8.
The volume and geographical reach of non-oil and gas exports from
Azerbaijan have been expanding in recent years. Ensuring the
sustainability of this trend and enhancing the capabilities of
exporters constitute key priorities of state policy. In this
context, the decree "On additional measures to stimulate the export
of non-oil and gas goods and to subsidize transportation costs"
represents a significant step toward promoting exports and
establishing new support mechanisms.
The decree provides for state coverage of a portion of the
transportation costs incurred during the export of non-oil and gas
goods of Azerbaijani origin. Specifically, the state covers up to
70% of these transportation costs. This support will reduce
logistics expenses for entrepreneurs and strengthen the
competitiveness of local products in foreign markets. The support
measure has been in effect since September 1 of this year.
The amount of support payable to entrepreneurs will be
determined based on transportation costs and customs value, taking
into account the mode of transport used for the export. The
calculation based on transportation costs amounts to 70% of the
costs incurred for rail, air, and sea transport, as well as for
cargo transported by vehicles registered in Azerbaijan, and 50% of
the costs for transport by vehicles registered abroad.
The calculation based on customs value amounts to 5% of the
value for sea transport and 15% for other modes of transport. The
lower of the two calculated amounts is paid as the support
payment.
In addition to this support mechanism, starting September 1 of
this year, the state covers 70% of the transportation costs
incurred for shipping non-oil and gas goods of Azerbaijani origin,
produced in the Nakhchivan Autonomous Republic, to other regions of
the country.
This mechanism will remain in effect for exports and domestic
shipments carried out until September 30, 2036. Entrepreneurs may
compile documents verifying their export or domestic transport
operations and submit them to the Ministry of Economy following the
end of each quarter. The support amount will be calculated based on
these documents and paid to the entrepreneur.
To expand the export of non-oil and gas products originating
from Azerbaijan, the state is compensating a portion of customs
clearance costs starting from September 1, 2026. Exporters
classified as micro, small, and medium-sized enterprises are
eligible for this support. The compensation amount will be
determined based on the customs clearance fee applied to the
customs value of the exported goods, subject to a set ceiling per
export declaration. This mechanism for compensating customs
clearance costs during export will remain in effect until September
30, 2031, a total period of five years.
Additional opportunity for accessing new
markets
One of the decree's key strategic outcomes is its potential to
encourage Azerbaijani companies to look beyond traditional markets
and target new, alternative ones. High transportation costs
associated with accessing new and alternative foreign markets are
among the factors that limit exporters' competitiveness. The
complexity of the logistics chain and the high share of
long-distance transportation costs in the product's cost price
hinder the diversification of exports across both products and
geographies. This mechanism creates additional opportunities for
companies to test new markets.
For instance, if an entrepreneur previously deemed exporting to
a certain market economically unviable due to logistics costs, this
mechanism could alter that market's profitability. Thus, state
support can create an additional economic incentive for the
company.
Mechanism for Nakhchivan
Another significant aspect of the decree concerns the
transportation of non-oil and gas goods of Azerbaijani origin,
produced in the Nakhchivan Autonomous Republic, to other parts of
the country. This mechanism holds particular importance for
expanding production in Nakhchivan. Delivering products from
Nakhchivan to other cities and districts of the country at
competitive prices is also crucial. If logistics costs
significantly drive up the product price, goods produced in
Nakhchivan may struggle to compete in other regions. Therefore,
support for domestic transportation can help Nakhchivan-based
producers expand their sales reach.
The mechanism implemented for Nakhchivan shouldn’t be viewed
merely as a way to reduce transportation costs for the
entrepreneur; there is a broader economic objective involved. This
represents a broader integration of products manufactured in
Nakhchivan into Azerbaijan's domestic market. In this regard,
support for domestic transportation can strengthen both
Nakhchivan's production potential and its sales and supply
capabilities.
Thus, the decree is a key element of the policy aimed at
expanding non-oil and gas exports within the Azerbaijani economy.
This mechanism has the potential to enhance the competitiveness of
Azerbaijani products in foreign markets, stimulate access to new
export markets, broaden the geography of exports, diversify the
structure of non-oil and gas exports, and incentivize the use of
local logistics capabilities.
