GOOD FOR SALE

Azerbaijan entered a new stage of development with the export potential of the non-oil sector of national economy being a priority. This topic was the subject of detailed discussion at the first republican meeting of non-oil exporters held in Yevlakh under the chairmanship of President Ilham Aliyev.

During the first three months of 2017, the non-oil sector, as well as the industry and agriculture sectors of the national economy increased by 2.4%, 2%, 3.5%, respectively. "Currently, the non-oil sector provides about 65% of the Azerbaijani economy, which means that Azerbaijan has managed to diversify its economic potential," said Mr. Aliyev.

Turnover in the first quarter of this year increased by 15%, while exports - by almost 50%, imports decreased by 17%, while exports of agricultural products increased by 44%. In the first quarter of 2017, the highest growth was observed in the export of cotton fiber - more than 700%, dairy products - 260%, apples - 144%, pomegranates - 125%. The surplus in foreign trade exceeded $1 billion.

Hazelnuts production, which attracted $105 million into the state budget, leads the race on the basis of 2016 exports, while the management expects to shortly increase the volume of exports to $200 million. Last year, the second place in exports was taken by tomatoes ($94 million), the third - persimmon ($68 million), the fourth - sugar ($62 million) and only the fifth place - cotton, which brought the currency in the amount of $24 million, but this year this figure will double with subsequent growth.

Supporting local production

The Strategic Roadmap on the perspective development of the national economy determines the increase of non-oil exports by 2025 to at least $450 per capita as one of the target indicators of economic growth, which means more than 3-fold growth.

The Azerbaijani government has invested significant financial resources to support the export potential and developed special incentive programs for exporters of products. For example, more than 250 million manats of public funds were spent on irrigation water supply and power supply projects, which help attract more than 150,000 hectares of land to the sowing sector and achieve high yields.

In accordance with a number of approved documents, a list of products to which the export promotion is applied - honey, persimmons, pomegranate, roasted hazelnut, dried fruit, canned fruits and vegetables, jams and jams, pickles, spirits and wines, mineral waters and juices, confectionery products Leather goods, silk fabrics and carpets. Depending on the type of products, the exporter is paid from 3 to 6% of the customs value of the exported non-oil products at the expense of the state budget. For the first quarter of this year, the Ministry of Economics received 84 applications, more than 520,000 manat was paid as export incentives for agricultural and industrial products sold to Russia, the United States, China, Belarus, and other countries. "We analyse the export dynamics and appeals of entrepreneurs. Other products with high export potential will be included in the list," said Minister of Economy, Shahin Mustafayev.

Meanwhile, in order to support the production and expansion of the export potential for the import of 84 products with a high level of self-sufficiency and local production potential, specific duties were applied for the period of two years. As a result, in the first quarter of this year, the volume of non-oil imports decreased by 20%. For goods with specific duties, an even greater decrease was recorded: cement and clinker - 92%, tile - 55%, plasterboards - 49%, hazelnuts - 58%, tomatoes - 49%, pears - 37%, apples - 33%. Imports of eggs and onions are practically suspended. "This decision is a big support for local production of products with a high level of self-sufficiency. As self-sufficiency in the country grows, the list of goods will be expanded on the basis of analysis," said Mr. Mustafayev.

Production and marketing

Azerbaijan seriously counts on its opportunities. While oil and natural gas are demanded by the EU countries and throughout the world, then the products of the non-oil sector are facing serious competition in export markets.

In this regard, it is not surprising that the image of Azerbaijan's exports changes drastically, if we take into account only the export of goods from the non-oil sector. In particular, Azerbaijan’s exports to the European Union is over 46% of the total exports volume, Turkey - 12%, CIS and Georgia - 11%, China - 5% and 26% - for the rest of the country. But if we consider only the export of the non-oil sector, then we export to the CIS countries and Georgia 45% of our products, 26% to Turkey, 12% to the European Union, 4% to China and 13% to other countries.

In this regard, it is logical that the first trade representative of Azerbaijan was appointed in the Russian Federation, which is the main trading partner for non-oil products. In the near future, it is expected to open the trade house of Azerbaijan in Belarus. Along with carrying out similar works in Ukraine, the establishment of trading houses in other countries with export potential of products is also considered.

Unlike the EU countries, Azerbaijan maintains special relations with a number of former Soviet republics, and they are ready to create more favorable conditions for Azerbaijani products. First of all, this is Kazakhstan. Thus, a modern logistic center was created in the Kazakh port city of Aktau. The President of Kazakhstan Nursultan Nazarbayev during his recent inspection of the center highly appraised its activities and instructed the relevant authorities to apply a special customs regime here. "This center is of great importance. It will allow us to freely export our products to the markets of Central Asia, Kazakhstan. Such centers should be established in other countries. Azerbaijanis living abroad also have a role to play in this matter. Of course, at the initial stage, we must start this in neighboring countries, in the CIS area," said the president.

At the same time, the implementation of international transport projects East-West and North-South will create new advantages for Azerbaijan in the supply of local commodities. Undoubtedly, the most promising areas for marketing are the countries of the Persian Gulf and South Asia. A big role will be played here by rehabilitation of the railway, increasing the speed of carriages, commissioning of the Baku-Tbilisi-Kars railway section, and the construction of the Astara-Rasht railway section with access to Iraq in the future, etc. In particular, in the hot countries of the Middle East, it is possible to successfully export mineral waters from the natural springs of the Caucasus Mountains. That is, it is possible to establish production and export quality mineral waters with the Made in Azerbaijan brand.

New opportunities

However, as mentioned above, it is difficult to increase export potential relying only on new sales markets. It is equally important to produce sufficient volumes of competitive goods. As was noted at the meeting, the government created Azexport web-portal, which could prove itself on a global scale. Meanwhile, it turned out that the country still does not have enough products for export.

"Sometimes we receive orders but we do not have products for export. Therefore, the objective of this portal is not only demonstrate our ability to export our products, which is the main task of course, but also to inform us about regions and countries demanding products transparently for both the state structures and entrepreneurs. Demand will stimulate the supply," added President Aliyev.

The export promotion mechanism is promoted by a mechanism for encouraging investments, through which 130 documents have been issued in a short time. Within the framework of this program, investors invest into the national economy 1.250 billion manats. 26 of 130 investment promotion documents concerns the construction of greenhouses with a total amount of 342 million manats.

However, the government relies not only on the production of fruits and vegetables. It forecasts an increase in cotton production by 2017 to 250 thousand tons, and a rapid development of viticulture. In particular, exports of cognac and wines in 2016 amounted to $17.5 million, but it is expected to increase this volume by 5 times in a short period of time.

An ancient craft of carpet weaving is reviving, and now "Azerkhalcha" creates new carpet plants in 13 cities. This will restore the production of wool in the regions. It is expected to create a large wool-spinning factory in Azerbaijan, which will bring additional currency to the country.

New branches are being created in Azerbaijan, which have developed after independence. Currently, the space industry is developing, and the country is one of the few members of the space club in the world. At present, Azerbaijan began to receive currency from the work of two satellites and is preparing to launch the third satellite (the second telecommunications satellite) in early 2018, for which orders are already being accepted.

Another new export direction is the manufacturing of defense products. Today, Azerbaijan not only satisfies the basic needs of the national army, but also exports military products. At present, more than a thousand items of hi-tech military products are manufactured in Azerbaijan.

AzerGold JSC is engaged in both development of gold deposits and gold export. It is clear that the sale of precious metals will bring huge revenue to the state, and the Azerbaijani government will support AzerGold to become a world-class company.

The steps taken by the Azerbaijani government to create trading houses in various countries of the world, organize export missions and exhibitions of local products abroad, promote the Made in Azerbaijan brand, activate the Azexport portal are links in the chain that will soon achieve a predominance in the export of national non-oil commodities.