A LUCKY STREAK FROM THE YEAR OF BLACK SNAKE

The year 2013 was a year of events that helped towards a real reduction in the Azerbaijani economy's dependence on the oil and gas sector, albeit it was during this period of time that very important agreements on delivery of Azerbaijani gas to Europe were concluded. Thus, against a backdrop of an almost six-per-cent overall economic growth in Azerbaijan (data for January-November 2013), the non-oil sector grew by 10 per cent. Last year saw the start of major projects in the non-oil sector. They have already started to earn revenue for the state's treasury, while in the future they will confidently maintain an economic balance.

Year of ICT: Azerbaijan became a space power

Everybody knows that President Ilham Aliyev had declared 2013 the year of information and communication technologies. Therefore, it is no coincidence that the most noticeable achievements in the economy's non-oil sector last year were in this field, the overall level of the growth of which was 20 per cent. 

Certainly, the main event was the successful launch on 8 February of Azerbaijan's first telecommunications satellite called AzerSpace/AfricaSat-1a from the Kuru cosmodrome in French Guiana. The satellite covers Eastern Europe, the Caucasus, Central Asia, and North Africa.

 Azerbaijan's needs for the satellite's commutation capacities will not be more than 20 per cent, and the remaining resources of the satellite will be leased. At present, the main leaseholder is the Malaysian operator Measat Satellite Systems, which bought about 42 per cent of the satellite's resources.

According to preliminary calculations, under the satellite project, the investments will pay for themselves after five to seven years of operation. The volume of the revenue in the process of the operation of AzerSpace will be 495m manats, while the net profit is forecast to be 176m manats. Azerbaijan's revenue from the implementation of the first satellite programme in 2013 was 10m dollars. About 70 TV and radio channels, of which 19 are domestic, are relayed via the satellite.

Over the next three years, Azerbaijan will send into space at least two more satellites: a low-orbit satellite to sound the surface of the Earth will be launched in 2015, and one more telecommunications satellite will be launched in 2016.

The launch of the satellite was the biggest but not the only event in the field of Azerbaijan's telecommunications last year. In addition to everything else, last year saw the recruitment of the first set of applicants to the University of Information Technologies, and also saw the endorsement of a provision on the State Foundation for the Development of Azerbaijan's Information Technologies, which will issue grants and soft loans to stimulate activities in the field of information and communication technologies.

A business incubation centre of the High Tech Park was also set up in Baku. Admission of projects in the field of ICT will start literally in the next few days. The park is planned to be built in Baku's Pirallahi district.

 Last year, the Communications and Information Technologies Ministry started to implement the "fibre to home" large-scale and capital-intensive project, which envisages a radical modernization of the distribution systems of IP channels in all of the country's regions. A total of 400m to 450m manats are to be invested in the project by 2015. In three years, the ministry plans to cover all population centres of the country, including the Naxcivan Autonomous Republic and also villages located in hard-to-reach regions, with broadband internet under the principle "fibre to home".

Within the framework of the big BakuTel exhibition held at the end of last year, the Baku memorandum of mutual understanding was signed concerning the implementation of the Trans-Eurasian Information Super Highway project - TASIM. The project is to join over 20 European and Asian countries by a high-speed information network. The project was unanimously approved by the UN General Assembly three times. All the three resolutions note that the project is a perfect platform for simplifying international cooperation within the framework of the Eurasian Link Alliance and helps towards the modernization and diversification of telecommunications channels, steady development of the ICT field and also the elimination of "digital inequality" in the vast Eurasian space. The implementation of this project will make it possible to resolve problems of digital gap both in the South Caucasus and across the vast Eurasian region as a whole.

The ASAN space: Azerbaijani brand

The launch of services for the population by the ASAN service centre on 15 January 2013 was, in a way, an unprecedented and unique event on a global scale. The centre was established at the personal initiative of Azerbaijani President Ilham Aliyev. Nine state agencies - the Justice Ministry, the Interior Ministry, the Tax Ministry, the State Property Committee, the State Customs Committee, the Migration Service, the State Committee on Land and Cartography, the State Social Security Fund, and the National Archive Department - render 23 kinds of legal services to the population through ASAN centres. Over 900,000 citizens of the republic have already used services provided by the centres. So far, a total of three ASAN service centres have opened in Baku and two have opened in the regions. In 2013, over 60,000 citizens in almost 40 districts of the republic used ASAN services owing to buses sent there.

As the president said, the ASAN service has already become an Azerbaijani brand. Owing to its implementation, the fight against corruption in the country has become more effective, and the amount of arbitrariness by officials and red tape during processing of documents, etc has decreased. The establishment of this service was welcomed by almost all international organizations and it was an important factor in the cause of improving the image of the country as a supporter of transparency of economic policy. It is not without reason that last December Azerbaijan also joined the bureau of the assembly of member countries of the treaty on the establishment of the International Anti-Corruption Academy.

At the same time, the main goal of the ASAN service is to make it easier for people to access services rendered by government agencies. To this end, in early 2013, the data processing centre of Azerbaijan's Communications and Information Technologies Ministry presented one more important project - an authentication system for accessing the "electronic government" portal using mobile devices. This project is about the implementation of the so-called m-government (mobile government) platform which is meant to make it faster and more convenient for people and organizations to receive services and also information about the outcome of the work of state agencies. 

As is known, in order to use electronic services, one needs an electronic digital signature (EDS), which is the target of a joint project by the Azerbaijani Tax Ministry and the ASAN service. The project aims to organize a service to issue mobile digital signatures. We should note that the new platform of the mobile signature (ASAN signature) centre is integrated with the platforms of all three Azerbaijani mobile communications operators.

Industrialization and strategic projects

Last year, very big steps were made towards industrialization and the implementation of large-scale strategically important projects. Thus, the Taxtakorpu reservoir and the Valvalcay-Taxtakorpu and Taxtakorpu-Ceyranbatan water canals were put into operation. They are meant to improve irrigation, melioration, development of agriculture, and drinking water supplies to the population. 

A shipbuilding factory was put into operation in Baku on 20 September. The cost of phase one of the construction of the shipbuilding factory is set at 405m dollars, and the cost of phase two is set at 60m dollars. Together with the shipyard, a dry floating dock was built, which is the largest in the Caspian region. The dock is very necessary for the construction of and repairs on ships. Another floating dock of comparable sizes and also new production sites and berths are planned to be built during the implementation of the next phase of the construction of the factory. As early as the end of 2014, it will be possible to build four tankers with a dead weight of 15,000 t at the shipyard. What is more, at phase two it is envisaged to assemble oil tankers with a freight-carrying capacity of up to 70,000 t, which are the most wanted type in the Caspian at present. The capacities of the factory will allow it - in parallel with the construction of new ones - to provide annual repairs and services to 80 to 100 ships of different tonnages and purposes. Simultaneously with tankers, at other sites at the factory it will be possible to build annually up to four supply and towing ships which are meant for the needs of the maritime oil fleet.

Also in autumn last year, the foundations were laid for a chemical industrial park in Sumgayit. The park will be built in an area of about 200 ha and will comprise about 40 large plants.

I would like to mention two more important events in this series which took place in neighbouring countries but are of great importance for the implementation of economic projects in Azerbaijan. Namely: the Marmaray tunnel was put into operation in Turkey's Istanbul on 29 October 2013. That was the last and foundation stone in the establishment of a transport system whose length is many thousands of kilometres and which will connect Europe and Central Asia. It has already been given a poetic name - the Iron Silk Way. This railway will link London and Beijing, and some time later it will become an alternative to the Trans-Siberian main railway. This will be possible after the Baku-Tbilisi-Kars railway (BTK) is put into operation this year.

In the meantime, Azerbaijan, Georgia and Turkey have also started to form an energy bridge that will be the basis of the project "Black Sea transmission grid". On 11 December, a 500-kV power line, which linked the electricity systems of Azerbaijan, Georgia and Turkey, was put into operation. Overall, the "Black Sea transmission grid" project is meant towards exports of electricity to the Turkish market and on to Southern Europe.

Image ratings

All positive trends in the Azerbaijani economy found their reflection in reports, opinions and ratings by influential international organizations. During his visit to Azerbaijan in mid-2013, the president of the European Bank of Reconstruction and Development (EBRD), Suma Chakrabarti, said that Azerbaijan' economy had experienced a serious transition process which resulted in a considerable decrease in the level of poverty in the country - from 50 per cent in 2001 to 6 per cent at present. "This impressive pace of decrease in poverty is one of the rarest examples in the history of mankind," Chakrabarti said.

We can say that the most important thing is that for a fifth year in a row, Azerbaijan holds leading positions among CIS countries in the rankings of the competitiveness of world economies issued annually by the World Economic Forum (WEF). In the report for 2013/14, this country is among the world's most competitive economies and is 39th among 148 countries, having improved its positions by seven points compared to previous figures. Among Eastern European and post-soviet countries, Azerbaijan only lags behind Estonia (32nd place). Since 2005, among CIS countries, besides Azerbaijan, only Kazakhstan, Russia, Georgia and Tajikistan have improved their positions. In particular, Azerbaijan went up by 30 positions, after starting at 69th place in 2005, Kazakhstan went up by 11 positions, and Russia went up by 11. According to some additional indicators, Azerbaijan is one of the top 20 countries. In terms of annual inflation rates, the country took the first place, in terms of the ratio of gross national income to GDP - 10th place, in terms of the ratio of aggregate foreign debt to GDP - 13th, and in terms of state purchases of advanced technological output - 14th place. In terms of macroeconomic stability, in the WEF report Azerbaijan stands in the top 10 (in the 8th place), having improved its positions by 10 points, which is a quite an impressive achievement.

In addition, Azerbaijan improved its competitiveness in the field of tourism, according to the WEF report "The Travel & Tourism Competitiveness Report 2013". In the ranking, which is published twice a year, Azerbaijan rose from position 83 to position 78. In addition, according to WEF assessments, regarding the state of the legislative framework in the field of tourism, Azerbaijan is in the 46th place in the world, regarding business environment and infrastructure - 87th, and regarding human, cultural and natural resources for tourism - 96th. Incidentally, it was last year that also saw the completion of the construction of phase one of the summer-winter holiday skiing complex Tufan in Qabala, the opening of which took place on 3 January 2014 with President Ilham Aliyev and First Lady Mehriban Aliyeva in attendance. We should note that this skiing complex is capable of servicing 3,000 people a day. The implementation of this project together with the winter-summer tourism complex Sahdag in Qusar District opens up opportunities for the development of skiing and other types of winter sports in the country.

As a result...

As we can see, last year was rich with events that help develop the non-oil sector of Azerbaijan's economy. One way or another, the main change in the budget for the current year was a decrease in its dependence on the oil factor. Actually, according to the government's plans, the annual pace of the growth of Azerbaijan's non-oil sector should be at least 7 per cent so that by 2012 its specific weight reaches 80 per cent of GDP.

We can also recall a series of events that had an impact on economic processes in the country. Among them is the extension by the Central Bank of the implementation by banks of rules regarding capitalization, the completion of the process of issuance of compensation related to deposits in the former USSR Savings Bank, increase in salaries, pensions and social allowances, development of a number of important pieces of legislation, etc. All this together had an impact on sentiments and consumer processes in this country. At the same time, sufficient efforts were made last year to maintain the macroeconomic stability in the country, and there are all grounds to believe that this trend will continue this year.