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Azerbaijan will become a regional industrial hub

Interview with  Minister of Economy and Industry Shahin Mustafayev

Q: 2014 was declared the year of industry in Azerbaijan. What is being done to ensure rapid development of industry?

A: Development of industry is among key priorities of Azerbaijan`s economic policy. The Presidential Decree announced 2014 the Year of Industry. The Republic of Azerbaijan is probably best described as an industrial country with a fairly high developed agricultural industry. The manufacturing industry is primarily comprised of the oil and gas sector as well as the three fields-engineering, metallurgy and electro-energy.

In his speech at the meeting of the Cabinet of Ministers, President Ilham Aliyev said: “Modern processing enterprises are being established in Azerbaijan. Our agricultural products are supplied to world markets in a processed form. I want to say again that there are great opportunities for increasing our export potential now. We simply need to further enhance the export capacity by additional investments and further measures related to the development of entrepreneurship. Of course, we must provide the domestic market with products grown in Azerbaijan. Recent years have seen great progress in this area. We can say that we are providing ourselves with staple foods to the highest extent, except for grain. This, of course, is a very important factor in ensuring food security. Of course, we have to access our traditional markets with even greater volumes of products and also find ways to new markets,” said President Ilham Aliyev at the meeting.

Under the Year of Industry special attention has been paid to the development of industrial production, of course. A number of plants, factories and industrial sites have been opened.

“The establishment of industrial clusters should be continued in the future. I have repeatedly talked about industrial parks and do not want to repeat anything. The future development of Azerbaijan must be associated with the development of industry. It should also be noted that Azerbaijan currently has sufficient funds, and we need to attract public investments to the industrial sectors representing strategic importance for us. Of course, the Azerbaijan Investment Company should take on a greater part of this work, and by attracting foreign investors we will achieve even better results in this sphere.”

The government of Azerbaijan has already started creating technological parks. With the potential to generate comparative and competitive advantages, industrial parks attract innovative businesses, leading to both more jobs and a larger tax base. They support start-ups, new enterprise incubation, the development of knowledge-based businesses, and offer an environment where local and international firms can interact with a particular centre of knowledge creation for mutual benefit.

A major advantage of industrial parks is that they provide an institutional framework, modern services and a physical infrastructure that may not be available in the rest of the country. Industrial parks use modern services, such as information and telecommunications as well as extension services that are critical for innovation, technological learning and company growth.

To promote innovative and high technologies, entrepreneurship, sustainable development of the non-oil sector and job creation, the Sumgait Chemical Industrial Park was established by Presidential Decree on 21 December 2011. Balakhani Industrial Park was also established by Presidential Decree on 28 December 2011.The intention is to site waste recycling and service enterprises within Balakhani Industrial Park.

Sumgait Industrial Park was designed to contribute to the development of the non-oil sector, as well as to create jobs, raise exports, encourage investment, generate clusters and accelerate technological development.

Q: President Ilham Aliyev signed a decree on the establishment of industrial quarters. What is being done on this front?

A: President of Azerbaijan Ilham Aliyev has signed a decree on the establishment of industrial quarters and the organization of their activities. The industrial quarter is an area, which has the necessary infrastructure for business activities and is used by small and medium entrepreneurs to produce products and services.

The decision was made by the President of Azerbaijan on the basis of the proposal of the Ministry of Economy and Industry.

The measures to improve the state of respective areas related to creation and activity of industrial quarters, construction of external and internal infrastructure (electricity, heating, gas, water, sewerage, communications, transportation, fire protection facilities, administrative facilities and facilities for other purposes) and ensure effective organization of business activities in industrial blocks are taken by the Ministry of Economy and Industry.

Q: We would like you to briefly highlight the history of development of Azerbaijan`s industry…

A: During the Soviet period, more than 70% of Azerbaijan's production was sent to Russia. Since Azerbaijan is now starting to enter the free market, the scope of production naturally has changed and new technology has been introduced. There is a great desire to equal the quality of production on world standards. Also the oil contract with Western companies has given a great impetus to the entire industry. Azerbaijan`s industry started to develop in the 1970-80s, when nearly 200 industrial areas emerged.

Thanks to national leader Heydar Aliyev`s rational and pragmatic activity Azerbaijan achieved rapid economic development in a short period of time.

We can say with confidence that thanks to efforts of the national leader the years 1970-1980 marked radical socio-economic reforms in Azerbaijan, and the country, which was on the verge of collapse, overcame all difficulties.

Hundreds of plants, factories and other production swatch established over the whole republic during the Soviet period. Great plant facilities started to function. In many important industrial spheres Azerbaijan won the first places in the Soviet Union. Many kinds of products made in Azerbaijan were exported to foreign countries. The amount of industrial production for these years was equal to previous 50 years period. During those 50 years Azerbaijan was a great construction square. Baku and the regions of the republic were completely changed.

Q: Certainly the Contract of the Century played a crucial role in the development of industry…

A: Azerbaijan became an important contributor to ensuring Europe`s energy security back in 1994 when the Contract of the Century was signed. In 1994, Azerbaijan embarked on a new policy, and from that time to the present day Azerbaijan has made huge strides in the oil and gas sector. Thus, beginning the implementation of the oil strategy of Azerbaijan, the "Contract of the Century" opened the way for the full development of the country in all fields. The image of a reliable partner enabled the country to initiate new large regional projects in a short period of time, the most important of which were the development of the Shah Deniz gas field and the construction of the Baku-Supsa, Baku-Tbilisi-Ceyhan, Baku-Tbilisi-Erzurum pipelines and the Baku-Tbilisi-Kars railway. Thus, Azerbaijan consistently turned from an oil and gas producing state into one of the main alternative sources of gas supplies to Europe. Today, Azerbaijan is one of the main players on the energy map of Europe.

The Contract of the Century has made the history as the first comprehensive economic decision taken by national leader Heydar Aliyev which has defined the main priority in the policy of his Presidential administration – the oil strategy. But even under those times, the significance of the Contract of the Century was not limited to the expected financial profits.

The signing of the Contract of the Century played a tremendous and invaluable role in Azerbaijan`s development. The Contract ensured rapid development for Azerbaijan, which is today the leader in the South Caucasus region.