THE CHAMBER SUPPORT

Boosting of reforms on development of non-oil economy urges the need for participation of the third sector, professional associations and business communities. Thus, the chambers of commerce are globally recognized organizations representing the interests of entrepreneurs. Niyaz Alizade, President of the Azerbaijan Chamber of Commerce, shared his views on the capacity of his organization in providing assistance to implementation of reforms during the post-oil era.

- First of all, we would like to know about the main directions of activities of the Azerbaijani Chamber of Commerce. What has been done during the recent years?

- Our main mission is to represent business interests in our relations with government agencies, to assist in the establishment of legal background and business infrastructure, as well as business relations with foreign partners.

We have agreements with chambers of commerce in Europe, Asia, North and Central Asia. We are members of international organizations including Eurochambres, the Asia-Pacific Chamber, the Islamic Chamber of Commerce and World Chamber.

Recently, we were elected to the Assembly of Eurochambres, the supreme governing body of the structure. Chamber of Commerce and Industry of Armenia was also nominated to this institution. However, the efforts of Armenian Chamber were in vain. We were able to score 9 of 11 votes with the support of the Azerbaijani Foreign Ministry and the Turkish Chamber.

During 2016, we held 6-7 business forums. We have held many forums with Russian regions: Ural, Yekaterinburg, Perm, Astrakhan, Krasnodar. We hold close ties with Estonia and hold regular business meetings in Poland. We are actively working with India, Pakistan, Australia.

During the recent visit of the Commerce Minister of Pakistan, Khuram Dastgir, we held a meeting of the Azerbaijani and Pakistani business communities. Investors from Pakistan are interested in the construction of a pharmaceutical plant. India and Pakistan are the largest manufacturers in this field. Indian investors are considering the purchase of a tea plantation in Lankaran.

In summer, we met with an Australian businessman who came as a guest visitor to the Formula-1 race. He expressed his desire to invest in the plant for production of baby food. Currently we are working on this initiative and provide consulting services to him.

We have a register of reliable partners. When foreign partners apply to us, we recommend them local businesses based on field of operation. The same applies to local companies: we provide them letters of recommendation certifying them as reliable partners and ask them find a partner in a particular country for business.

- Are there enough opportunities for the Chamber today? What are the challenges?

- In many countries, membership of companies in the Chamber of Commerce is compulsory. We do this on a voluntary basis, so we do not have many members, about 300. Among them are old members who are aware of the significance of the Chamber and gently pay fees but they count to only 10% of all members. With others, we have to work hard to convince them of importance of our work. I have made a proposal make membership in CoC compulsory but there is no decision on this so far.

As a public organization, we do not get funding from the state but we have to receive membership fees to be able to be members of international institutions. The Ministry of Finance has financially supported our election to the Assembly of Eurochambres but it was a one-off attempt.

We organize business forums on our own while foreign partners also provide support.

Previously, one of our functions was issuing barcodes for domestically produced goods, certificates of origin for exported goods, conducting examinations, etc. But since 2000, these functions are transferred to state agencies, which greatly reduced the financial capacity of CoC. But, for example, law enforcement authorities including the courts, the prosecutor's office, the Ministry of Interior, the State Security Service have ordered CoC carrying out examinations, as we are quite skilled at them. We have appealed to return these functions to us but it is a complicated procedure, as it requires changes in legislation.

- How do you find the business environment in Azerbaijan? What are the main achievements and shortcomings to date?

- The apparent success, which is also praised by foreign partners, is a high level of privatization: more than 70% of all enterprises are privatized.

This allowed the state to be actually free from economic activity and to fully engage in carrying out its regulatory functions.

However, the downside is that majority of enterprises in Azerbaijan are large companies. There is not enough companies in the small and medium sector. 30-40% of tax revenues in Europe come from small and medium-sized businesses, plus the sector provides employment. However, the works on the development of small and medium-sized enterprises is being actively implemented today. The companies are established for the processing of agricultural products, companies in transport and tourism sectors operating in the regions under government programs. This helps to avoid migration of population from the regions to the capital, which is already overpopulated.

Thanks to oil revenues, we can afford building modern enterprises, buying high-tech equipment to release products complying with the highest standards. But operating these enterprises needs qualified personnel. Without adequate staff, these companies do not provide the desired effect.

Therefore, I think the main problem is the lack of proper education and training of employees in the regions.

- What kind of assistance can CoC provide in this regard?

- As a member of Eurochambres, we offer participation in trainings abroad. They hold many training sessions in various areas. We regularly receive their programs, and they ask us to send people, organizers pay all expenses. This is certainly not a complete training, but at least it will be an opportunity to be acquainted with the direction of development. However, entrepreneurs are not very interested in the participation of their employees in such trainings. There is a language barrier, is not so easy to find people in the regions that fluent in English but at least with a good level of Russian language.

- What kind of products made in Azerbaijan are interesting abroad?

- Our main export commodities are agricultural products and products of their processing. In Europe, they have not heard about fruit compotes, they drink juices. We could take this niche. Pomegranates and persimmons are well-known in Europe. By the way, our pomegranates taste much better. You cannot find the pomegranate juice known in Azerbaijan nowhere else. There is a pomegranate drink In Europe but they do not have purely squeezed juice. Tomatoes from Baku are also known in Europe.

And the main advantage is also that we have a good level of packaging. We have enterprises with modern equipment, producing products meeting European quality standards. When one enters such enterprises, he feel as if in Europe.

Also, traditional agricultural areas such as cotton growing, viticulture, silkworm are realistic to develop. We have high quality silk. But we need to have artists, designers, etc. We cannot limit ourselves to raw materials but establish a full cycle of production.

It is important to attract foreign partners for the production of textile products. For example, in Egypt, long staple cotton grown very high quality, it is virtually the best in the world, which is even used in military industry. A factory for the production of T-shirts is a German brand. I think we need to go along such a path. We have silk but I do not think we will be able to significantly increase export of silk scarves if they are released under the brand name ‘kalaghai’. 

We have managed to bring Coca-Cola and Pepsi Cola to our country. Similarly, it is necessary to bring a specific brand and to use local labor and raw materials. All that is associated with the most famous textile brands produced in China, Vietnam, Indonesia. There's cheap labor force, and there are enough qualified personnel. Go to stores of Adidas and Nike and check the tag where it is produced. We need to do the same. If we have invited Coca-Cola, why not to invite Adidas?

Turkey has become a leading country in the field of textiles. Turkey produces 70% of the world's denim texture. The Turkish President Turgut Ozal had significantly increased customs duties on imports and invited foreign companies to produce products within the country. As a result, Turkey has significantly increased its exports potential, and thereby strengthened its currency.

- What form of promotion of products do you think is better?

- Azerbaijan participates in EXPO, we were in Shanghai (2010) and in Milan (2015). Between these events, we organized an exhibition of our goods in Urumqi and the Netherlands, with the support of President Ilham Aliyev. In both cases, we took our local businessmen and their products - fruit drinks, juices, brandy and others. In China, we have customs cleared our goods to not bring them back. In Urumqi, we were 10 days and everybody wanted to buy all of our products on the first day of exhibition. At that time, the businesses signed contracts on long-term basis. These were small businesses.

In South Korea, we have made a virtual exhibition, where information about the products was translated on plasma screens.

- One of the goals of CoC is the implementation of measures to prevent non-business cooperation, and unfair competition. What is the situation on these issues today, what specific measures are being taken?

- While the country is actively promoting the fight against monopolies, we are still faced with the facts of unfair competition. And if the issue of import in the country is solved, there remains the problem of monopolies in our market. Not so easy to eliminate the monopoly on the market, it is at the stage of implementation. This is a serious problem and can inhibit the development of sectors.

Competition is always beneficial to consumers, as it will lower prices. Without competition there will be no quality or price.