Author: Khazar AKHUNDOV
The reform of the national recreational sector for the last two years has had a positive impact on the basic components of the industry. Azerbaijan enjoys a considerably simplified visa regime, renewed segment of low cost air transport, favourable hotel tariffs, and new priorities of travel agencies shifted towards inbound tourism. The Baku Shopping Festival held for the first time in April 2017 may well be the new driver of tourism in Azerbaijan.
It would be absolutely true to say that the modern tourism is a direct result of the world trade. Since ancient times, the merchants sent caravans and ships full with goods to distant countries, which contributed to the discovery of new civilizations, cultural exchange, development of know-how and technologies.
Trade is still a weighty argument stimulating travelers from all over the world to fly to countries with preferential trade regimes or large production hubs in the Southeast Asia, Middle East, Europe, etc.
The convergence of trade and tourism in many regions of the world in the past decades has transformed into seasonal shopping festivals, where large-scale sales of brand new clothes and equipment, jewelry, perfumes, alcohol, crafts, and souvenirs is taking place. These trade festivals are accompanied by various theatrical performances, defile, competitions of young designers, exclusive parties and tasting of culinary delights. Annual shopping festivals in Dubai, Istanbul, Cannes, Berlin, Frankfurt, Basel, Singapore, Bangkok, and Guam are among the most popular trade festivals. They attract tourists from all over the world thanks to the absence of taxes and duties, as well as special sales and favorable offers, pleasant gifts and bonuses. It seems that the organizers are never on the losing side: besides direct profits from trade, the manufacturers, airlines, travel agencies, hotels, restaurants and other actors of recreational services earn as well.
Based on the rich world experience, Azerbaijan also decided to organize trade festivals as an effective incentive for the development of tourism. According to the presidential order, the organization of trade festivals is part of the Strategic Roadmap for the Development of the Specialised Tourism Industry practically implemented by the Bureau of Congresses under the Ministry of Culture and Tourism of Azerbaijan, which also organized the first Baku Shopping Festival on April 10, 2017. It will last until May 10 and cover several areas simultaneously: trade, tourism, entertainment, fashion, and culture. The next festival is planned to be held in October 2017.
"Large countries have a tradition of holding trade festivals that promote the tourist flow. Such festivals are boosting the trade and also introduce tourists to the historical monuments and culture of the host country," said the Minister of Culture and Tourism Abulfaz Garayev, emphasizing that the shopping festival in Baku is the first of its kind in the South Caucasus and Central Asia.
As part of preparatory works, the experts of the Bureau of Congresses, Ministry of Tourism conducted large-scale works to coordinate the activities of a number of state agencies, as well as transport structures, hotels, restaurants, trade, and service facilities, and banks with the support of the relevant associations. Five days before the opening ceremony, the teachers of the Azerbaijan University of Tourism and Management and specialists of the Ministry of Taxes conducted trainings for the festival participants. Since March 1, 2017, the official multilingual website of the festival, bakushopfest.com, has been visited by 57,000 users. The festival also had a social media coverage aired through the social networks and viewed by 10 million users and about 600 thousand active commenters.
The exhibition dedicated to the Baku Shopping Festival was presented at the annual Azerbaijan International Exhibition "Tourism and Travel" AITF-2017 held on the following day. The visitors of the exhibition could get detailed information on the stand of the Baku Trade Festival: in particular, they got to know the conditions for participation in the festival, filled in applications to join as participants, learned about the stores and other sites that have already joined the festival, as well as obtained information about the mechanisms of the VAT refund system.
The festival has generated considerable interest in the regional states enabling a considerable inflow of guests from Russia, Kazakhstan, the UAE, Saudi Arabia, Qatar, Oman, Bahrain, Iran, Turkey, and Georgia.
"It is encouraging that for the first time in the world practice, both the foreign tourists and local citizens will enjoy the Tax Free system, which should be an effective measure to stimulate tourism and trade. Our forecasts show that the Baku Shopping Festival will ensure an inflow of about 50 million manats to the state budget," said Mr. Garayev.
The festival started in the historical part of Baku, Icheri Sheher, in front of the Gosha Gala gates, where the visitors watched a bright show program with the participation of popular Azerbaijani dance and music groups. The program of the festival also includes entertainment events such as concerts, theatrical and film premieres, exhibitions, fairs, ceremonies and fashion shows that help turn the festival into a big holiday. Daily shows are organized In the shopping malls of Baku, on the Fountain Square and in the National Seaside Park including performances by DJs and animators, singers and artists, flash mobs, mascot parades, dances, acrobatic shows, etc. Various information kiosks and call-centers operating in the center of Baku, at hotels, and the shopping malls will provide useful information to the visitors.
It would be difficult to imagine a shopping festival without a wide trading component. Hundreds of shopping venues and over 40 restaurants have been registered as participants of the festival. The registration of participants will continue throughout the event. More than 250 trading facilities have been connected to the Tax Free system and will be able to offer VAT refunds throughout the event.
Numerous shopping centers of the city offer special discounts to the visitors. Trade-marks of Azerbaijan and foreign brands are widely represented at the temporary trade points. Under the recently introduced Tax Free system, the buyers will enjoy VAT refunds for any purchase they make at the shops marked with the Baku Shopping Festival logo. Moreover, this applies also to the citizens of Azerbaijan - it is enough to buy goods costing more than 100 manats from a single account. The VAT is refunded in three stages. The buyer must provide the seller with his/her ID card and fill in two copies of an electronic invoice (e-VHF). Then, these documents with accompanying stamps and details must be submitted to one of the special tax kiosks located at the shopping and entertainment centres of Baku: 28 Mall, Port Baku, Nargiz Mall, Park Bulvar, Metro Park, and Ganjlik Mall. After the tax official checks the invoice and prints it, the buyer will contact one of the five authorized banks - Kapital Bank, Pasha Bank, Yapi Kredi Bank Azerbaijan, Bank Silk Way, and Azerbaijan Industrial Bank, where the VAT amount will be refunded to the buyer within one day in the national currency of Azerbaijan. It is also possible to claim a cashless refund. You need to drop your invoice into a special box next to tax kiosks. But when choosing the cashless format, the actual refund will take place within 10 working days only.
Regardless of the chosen method, a commission of 20% of the return amount is charged. The buyers of excisable products, food, medicines, raw precious stones, precious metal ingots, vehicles, and spare parts to them, as well as goods exempted from VAT will not enjoy the benefits of the VAT refund system.
"The Baku Shopping Festival will make a significant contribution to the development of tourism, economy, cultural propaganda and national values," said Minister of Culture and Tourism Abulfaz Garayev at the opening ceremony of the first Baku Shopping Festival. According to him, trade festivals can become one of the tools for the development of tourism, contributing to the increase of the economic and tourist potential of Azerbaijan, stimulating trade and production. The effectiveness of using the trade component is very high, as in the global tourism market, shopping tourism is one of the first places in the industry. Equally convincing is the fact that, according to global statistics, trade festivals increase the tourist flow by 30%, primarily due to attracting foreign tourists.
This is a good indicator, and if everything goes well as planned, the Baku Shopping Festival can boost the inbound tourism. According to the Ministry of Tourism, in 2016, Azerbaijan was visited by more than 2.2 million tourists and the growth of the tourist flow was 11.7%. This trend continued in 2017 as well: in the first quarter, Azerbaijan was visited by more than 557,000 foreign tourists, mainly from Russia, Georgia, Iran, Turkey, and the Arab countries. The successful start of the Baku Shopping Festival brings hope that the travelers from European, American, Chinese, and the Southeast Asian countries will join these tourists soon as well.