VALLEY OF REVIVAL

Azerbaijan has implemented its industrialisation program for several years. As a result, about fifty agricultural parks, over a dozen technoparks and industrial quarters, as well as the Alat Free Economic Zone (FEZ) have been created. This proven method will be also applied for the development of industrial clusters in Garabagh. In particular, the Aghdam Industrial Park has been developed since the middle of the current year, with the foundation laid for the industrial park Araz Valley Economic Zone.

Revival from scratch

Restoration works in the liberated territories of Azerbaijan began right after the 44-day war was over in November 2020. It took less than a year to implement a huge scope of infrastructure projects over there, including but not limited to a road network, a power supply and communication system built from scratch, the upgrade of hydrosystems and small hydroelectric power plants. After the launch of the Fuzuli International Airport, it is planned to implement another airport projects in two more districts. Preparations for the construction of international railway lines have also been begun in the region.

Remarkably, a significant share of these projects involves foreign contractors, equipment suppliers, project developers, and consulting companies. Today, dozens of companies are involved in these works, mainly from Turkey, Italy, Israel. Entrepreneurs from Hungary, Britain, Kazakhstan, Pakistan, China, Poland, Russia and a number of other countries have also supplied numerous proposals on infrastructure and production projects in Garabagh.

In general, Azerbaijan intends to ensure the widest possible participation of foreign capital and the transfer of modern technologies in the development of industry and high-tech agricultural sector in the liberated territories. Development of renewable energy sources, energy-efficient solutions, waste and water management, smart technologies in agriculture, industrial production and urban planning, mining and processing of ore and other mineral raw materials is an incomplete list of business proposals received from foreign and local business community.

However, in order to develop effective industrial clusters, it is necessary to create sites with primary industrial infrastructure, provided with all the necessary utilities and other communications, as well as provide investors with broad fiscal and other preferences. As the experience shows, all these tasks can be most optimally solved by forming a network of technoparks, industrial quarters and agricultural parks in the liberated territories.

Effective solution

Azerbaijan's industrialisation strategy until 2030 defines the localization of industrial enterprises in specialised clusters as a key direction of development. In January 2021, President Ilham Aliyev signed a decree On measures to improve the management of industrial parks, industrial quarters, and agricultural parks to improve the administration mechanisms and increase the production efficiency of such structures. According to the decree, Agency for the Development of Economic Zones was created under the Ministry of Economy, which apart from Sumgayit Chemical Industrial Park LLC includes all other industrial parks (except for Balakhani) and industrial quarters (except in Nakhchivan), as well as all agricultural parks operating in Azerbaijan.

The agency also includes the two most powerful technoparks operating in Sumgayit: Sumgayit Technology Park (STP) and Sumgayit Chemical-Industrial Park (SCIP). Other industrial parks operating in Azerbaijan include the ones in Mingachevir, Pirallahi, Balakhani, and Garadagh. “The volume of production in industrial parks, which are the optimal mechanism for the development of the non-oil sector, has exceeded ₼4.3 billion. At the same time, the total volume of investments reached ₼6.1 billion,” said the Minister of Economy of Azerbaijan Mikayil Jabbarov.

The development of a network of industrial quarters has also become an effective way of concentrating industrial production: five of them (Neftchala, Hajigabul, Masalli, Sabirabad, and Sharur) are actively developing, with two more industrial quarters under construction. Residents of industrial blocks have already invested over ₼74.5 million. Along with consumer goods, a number of industrial clusters are engaged in the manufacture of cars, trucks, metal structures, building materials and other products with a high level of added value.

To increase commodity production and processing potential of the agricultural sector, it is planned to create 51 agricultural parks in Azerbaijan on a total area of about 240,000 hectares. Since 2014, the volume of investment in agricultural parks has reached ₼2.4 billion, while about 43 of these facilities are already operational.

Aghdam Industrial Park

Azerbaijan’s rich experience since 2009, including the development of local industrial clusters, will also be implemented as part of the industrial and agriculture projects in Garabagh.

The first step was the creation of the primary infrastructure of the Agdam Industrial Park launched in mid-2021 under the leadership of the Agency for the Development of Economic Zones. It is planned to establish production, processing and logistics facilities for competitive products, as well as provide services in the industrial sector by introducing modern technologies. The Aghdam Industrial Park is planned to go through a two-stage development process. Initially, 76 hectares of land will be developed, which will provide access to about 30-40 entrepreneurs. In the following stage, the rest of the territory will be developed with hundreds of jobs created there permanently. All expenses for infrastructure, administrative and production buildings will be paid by the state.

The industrial park is at the advantageous location, with two highways passing nearby (Baku-Shusha, Aghdam-Aghjabadi), and a new railway line from Yevlakh, which is currently under construction. Thus, Aghdam and adjacent territories will turn into an industrial hub for the processing of raw materials of regional importance. According to MP Vugar Bayramov, it is planned to organise the production of building materials and process agricultural products in the industrial park, including the production of wine, fertilizers and other products with high export potential. In general, it is expected that in the coming years, Aghdam Industrial Park will attract ₼110 million as investments. The park will ensure the production of feed, packaging, canned food, meat, dairy products, as well as the processing of grain and other products from plants.

Araz Valley

A similar production and service cluster will be established in Jabrayil. President Ilham Aliyev has recently took part at the ground breaking ceremony of the industrial park Araz Valley Economic Zone. The new structure covers a vast territory of 200 hectares near the village of Soltanli, Jabrayil. Moreover, it is developed as a key production hub for the entire East Zangezur economic region. ₼500,000 have been provided from the state budget dor the development of the primary infrastructure of the zone. But the volume of investments will increase next year, with the construction of administrative and production buildings, management facilities, as well as the implementation of other measures to carry out entrepreneurial activities.

In the next step, it is planned to attract investors to the new industrial park and to set up production of competitive industrial products.

The territory of the industrial cluster will be divided into agricultural, industrial, social, and technical zones. It is planned to create a logistics and shopping centre, warehouse complexes, wholesale and retail facilities, a fleet of heavy vehicles, customs, gas stations, as well as facilities for the repair of cars and other equipment. The foundation of the future service centre, which is a joint venture between the Ganja Automobile Plant and one of the leading manufacturers of trucks in the world (KamAZ OJSC, Russia), is ready. Service blocks for the maintenance and repair of trucks and agricultural machinery will cover an area of 1.5 hectares.

In the future, it is planned to launch facilities in the Araz Valley Economic Zone for the production of metal structures, facing and insulating materials for construction, as well as enterprises for the packaging of agricultural products.

It is also planned to launch respective facilities for the production of fertilizers, silk processing, textile and carpet weaving. There will be refrigerators and small production and service facilities in the zone as well. Since all the surrounding settlements have been destroyed by the Armenian invaders, it is planned to construct in the social zone a modular town for 150 people, equipped with residential, social and office buildings.

Apparently, the development of the Araz Valley Economic Zone looks quite promising, given the capacious resource base and agricultural potential of the Jabrayil district. In particular, the area has 5 million cubic meters of sandy deposits, as well as gravel, volcanic ash, sawn stone, clay for brick production, cement raw materials, gypsum, lime, jasper, deposits of iron and chromium, which are basic materials for the production of ore concentrate. The industrial cluster in this area will has its own power industry thanks to BP’s plan to build a 240 MW solar power plant in the region.

Development of agricultural enterprises in Jabrayil is also very promising. Thanks to about 60, 000 hectares of fertile lands, abundant subsoil waters, location near the Araz River and the Khudaferin reservoir, it will be possible to ensure the rapid revival of viticulture, cotton growing, silkworm breeding, horticulture and animal husbandry in the area. The cultivation of technical grape varieties and the development of winemaking in the sunny Araz valley, protected by mountains from cold weather masses, seem especially beneficial. In the Soviet times, the region provided about 300 tons of silkworm cocoons. Thus, it is planned to ensure a massive planting of mulberry trees and the launch of silk fibre production in the area.

Aghdam and Jabrayil industrial parks, whose residents will be exempted from customs duties, VAT and a number of other taxes, are the first steps to revive the industrial potential of the liberated territories. Industrial clusters of various formats are also planned in the districts of Kalbajar, Zangilan, Gubadli, and Lachin, which have the potential to organise the extraction and processing of mineral raw materials, to develop the mining industry. The liberated territories of Azerbaijan also have considerable potential for the introduction of IT technologies. In Garabagh, it is possible to create a high-tech park and an innovation centre. Azerbaijan Innovation Agency and the Turkish technopark GOSB have already signed a memorandum on cultural and scientific cooperation in this area. With the support of Turkish companies a large-scale project for the development of electronic agriculture is underway in the village of Aghaly, Zangilan.

Thus, the revival of the industrial potential of Garabagh and Eastern Zangezur will become a powerful incentive both to attract new large investments to the non-oil sector and to create an efficient production chain throughout the country. The ultimately objective of the government is to achieve a parity share of all the components of the national economy in GDP.