A TREND

In recent years significant measures have been taken in Azerbaijan to encourage the profitability of industries and to promote goods on to world markets. The success of this policy is confirmed not only by the increase in export volumes of non-oil output, but also a change in its structure through increasing the proportion of goods with a high level of added value. The government's efforts to encourage advertising and promotion are also impacting on the development of the country's export potential to no less a degree.

The non-oil trend

"With the purpose of diversifying the national economy 80% of the country's GDP needs to be formed through the non-oil sector in the next few years. And a particular role is being allocated to the production of export-orientated output: in the past 10 years its production has increased by 23% and in the next few years it is expected to increase another 20%," Deputy Minister of Economic Development Sevinc Hasanova believes.

Until recently the international trade volumes of the country's non-oil output on average did not exceed 5% of the country's total exports. Today the overall proportion of non-energy exports is close to 8%, and the main trend in recent years has been a significant change in the structure of goods being exported from Azerbaijan. The result of the government's efforts in the new industrialization of the country and the development of its technological parks and industrial townships has been the noticeable increase in the proportion of goods produced by our heavy, light and food industries. In the past four years over 20,000 enterprises have been commissioned in the country and about 400 of these may be placed in the large and medium-sized category. The construction of over 90 new factories and plants is continuing and shipyards and ammonium nitrate plants, as well as a major steel complex in the north-west of the country will soon be put into operation.

The introduction of a regime of tax preferences in order to speed up the development of enterprises in the ICT sector will enable about 15 plants to be created in the near future and, as a consequence, set up the export of communications equipment, computers and accessories, as well as IT-bio- and medical equipment, equipment for the sphere of alternative and renewable energy, optic lenses, glass and basalt fibres, high-capacity batteries, and so on.

"The outcome of the gradual modernization of our industry was an increase in the volume of the non-oil export of goods and services of over $5bn last year. Significantly, this figure has almost doubled since 2008," the head of the Central Bank of Azerbaijan Elman Rustamov noted.

Today's list of exports includes a broad range of power supply equipment, cables and power engineering components, and not so long ago this list also included solar panels and water-heaters used in alternative power engineering. The export of chemical raw materials and semi-manufactured goods for the polymer industry has increased many times: the catalyst of these processes, among other things, has been the supply of raw materials from a chemical plant in Izmir, Turkey, which belongs to SOCAR. For the first time in recent history Azerbaijan has become an exporter of construction materials - plastic pipes, plasterboard, dry mix, insulation and polymer materials, and not so long ago passenger lifts were also being supplied. This output is being successfully marketed in southern Russia and on the markets of Ukraine, Georgia and a number of states of Central Asia.

Helping where possible

Quite recently, among the former Soviet countries, Azerbaijan had mainly been a supplier of fresh fruit and vegetables and other agricultural raw-materials. Today, however, our agrarian and forestry industries are exporting yarn and finished fabrics, tanned goods, footwear and even furniture. But the biggest progress has been achieved in the export of processed and pre-packed foodstuffs: mainly canned fruit and vegetable products and juices, wines and brandy, vegetable oil, sugar and packaged tea. All these goods come under the category of products with relatively high VAT and are now marketed not only on the markets of the post-Soviet states, but in a number of cases are also exported to countries further abroad.

As an example one might mention the change in the structure of cotton exports. A few years ago the lion's share of the export of the country's refineries was raw cotton, but last year, according to the figures of the State Customs Committee, the export of cotton fibres (yarn) for the first time exceeded 50% of total cotton exports. Some $8.155m of yarn were exported, which exceeded the export volumes of 2011 by 1.9 times. At the same time, there was a considerable increase in the export volumes of ready-made fabrics produced at a number of spinning and textile factories which were built not so long ago in Baku, Sumqayit and in Saatli District.

There have been similar changes in the sugar industry: until the construction of a large sugar plant in Imisli District in the Caspian region in 2006, Azerbaijan was purely an importer of this product. Today, over 20% of this "sweet" product is exported not only to markets in the countries of the former USSR, but also to the Near East, the USA, and so on.

"The main task of the present stage is to expand the production of competitive output and to make maximum efforts to ensure that our rapidly developing non-oil sector reaches foreign markets. State-of-the-art technology and experience must be applied in Azerbaijan," the country's president, Ilham Aliyev, has said.

A most important role in expanding the variety and geography of Azerbaijani exports is being allocated to the Foreign Ministry and the Ministry of Economic Development, and especially the Azerbaijani Export and Investment Promotion Fund (AZPROMO). At the instigation of these structures dozens of business forums and exhibitions are being organized at home and abroad, providing contacts between local business circles and foreign companies and organizations, and inter-active forms of promotion and advertising are being introduced into the worldwide network. For example, thanks to AZPROMO's efforts, three years ago the import-export company West Coast Connection was set up in the USA, by means of which various goods with the Made in Azerbaijan label are now being marketed in a number of high-class shops in Los Angeles.

The export of foodstuffs and, in particular, seafood products in the states of the Old World has been assisted by the development of certified laboratories within the context of TACIS twinning programmes implemented a few years ago to support the Ministry of Economic Development and the State Standards Committee.

A very significant element of this position reference system was the formation in 2008 of Azerbaijan's first export catalogue, drawn up with the support of the Azerbaijani Marketing Society. The results of the fourth edition of this catalogue, which was published last year, were summed up recently, and the fifth edition of AEC-2013 has also been presented. The Foreign Ministry, which acquired 40% of the copies of the production and circulates it through embassies and other diplomatic offices, is playing a huge role in promoting the catalogue abroad.

In short, quite a number of departments and organizations have signed up to help implement the tasks to set up competitive, import-substituting hi-tech agrarian and industrial production and the gradual progress of the country's output onto world markets, which inspires confidence in its early fulfilment.