UNLEASHING THE NATIONAL EXPORT POTENTIAL

Over the past decades, the Azerbaijani government has taken many successful steps to develop the private sector and non-oil sectors of economy. The national reforms made it possible to change the form of ownership of enterprises from state to private. Currently this sector accounts for 80% of the gross domestic product (GDP) produced nationwide.

During the last two years, the radical reforms in obtaining licenses, as well as the prevention of routine business checks by various state bodies stimulated the development of the non-oil sector increasing its GDP share from 40% to almost 70%.

At the same time, with the export of non-oil sector products, the situation is not so rosy. Although 70% of the national GDP is produced by the non-oil sector, its exports by the end of 2016 did not exceed 15%.

Measures to stimulate exports

In the last few years, hundreds of measures have been taken to support the entrepreneurs and to increase the exports. The results of five months of this year show the first results of the Azerbaijani government's activity in the development of entrepreneurship and the stimulation of the national exports.

"Thanks to the promotion of the Made in Azerbaijan brand, it has been possible to increase total exports by 44%, non-oil exports by 22%, export of agricultural products - by 40% since the beginning of 2017," said Deputy Minister of Economy Sahil Babayev during the presentation of the project "Eastern Partnership: Be Ready to Trade".

According to Babayev, under the program aimed at refunding part of the costs for the export of non-oil products, Azerbaijani exporters were refunded ₼1.3 million within six months. "Within the framework of mechanisms for encouraging the export of non-oil products, the government refunds some of the costs to exporters, compensating 3-6% of the customs value of the goods," said the deputy minister.

The potential for exporting the products of the non-oil sector of Azerbaijan, especially the agrarian sector, is huge, considering that there are nine climatic zones in the country. Developing small and medium-sized enterprises (SMEs) in the country, it is important to determine what products and markets can be supplied.

Under the "Eastern Partnership: Be Ready for Trade" initiative of the European Union, experts of the International Trade Center (ITC) will conduct activities in Azerbaijan with entrepreneurs of small and medium business and operating associations.

The main goal of ITC is to facilitate the supply of products of Azerbaijani entrepreneurs to the European Union. ITC, in particular, helps small and medium-sized businesses to increase the competitiveness of their products and bring them to international markets through the provision of SME support through training, information provision, the involvement of international experts who can contribute to productivity, product quality, design, and international exhibitions. Cooperation with ITC to stimulate the export of SME products will cover five areas.

The first direction is the definition of goals and analysis of markets. Secondly, it is planned to increase the competitiveness of SME products. The third direction implies increasing the capacity of organizations providing support to SMEs (Azerbaijan Export and Investment Promotion Foundation (AZPROMO), export associations and newly established SME Agency). The fourth direction is to increase the availability of entrepreneurs to financial resources. And, finally, the fifth direction is the integration of small and medium-sized businesses into the global value chains of the international electronic commercial platform.

Conductors of interests of entrepreneurs

The Azerbaijani government in the development of the export potential of the non-oil sector relies not only on establishing cooperation with international organizations. It is hoped to open trade missions and trading houses in foreign countries, where Azerbaijani business circles have a chance to occupy their own niche in relevant markets to increase the export of Azerbaijani brands.

The objective of trade missions in foreign countries is to assist in the organization of sales of domestic goods and to promote Azerbaijan in order to attract investments and protect the interests of local entrepreneurs. But the steps of trade missions can become ineffective if they cannot first establish contacts with Azerbaijani exporters of products and determine the export obstacles in the course of the dialogue.

At a regular meeting of the Exporters Club on July 7, the heads of trade missions of Russia, the United Arab Emirates (UAE) and China gathered at the Baku Business Center.

In his speech, Azerbaijan's trade representative to the UAE Elnur Aliyev noted that the peculiarity of exporting Azerbaijani products to this country is the solution of the issue of delivery, since there is no common border between our states unlike Russia.

At the same time, the market of the Emirates will facilitate the access of Azerbaijani products to the markets not only of this country, but also of other Persian Gulf states, being one of the largest importers of agricultural products.

"Therefore, Azerbaijan will be able to occupy not only its niche in this market, but in case of transferring part of the production process to the UAE, it will be possible to organize re-export of Azerbaijani products to other Arab countries of the Persian Gulf and even to some countries in Africa," said Elnur Aliyev.

Speeches by trade representatives of the UAE and China aroused the interest of entrepreneurs, as unlike the traditional Russian market, both countries are opening new prospects for increasing exports of Azerbaijani SMEs.

The prospects for the development of new markets by Azerbaijani business circles are indicated by the first results of export missions and exhibitions, followed by the export of wine to China and food products to the UAE and other countries.

Until the end of 2017, export missions will be sent to Russia, Kazakhstan, Saudi Arabia and Europe, as well as to export operations already carried out in Qatar, Kazakhstan, Germany, Afghanistan and Pakistan.

AZPROMO President Rufat Mammadov noted that the national stands are organized under the export missions and exhibitions where the state of Azerbaijan incurs all expenses related to the delivery of products and participation of one representative in them.

However, AZPROMO cannot cover and take part in all the exhibitions. Only this year, it is planned to hold 250 exhibitions in various countries, and the state is ready to pay up to 30% of the costs (not more than $5 thousand) for those exporters who decide to participate independently in these exhibitions.

Digital trading hub

Azerbaijani SMEs will be able to develop their foreign economic activities without even leaving the country, which will be facilitated by the Digital Trading Hub (DTH). According to Vusala Gasimli, Executive Director of the Center for Analysis of Economic Reforms and Communications, DTH defines a qualitatively new role situated at the intersection of the North-South and East-West corridors.

The best practices of Great Britain, Estonia, Malaysia and other countries were used in the establishment of DTH. "In fact, Azerbaijan is the first digital trading hub in the Muslim and Turkic world, its creation is an integral part of the economic reforms being conducted by Azerbaijani President Ilham Aliyev," noted Gasimli.

After the UK, which launched DTH in 2016, Azerbaijan becomes the second country that will provide an opportunity for Azerbaijani and foreign entrepreneurs to engage in foreign economic activities in the country. In fact, Azerbaijan becomes open to the world economy, erasing all borders, which will attract foreign investment in the country.

The head of azexport.az Zaur Gardashov noted that the work of the Center will be carried out within azexport.az portal. DTH will ensure that the non-residents use electronic purse and electronic signature. "This will allow non-residents to open enterprises in Azerbaijan, carry out export-import operations, maintain bank accounts, accept or dismiss workers, conduct other financial operations," said Gardashov.

The foreign citizens will be able to apply to relevant embassies and consulates of Azerbaijan and after physical identification procedure through the ASAN Imza, be able to conduct export-import operations in our country.

In turn, Azerbaijani SMEs will be able to create virtual stores, where they will post and offer their products. By the way, according to the results of six months since the beginning of the work of the azexport.az portal, foreign investors have made orders for more than $200 million, while only in June for $65 million. Orders for deliveries of Azerbaijani products came from both traditional markets of Russia, Ukraine, Turkey, Saudi Arabia, Kazakhstan, the United States, and new markets such as Benin, Nigeria, and Togo. In June, Colombia and the Maldives joined these countries, and Sweden ordered a large batch of confectionery.

Apparently, the Azerbaijani government is successfully stimulating the export of products of the non-oil sector and is taking organized steps to arrange various campaign and advertising projects with the use of modern information communications.

However, to achieve final success in increasing the export of the non-oil sector, it is necessary to continue promoting the national brand Made in Azerbaijan and to seek new markets for Azerbaijani goods.

Steady growth in export of non-oil products is the key to the prosperity of the national economy and the public welfare.