Development of industrial sphere in focus of gov’t

/By Azernews/

By Nigar Abbasova

Azerbaijan has launched the second stage of drafting a strategic road map of the national economy to ensure the sustainable growth.

Elkhan Mikayilov, the head of sector in the Presidential Administration, announced about this while addressing public discussions on the topic of “Industrialization and innovative development” in Baku on July 5.

“The first stage of the roadmap project has been completed. The first phase of the project implied the study of advanced experience and the creation of the document. The second stage is to define the strategy and the action plan on realization of the roadmap," Mikayilov said.

He added that the document covers 11 key sectors of the national economy, including 8 primary and 3 auxiliary sectors.

“The road map defines three main directions of industrial development - oil & gas and chemical industry, heavy industry and mechanical engineering, as well as other sectors in the context of small and medium enterprises," Mikayilov said.

He added that despite the share of the non-oil economy has been brought up to 70 percent of the GDP, it is yet insufficient for complete liberation from oil dependence, and such situation poses new challenges for government.

Nevertheless, Mikayilov said that despite serious measures taken with the view of further industrial development in the country, the sector still faces a number of problems.

“The problems are mainly connected with the competitiveness level of the domestically produced output and with the fact that majority of the local goods do not meet international standards. The application of innovative technologies is considered to be crucial for the increase of competitiveness in the sector. In this regards, the Economy M Ministry is currently implementing serious projects including creation of industrial parks,” he said.

Touching upon the issue of goods compliance with international standards Mikayilov said that the issue necessitates implementing serious reforms in the sphere.

The third problem in the sector is the necessity of corporate management development which may trigger the increase of foreign investments influx to the country.

The executive director of the Center for Analysis of Economic Reforms and Communication Vusal Gasimly in his turn said that as many as 10 books were prepared and directed to the relevant authorities within the framework of drafting the strategic road map. “The books contain information about the world experience in the sphere of economic development,” he added.

He also mentioned that industry ratio of the country’s economy exceeds worldwide average rate by 30 percent. Azerbaijan ranks the first in the European region on the index of ratio of the industrial share in the country’s GDP, according to the UN Economic Commission for Europe.

“The share of the processing industry in the industrial output is increasing. Previously the increase was connected with energy resources, currently we are aimed at the development of the industrial sphere on the basis of economic efficiency,” Gasimly said.

He also emphasized that the country has switched into the new stage of the industrialization. “The stage is characterized by the development of the industrial sphere in the regions of the country, innovativeness, lowered impact on the environment as well as new jobs and increase of competitiveness and export potential,” he said.

Gasimly believes that the main features for reaching the goal include relevant institutional environment, macroeconomic conditions as well as preservation of the world economic growth tendencies. Gasymly underlined that Azerbaijan has managed to turn into a transit hub despite the fact that the country do not have an outlet to the ocean.

Deputy Economy Minister Sevinj Hasanova talking to reporters said that the range of goods which are exported to the foreign market has expanded in 2016 by 28 percent. “We have been observing the improvement in the non-oil sector for several years and expect the further growth in the sector,” he said.

She also emphasized that the industrial sphere in Azerbaijan is focused on the production for the domestic consumption. “The fact allows saving the currency as well as reducing dependence on imports,” she said, adding that the results especially in the sphere of food industry are already visible.

The production export amounted to $3.05 billion in January to May 2016, according to the State Customs Committee. As many as 1,826 units of goods have been exported in this period as compared to 1,424 units in 2015. State sector which prevails in the overall exports makes up $2.65 billion. Main export destinations of the country are EU countries. The volume amounted to $1.65 billion.

“The level of poverty in the country has reduced manifold. Azerbaijan 2020: vision for the future concept was accepted with the view of lowering dependence on the oil sector. Main objective of the concept is to improve the quality of life in the country,” she said.

Commenting on the influence of the external economic factors on the country’s economy the deputy minister said that Azerbaijan has managed to show its resistance to external shocks. She mentioned that drop in oil prices as well as instability of the world economy has influenced the country’s economy.

“In order to eliminate their negative impact and to ensure even more sustainable resistance, the government has mobilized all the efforts and has accelerated the implementation of the measures envisaged in the Azerbaijan 2020: vision for the future concept,” Hasanova said.

“Serious steps have been taken in this sphere. The conditions for starting a business have been improved in the country,” she noted. “The inspections of business entities have been suspended for two years (except of the inspections related to state security).”

Moreover, the number of licenses and permissions for doing business has also decreased, she added.

The inspection of entrepreneurs' activities in Azerbaijan has been suspended for the period of two years from November 1, 2015.

Only 46 inspection procedures have been conducted from November 2015 to March 2016 as compared to 33,300 checks in the same period of 2014-2015. The suspension of inspections is considered to be an important step for further stimulation of the business development in the country. Main objective of the decision is to promote entrepreneurial activity, create favorable conditions for business as well as encourage people to get engaged in entrepreneurial activities.

Previously, the government was reported to be likely to consider the prolongation of the moratorium imposed on business inspection.

The deputy minister also added that entrepreneurs will be eligible to start production of output in the territory of the Neftchala industrial park in the summer of 2016. She said that eight entrepreneurs have applied for getting the status of industrial park residents. “I want to emphasize that the industrial park will be engaged in the vehicle production. We also consider the issue of creating a fish conservation plant. We expect that the project will attract the interest of foreign investors,” she said.

Hasanova mentioned the importance of the industrial development for the country mentioning that serious steps have already been taken in the sphere. “Industrial development is crucial for the diversification of the economy. The country takes auxiliary measures to stipulate the development including tax exemptions which are applied in the territories of industrial parks. The country has already made certain achievements, for instance, Sumgait chemical-industrial complex is attracting investors for the implementation of the projects worth $1 billion,” she added.

The total volume of investments which will be allocated in the preliminary stage in Neftchala industrial district is expected to be more than $20 million manats ($12.9 million).

Industrial parks have already been created in Sumgait, in the village of Balakhani and Garadagh in Baku and Mingachevir.