WORKING IN PREFERENTIAL MODE

A regime of financial incentives and fiscal preferences has been introduced, and production and service-logistic clusters with high export potential are being formed. The majority of these enterprises are currently situated in the Aghdam Industrial Park and the Araz Valley Economic Zone. As reported by the Economic Zone Development Agency (İZİA), which operates under the Ministry of Economy, the construction of several facilities in the Aghdam industrial zone has already been completed, with the intention of putting them into operation in the near future.

Job Creation in Aghdam

The Aghdam Industrial Park, the largest industrial zone in the west of Azerbaijan, commenced construction three years ago on a 190-hectare plot. At the time of writing, 25 business entities have been granted resident status, while a further six companies have been registered as non-residents. The total volume of investments made by these entities is estimated to exceed ₼216 million. In terms of the number of registered residents, the Aghdam Industrial Park is the second most populous park in the country, after the Sumgayit Chemical Industrial Park. According to İZİA, the residents of the former have already invested a sum exceeding ₼35 million in various projects, thereby creating approximately 300 permanent employment opportunities. As additional enterprises become operational, the total number of enterprises in the zone is expected to reach 2,000. It is intended that production of building materials, including pipes, metal products, façade plaster, insulation materials, wallpaper, reinforced concrete structures and roofing, will be established. A factory specialising in ventilation and fire-fighting equipment, as well as shoe and tobacco factories, is scheduled to commence operations. Additionally, a factory for the production of automatics and telemechanics is set to become operational.

Remarkably, the construction of energy, utilities, transport infrastructure, communication and internet systems has been accelerated on the territory of the future industrial cluster. It is also noteworthy that the Aghdam industrial zone is situated in a highly advantageous location in close proximity to motorways and railway junctions, which significantly simplifies the transportation of goods, raw materials and finished products manufactured at the enterprises.

The favourable business climate has motivated investors to accelerate the construction process of industrial, processing, service and other enterprises. The initial phase of this process was conducted in close alignment with the objectives outlined in the First State Programme, "Great Return to the Liberated Territories of Azerbaijan". As is widely acknowledged, the overarching objective of the programme is to facilitate the growth of the production sector, thereby creating employment opportunities for the prospective inhabitants of the towns and villages that are scheduled for revitalisation, including those in the Aghdam district, where approximately 42,000 individuals are expected to be resettled.

At a press conference dedicated to the results of the Economic Zone Development Agency for 2023, İZİA Chairman Seymur Adigozalov revealed that more than five industrial enterprises are scheduled to commence operations in Aghdam Industrial Park in the current year. These enterprises will engage in the production of wallpaper, footwear, roofing materials, pipe and box profiles, ventilation equipment, fire-fighting apparatus, and a range of metal products. The process of attracting investors has continued at a steady pace. Additionally, the head of İZİA has indicated that Construction Ltd. has been designated as a resident of the Aghdam Industrial Park. Consequently, at the recently established enterprise, which will receive an investment of ₼2.9m and will employ approximately 40 individuals, the objective is to commence production of metal electric poles for high-voltage power lines.

Cluster in Jabrayil

The next in terms of capitalisation among the territories of Azerbaijan liberated from occupation is the industrial-logistic cluster, the Araz Valley Economic Zone,  which is currently being formed in the Jabrayil district. By the end of June, 10 residents and 2 non-residents had been registered. It is anticipated that investors will progressively invest a total of ₼83.4m in this industrial zone, thereby creating over 700 jobs. At this juncture, the total investment amount exceeds ₼14m. The final stages of infrastructure construction are underway, along with the erection of the administrative building, substation, and water tank. A logistics centre with an estimated value of ₼20m is scheduled for completion in the near future. It is necessary to fulfil the functions of a regional supplier of construction materials and other products, serving the districts of Lachin, Shusha, Fuzuli, Gubadli, Zangilan, Khojavand, and Jabrayil.

By the conclusion of the current period, the Araz Valley Economic Zone is scheduled to have completed the construction of a number of enterprises for the production of special-purpose equipment and metal products, as well as various types of adhesive tape, and so forth.

It is anticipated that an enterprise for the production of fibre and polystyrene concrete blocks will be operational in the Jabrayil district industrial zone in the future. Another resident, KAMAZ Lizinq Azərbaycan Ltd, has established a system for the provision of maintenance and repair services for trucks and agricultural machinery. Additionally, the establishment of an assembly line for Italian IVECO Daily trucks from components, the production of spare parts and separate units for automotive equipment is also planned. Another noteworthy project is currently in development: a facility for the production of disinfectants, liquid detergents, and bleaching agents. Furthermore, a number of companies are exploring the potential for the production and processing (including recycling) of agricultural products.

The Most Advantageous Benefits

Towards the conclusion of June, during the forum entitled "New Opportunities for Entrepreneurs: At the Revive Garabagh Together forum held in Shusha, government representatives and business leaders engaged in a comprehensive discourse on the subject of public-private partnership, with a particular focus on the preferential treatment of entrepreneurs operating within the industrial clusters of the Garabagh region.

At the event in Shusha, Azerbaijani Economy Minister Mikail Jabbarov asserted that the optimal conditions for business operations are currently being established for Azerbaijani entrepreneurs. In addition, residents of industrial parks situated within the exempted territories will be entitled to significant tax benefits. These include exemption from profit, property and land tax for a period of ten years, commencing from the date of registration. The state will assume responsibility for the development of the requisite infrastructure, including the provision of electricity, natural gas, potable and technical water, as well as high-speed internet.

In addition, entrepreneurs operating in the exempted territories are granted special privileges. These include subsidised social insurance payments, the exemption of imports of machinery, technological equipment, installations, raw materials and component materials used in the production process from both VAT and customs duties, and the provision of other benefits.

This encompasses financial assistance amounting to 20% of the funds paid for the utilisation of public utilities, namely electricity, natural gas, water supply and sewerage. The aforementioned funds are disbursed to producers of assorted products who are registered in the region and do not fall within the category of high-risk taxpayers.

The residents of the Garabagh region are able to benefit from preferential lending, which serves to enhance entrepreneurs' access to finance. Furthermore, state guarantees and subsidised loans are also available. Up to 90% of the loan amount, up to ₼5 million, is guaranteed, with an annual interest rate of up to 15% and a term of up to 7 years. The state provides a subsidy of 10 percentage points on the annual interest rate applicable to these loans, for a period of up to 36 months. Those wishing to utilise this mechanism are required to submit an application via the electronic credit and guarantee system, accessible via the e-government portal and the official website of the Entrepreneurship Development Fund, which is administered by the Ministry of Economy.

It is anticipated that by the conclusion of the current fiscal year, the department will have completed the requisite processes and will be in a position to explore the possibility of additional financing, including the utilisation of resources from the Entrepreneurship Development Fund and the Azerbaijan Investment Company. Furthermore, businesses operating in Garabagh will also have access to additional sources of favourable financing.

The social benefits, which facilitate the growth of human capital and the recruitment of qualified professionals to work in the liberated territories, have not been overlooked. To illustrate, those employed in this region will be granted supplementary vacation days and salary supplements.

The aforementioned factors should guarantee the swiftest growth in the capitalisation of agro-industrial enterprises in Garabagh and the East Zangezur economic regions. The operations of these enterprises are not only oriented towards the domestic market, but also towards external markets. In this regard, the specialists of the Export and Investment Promotion Agency (AZPROMO) have developed a project for the creation of the "Made in Garabagh - Heart of Azerbaijan" trademark, and the rules of its use have been prepared and submitted to the relevant structures. It is anticipated that the inaugural recipients of the special trademarks will be companies based at the Aghdam Industrial Park. This is a crucial step in promoting the products manufactured in the liberated territories abroad. In addition to reinforcing the commercial aspect, it is of paramount importance from a political standpoint. This will finally establish a new geographical brand for Azerbaijan. At the same time, AZPROMO is increasingly promoting the key national brand—Made in Azerbaijan. As part of these efforts, exporting companies will soon start to receive logistical subsidies. AZPROMO is currently concluding the development of legal framework and administrative processes related to the implementation of this initiative.