EXPORT VECTOR

Azerbaijan is on the threshold of a post-industrial era with its typical developed high-tech information economy. In order to promote this sector, the country has set up a state fund for the development of information technology and has decided to grant broad tax and customs privileges for the efficient operation of future IT-parks. Given the achievements of the communications sector and the bright prospects for the development of IT-technologies in the country, President Ilham Aliyev designated 2013 as a year of information and communication technologies.

Clear leader

"Azerbaijan is steadily moving on the path of innovation and reform and gradually turns into a modern, strong state with a highly competitive economy. The sphere of information and communication technologies has long become the leading factor of this trend. With the current progress in the development of ICT, its role in shaping the post-industrial state and future expectations in this area, I designate 2013 as a Year of ICT. I think that this year our country will gain even greater achievements in this field," Azerbaijani President Ilham Aliyev said recently. In this regard, the president signed an executive order, authorizing the Ministry of Communications and Information Technology and the Azerbaijani National Academy of Sciences to prepare an action plan in the field of information and communication technologies within a month.

Azerbaijan really has made impressive progress in the field of communication and information technologies over the past eight years. For example, in 2004-2012, the domestic ICT market doubled every three years, and last year the growth rate was about 18 per cent. This is nearly 2.5 times higher than the average rate of development in the industry!

Back in 2008, Azerbaijan was the first in the post-Soviet area to provide telephone lines in all population centres in regions, and two or three years later it fully digitalized all exchanges in the country, and in this parameter, we take the leading position in the CIS again. Nevertheless, the installation of telephones in the country continues unabated. Last year, 20,000 numbers were added to the network using "new generation" technologies, for which over $ 400 million were invested in the industry.

Azerbaijan is clearly in the lead in the field of mobile communications: back in 2010, our operators were the first in the CIS to ensure 100-per-cent coverage of the country. We take one of the first places in the number of cell phone users - today there are more than 110 mobile devices for every hundred people. Last year, Azerbaijan also took ninth place in Europe in the introduction of fourth generation mobile technologies - 4G.

Over the last three years, our country has taken leading positions in the CIS in terms of the growth on the Internet market: in 2012 in this indicator, the domestic market increased from 65 to 70 per cent, not to mention the significant reduction of the cost of network traffic. "For example, last year the volume of traffic increased by 2.2 times, and prices fell by almost 35 per cent. Today the cost of 1 megabit per second for users is less than three per cent of the average wage in the country. For comparison, in many developing countries, the average figure is within the range of 20 per cent," Minister of Communications and Information Technology Ali Abbasov said.

The list of positions, in which Azerbaijan clearly leads in the South Caucasus and Central Asia, is even more extensive. Azerbaijan was the first to digitalize broadcasting and leads in the formation of the electronic government portal that operates on the "one-stop shop" principle. With the efforts of the Communications Ministry, a system of electronic signatures was introduced for the first time in the region one and a half years ago, and now these services are available to more than six thousand individuals and legal entities.

Thus, we have all the prerequisites that in the near future, the achievements of the domestic ICT sector will help to bring Azerbaijan to the level of advanced countries in the world. For example, the first national communications satellite will be launched into space this month, and in the next three years, the orbital group will be reinforced with two more satellites. An extensive system of space and service industries will be formed. Azerbaijan is the initiator and lead partner in a number of international projects - the laying of the fibre-optic information lines EPEG, TASIM and in the future, the development of TAE communication systems. The fibre to home project - a high-speed communication line to provide broadband Internet services in all regions of the country - will be launched this year. It is planned that 140 million manats will be allocated for this project through the State Oil Fund, and within three years, Azerbaijan will reach the level of the world's developed regions in terms of the development of broadband Internet.

In order to accelerate the development of the manufacturing and infrastructure areas of the ICT sector, the head of state issued orders and decrees in the past year, including those providing for the establishment of a State Fund for the Development of ICT and Hi-Tech Parks. The creation of industrial parks for small and medium-sized innovation businesses will be one of the first components of the Regional Innovation Zone (RIZ), the formation of which is recognized as one of the priorities of the Ministry for the next decade. Other components of the Regional Innovation Zone will be a regional base on the production and export of electronic hardware and software products, the establishment of a DATA centre, turning the country into a regional transit information hub, training and development of human resources for the emerging information society, and the establishment of effective mechanisms and structures to promote products of various industries developed in the industrial park.

In order to attract investment in IT-technology parks and increase the export of innovative products and services, it was decided to use broad tax and customs preferences for the activities of industrial towns. In particular, the amendments to the Tax Code, which entered into force this year, exempt companies and operators managing IT-technology parks from the profit tax on the revenues they channel into the construction and maintenance of the infrastructure of industrial estates. They will also be exempt from the payment of VAT for a period of seven years. In turn, legal entities that are residents of industrial estates will be exempted from paying the profit tax for seven years from the moment of their registration, and individuals - from the income tax, property tax and land tax. According to the Communications Ministry, the aforesaid fiscal concessions and concessional lending to projects in IT-technology parks by the State Fund for the Development of Information Technology will help increase the income of the ICT sector to $ 12 billion by 2020.

What will be the distinctive features of the new stage of the development of the ICT sector in Azerbaijan? In the past, the vast majority of investment and thus profits fell mainly to the communication sector (stationary and mobile) and to a lesser extent - to television and the Internet.

Domestically-made

Although IT-production increased at a very dynamic pace, it had an insignificant share in the total volume of ICT sector services produced in a year.

Now the leading role in the ministry's plans should be given to the development of the production sector, so that it becomes the driving force of the domestic ICT market in the next few years. And as a rule, it is not so much about expanding the production of computer equipment and peripherals as about support for domestic software developers and network infrastructure integrators who actively promote intellectual products in neighbouring countries.

According to a number of local and foreign experts, in the foreseeable future, our country is unlikely to be able to compete with countries of Indochina and South East Asia in the assembly of computers and other digital "ironmongery". On the contrary, the most promising and lucrative export sphere for the domestic IT-sector is the development of software solutions and the integration of the network infrastructure.

The considerable experience gained by local companies in the implementation of large-scale projects to build an e-government system in Azerbaijan gave them an important competitive advantage - the ability to implement multiple software development and integration schemes abroad. This factor largely allows them to confidently win tenders and take subcontractors' positions on the market of the post-Soviet area.

A good example of the export breakthrough in the field of software can be the activities of SINAM, a company that completed the formation of an electronic archive of documents of the Department of the Cadastre and Registration of Real Estate Rights of the State Registration Service under the government of Kyrgyzstan earlier this year. This company has also created an extended version of an online browser, which, in addition to our country, also includes the full electronic map of Georgia.

In late 2010, the company R.I.S.K. introduced Randa and Omega air navigation systems at the Moldovan state enterprise MoldATSA. It is noteworthy that Moldova became the ninth country in the world where air navigation systems based on R.I.S.K. solutions were introduced. Previously, these products were successfully tried out in Kazakhstan, Belarus, Latvia, Estonia, Thailand, Brazil, the Dominican Republic and, of course, in Azerbaijan.

Another example is that in June 2011, the Azerbaijani IT-company Matrix, in partnership with SINAM, signed a contract to supply navigation tracking systems to a Turkmen oil company.

Another success of the Azerbaijani software business was the victory of the national company SayberNet in the tender for the automation of Tajikistan's tax system.

These examples clearly demonstrate the international level of Azerbaijani IT-companies that are able to use their own software developments and experience gained in the formation of Azerbaijan's e-government system outside the country. As a matter of fact, the realization of the potential of domestic software companies in IT industrial parks should help the country to overcome the "digital divide" and draw level with developed countries as soon as possible.

"In general, according to the development concept Azerbaijan-2020: A Look into the Future, every effort will be made to maintain the annual growth rate of the ICT sector at 18-20 per cent, thanks to which in the next eight years it will be possible to bring the income of the sector to at least $ 8-9 billion," this is how Minister of Communications and Information Technology Ali Abbasov described the long-term objectives of the ministry.

According to him, the plan will be implemented mainly through the improvement of the competitive environment, use of fiscal and monetary benefits for the IT-sector, increasing export capability, the formation of a regional ICT infrastructure, the development of innovative businesses based on the manufacture of high-tech products and services, and of course, the development of science and education in order to create literate human resources.