BEATING HEART OF THE ECONOMY

If the banking sector is considered the circulatory system of the economy, then business can rightly be called its heart – the central engine that supplies all other organs with the necessary resources. In Azerbaijan, the need to strengthen the non-oil sector is becoming more urgent with each passing year. This is due to the natural decline in oil production and the volatility of fuel prices. The main focus in this country is therefore on entrepreneurship.

The latest developments in this field were unveiled during the conference on 25 April, which coincided with the annual Entrepreneurs' Day celebrations in the country. The event, themed 'Constitution and sovereignty - development of entrepreneurship in Azerbaijan', provided a platform for the discussion of these innovations.

Transparency and Tax Growth

Azerbaijan's economic development is entering a significant new phase. Following the 44-day Patriotic War, the country was victorious, its sovereignty was restored, a regional agenda was formed, and efforts were made to unblock communications in the region and their development. These developments will open new horizons for the economy and businessmen of Azerbaijan.

The number of individual entrepreneurs in the country exceeds 1.4 million. At the same time, the number of business entities with legal entity status has increased by 7.1% compared to the previous year, reaching 212,000. In 2024, the private sector's share of the wage fund in Azerbaijan reached 51 per cent, its share of employment was 79.1 per cent, and it accounted for 91.6 per cent of new job creations. This clearly highlights its significant role in the economy.

Mammad Musayev, President of the National Confederation of Entrepreneurs' Organisations (Employers), highlighted the rapid development of business in the country, particularly in the Garabagh and East Zangezur economic regions.

Azer Amiraslanov, Chairman of the Committee on Economic Policy, Industry and Entrepreneurship of Milli Mejlis, also expressed agreement. "Entrepreneurs contribute to the development of the country, the restoration of liberated territories and the solution of social issues. At the same time, business and the state have mutual expectations," he said.

In 2024, the private sector accounted for 81.4% of Azerbaijan's GDP, with the non-oil and gas sector contributing 76.1%, industry 81.4%, services 71.9%, and agriculture 99.8%.

"These figures demonstrate that the private sector is in alignment with the government's objectives of economic diversification and sustainable economic growth. Businessmen will continue to contribute to strengthening the economic foundations of our sovereignty and independence," the committee head said.

Meanwhile, First Deputy Economy Minister Elnur Aliyev highlighted that following recent reforms in Azerbaijan, the country's economy has shown notable growth, the level of transparency has increased, and the number of labour contracts and tax revenues to the budget have risen. In the first three months of this year, the non-oil and gas sector received over ₼3.2 billion in taxes, which represents an increase of almost 11% compared to the same period last year.

Another significant accomplishment is the establishment of industrial zones, with resident status already granted to 96 entrepreneurs with a combined investment portfolio exceeding ₼1 billion. The registered residents are expected to create more than 10,800 jobs in total.

"In terms of the number of residents, the second place among the country's industrial parks is occupied by the Aghdam Industrial Park, whose products are supplied both to the domestic market and for export," the deputy minister said, urging entrepreneurs to take advantage of the opportunities created in the vacated territories. I would like to draw your attention in particular to the industrial zone known as the Economic Zone of Araz Valley.

Plans for the near future include 100 per cent reimbursement of costs incurred by representatives of the private sector when exporting goods from the liberated territories. This was stated by Yusif Abdullayev, Executive Director of the Export and Investment Promotion Agency. He has announced that the country is creating a new mechanism for subsidising logistics, which will cover up to 75 per cent of transport costs, and up to 100 per cent for goods exported from liberated territories.

Challenges and Objectives

Incidentally, the positive results achieved do not guarantee that all business problems have been solved. For instance, the issue of settling economic disputes is particularly acute in the current climate. In this regard, the Azerbaijani government is considering the possibility of creating new specialised courts to resolve disputes in the field of entrepreneurship. The documents pertaining to the dispute resolution process by the Arbitration Centre under the auspices of the National Confederation of Entrepreneurs' (Employers') Organisations have been finalised and will be submitted to the Ministry of Justice for further action. Another issue that is proving problematic for entrepreneurs is disputes with government agencies, disagreements and, as a result, the emergence of any proceedings. This is particularly the case in the aftermath of the Coronavirus pandemic, which has resulted in an increase in disputes between administrative agencies and entrepreneurs. Consequently, administrative courts are facing an increase in workload," said Gunduz Kerimov, head of the Legislation and Legal Policy Department of the Presidential Administration. It is estimated that approximately 40 per cent of cases in the courts are related to tax, social payments and customs disputes. In order to reduce this burden, new, specialised courts for tax, social payments and customs disputes may be created. In this regard, the opinion of entrepreneurs is of great significance.

Shahin Baghirov, Chairman of the State Customs Committee, emphasised the importance of judicial consideration of disputes in the customs sphere, stressing that judgements must be legally justified and enforceable.

Mr. Musayev also emphasised the importance of the Cooperation Councils in addressing the challenges faced by entrepreneurs in a timely manner. "The Confederation of Entrepreneurs of Azerbaijan operates within the framework of Cooperation Councils together with the State Tax Service under the Ministry of Economy, the Central Bank of Azerbaijan and the State Customs Committee. This mechanism is widely regarded as one of the most effective platforms for public-private dialogue," he said.

In turn, Mr. Kerimov called on entrepreneurs to more actively use the construction amnesty in non-residential areas. The Decree of President Ilham Aliyev "On additional measures related to issuing permits for the operation of some non-residential construction projects" provides for a simplified procedure for issuing permits to entrepreneurs for this type of construction project. The decree actually announces construction amnesty in non-residential areas. We urge entrepreneurs to take advantage of this opportunity," he said.

He believes that businesses should also be more proactive in attracting foreign investments into the country's economy. "The laws adopted in our country in recent years are significant documents for attracting foreign investors. At the same time, entrepreneurs must also be active in this area," Kerimov emphasised.

Therefore, the government has restated its commitment to tackle the current issues in the private sector. At the same time, however, there are reciprocal expectations. It is vital that businesses are transparent, develop and contribute to the strengthening of the non-oil sector of the economy.