Baku Shopping Festival Offers Few Advantages for Potential Tourists, Locals

The 1st ‘Azerbaijani Shopping Festival’ kicked off in Baku yesterday and will continue until May 10, however, what benefits it has to offer foreign and local tourists is unclear.

Foreign tourists and Azerbaijani citizens will be able to receive a value added tax (VAT) refund on items purchased in shops that have signed on to the programme for the next month.

In order for Azerbaijani citizens to receive a refund, the total amount of purchased goods must exceed 100 manat ($59), whereas foreigners must have spent more than 300 manat ($178).

Refunds must be requested on the same day at refund spots set up around the center of town.

According to the official

Shopping Festival website

, the tax will not apply to medications and medical equipment, goods which may require an export license, raw gemstones, precious metals, foodstuffs and other goods.

Around 100 stores have joined in the initiative, ranging from high-end brands such as Emporio Armani and Tod’s to more affordable shops such as Mango. Several public concerts will be held throughout the festival, one of which will host DJ Italian “dancing millionaire” Gianluca Viacchi.

The initiative is part of a September 2016 presidential decree “On additional measures to develop tourism in Azerbaijan”, an initiative aimed at further boosting tourism sector in the country and the economy.

The event will take place biannually.

In recent years, Azerbaijan has begun to more heavily invest in the tourism sector in order to differentiate its economy after years of heavy reliance on oil and gas dollars. In January of 2015, crude oil spot prices fell from more than $100 / barrel to $47 / barrel at a time when the

oil sector comprised approximately 65 percent of the state budget.

How successful the initiative will be has yet to be seen.

Although the number of tourists heading to Azerbaijani has been slowly growing each year, in part due to the cancellation of visa-requirements for citizens of a number of the Arab Gulf states, the numbers are still relatively low.

According to

World Bank

statistics on incoming international tourism, 2.160.000 tourists visited Azerbaijan in 2014, whereas 5,516,000 visited neighbouring Georgia in the same period.

Minister of Culture and Tourism Abulfas Garayev recently said the country is expecting a

“huge most amount of tourists”

from Russia, Kazakhstan, the UAE, Saudi Arabia, Qatar, Oman, Bahrain, Iran, Turkey and Georgia.

Considering that VAT in Azerbaijan is 18 percent and most countries in the Gulf instituted the practice of collecting VAT only in 2016 at low rates hovering around 5 percent, it is not clear that the Azerbaijani Shopping Festival offers any clear advantages to potential tourists.

If one further takes into account the cost of air fare, transport, accommodation and food, the Festival does not seem to hold any clear benefit for international tourists.

As far as Azerbaijani citizens are concerned, the recent two devaluations of the national currency since 2015 – when a more or less 1-to-1 ration of the US dollar to the Azerbaijani manat sunk to 1 USD / 1.55 AZN – and heavy inflation as high as

12 – 15 percent

do not suggest high buying spirits among consumers.

Many Azerbaijanis struggled to put food on the table for the recent

Spring festival of Novruz

, lamenting the fact that food prices have risen as much as 15 percent in recent months, while salaries and pensions have remained low.

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