TODAY.AZ / Business

Government starts to develop schemes to encourage exports

23 April 2015 [14:31] - TODAY.AZ

/By AzerNews/

By Gulgiz Dadashova

If the decline in oil prices has proved anything, it is that energy producing countries should assess the risks the orientation of their economies essentially carries and push for the development of the non-oil sector to act a buffer and a security blanket.

Azerbaijan, the second-largest oil producer in the former Soviet Union region after Russia and Kazakhstan, has long ago sought to develop its non-oil sector in a bid to overcome the risk of its energy dependent economy. The country has recorded a 10- 15 percent increase in its non-oil economic sector over the last two to three years.

To push the trend further, the Azerbaijani government has decided to develop new schemes in view of boosting the number of growing export businesses.

Possible ways of improving the mechanism of export promotion was mulled over at the extended board meeting of the Economy and Industry Ministry this week.

Minister Shahin Mustafayev said the president defined the tasks to improve the business environment in the country: expansion of export potential, ensure export mix and the exploration of new markets.

The measures, which will be rolled out in the coming months will help grow the Azerbaijani economy by increasing the number of businesses selling products abroad.

Currently, Azerbaijan’s exports are dominated by oil and natural gas, which account for around 92 percent of the total export revenues. Azerbaijan’s other exports include sugar, fruits, metals and polymers - comprising the rest 8 percent.

The country plans to export products worth $26.8 billion in 2015, some $2.7 billion of which will be goods from the non-oil sector.

Asked about the measures the government intends on taking, MP Vahid Ahmadov noted the president instructed the government to develop the non-oil sector and export oriented productions in view of developing the country’s export potential.

“Thus, in view of falling oil prices, the government is working hard on developing schemes to boost the export oriented productions,” he told AzerNews. “Certainly, agricultural products stand in the core of such export opportunities.”

The establishment of processing plants, packaging processes and insurance issues will be in focus, explained the MP. He also pointed out that the creation of industry districts and the construction of industry plants across several regions will also be boosted, all contributing to strengthening and diversifying Azerbaijan' economy.

Ahmadov stressed a special bill has been developed on educating entrepreneurs - mainly farmers, about ways to develop their business and form export routes.

“The bill already passed the first reading at parliament. The aim is to timely inform farmers and educate them. Big changes were made in the structure of the agriculture ministry, agriculture departments are being created in the regions and will soon operate,” he said adding this will have a positive effect on the export potential of this sector.

Asked about the financing of the agriculture sector, the MP said there will be no problems associated with the financing of such projects.

The National Fund for Entrepreneurship Support has enough assets. The Fund has operated for more than 10 years, during which it could realize a return on investment with high level performances, he said.

“Thus there are no big problems with financing, it can finance major projects,” Ahmedov said pointing out that the NFES is one of the best performing state funds and has a big role in the development of agricultural sector.

Preferential loans worth 160.2 million manats ($152,557 million) were issued to 4,720 entrepreneurs throughout the country since the beginning of the year.

As Azerbaijan is indeed trying to diversify its economy, experts agree that the export of agricultural products can act a locomotive for non-oil sector exports. Favorable soil and climatic conditions, relatively cheap labor and access to rail transport turn the agricultural sector into a major priority of the domestic non-oil economy.

Expert Ilgar Muradov believes the country’s agricultural sector enjoys huge potential for development and access to overseas markets.

The main point here is the promotion of small and medium businesses, Muradov told AzerNews noting that the matter is not only about funding but also the education of entrepreneurs.

“Entrepreneurs, mainly those living in rural areas are not well aware of export opportunities. They need assistance for developing business plans, access funds, and find ways to export their products abroad,” he said.

Proper assistance may encourage SMEs to expand their business, Muradov noted.

Expert Vugar Bayramov shared such views noting that the export of end-products will be more valuable, as the export of raw agricultural products remains risky.

“For example, Azerbaijani farmers now export tomatoes and eggplants to Russia. Any delays and weather issues can lead to export problems, and this in turn will harm entrepreneurs' bottom line. However the export of canned products is less risky in that the final products can easily be exported to European markets,” he said.

Priority markets for agricultural products can be the CIS states, mainly Russia, which sanctioned food imports from the EU and eastern European states. The experts also noted that that creation of joint agricultural markets on the border with Georgia, Russia and Turkey may also drive the export sector further.

Azerbaijan has become self-sufficient in all main staple food products, expect grain. The total volume of production of agricultural goods increased by 3.4 times, the volume of investment made in Azerbaijan's agriculture increased by 15 times, and the average monthly wage of agricultural workers increased by 9 times in the past ten years.

URL: http://www.today.az/news/business/140101.html

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