President of the Republic of Azerbaijan Ilham Aliyev has attended a groundbreaking ceremony of Alat Free Economic Zone, APA reports.
President Ilham Aliyev then was interviewed by Azerbaijan Television.
Correspondent: Hello, Mr. President. It is a pleasure to see you. Mr. President, how did the idea of creating the Alat Free Economic Zone, the foundation of which was laid today, come about?
President Ilham Aliyev: The idea of establishing this zone is based on our policy. In particular, the work done to develop the non-oil sector in recent years has given an impetus to the establishment of this zone. We saw that investment in the non-oil sector was more made by the state or local companies. Foreign companies tend to invest more in the oil and gas sector. Therefore, I am confident that the creation of this zone will serve the development of the non-oil sector of Azerbaijan, the non-oil sector of our economy. At the same time, the infrastructure to be created here will be attractive to investors, new technologies will come to our country, new jobs will be created, the salaries of Azerbaijani citizens will be high, competitive products will be manufactured here and our non-oil sector's export opportunities will expand. Because if we look at the structure of our gross domestic product, we can see that the oil sector is no longer dominant. However, if we look at exports, we can see that oil and gas products account for the vast majority of our exports. Therefore, one of the key factors was the implementation of reforms and the attraction of foreign investors, especially to the industrial sector. Of course, this idea has been discussed for a long time. But we had to choose the right time to implement this project. We had to be ready for it, and I think we are ready for it today.
- Mr. President, what steps were made in the run-up to the establishment of the Alat Free Economic Zone?
-First of all, we had to do some organizational work and create suitable conditions to attract investors. It is clear that Azerbaijan is a landlocked country and it is more difficult to create free economic zones in such countries. In countries with a more favorable geographical location, these zones have been very successful primarily due to their geographical location. Therefore, taking into account this geographical situation, we had to work more efficiently and provide more attractive conditions for investors. First of all, work had to be done in the field of legislation, and in 2017, I signed a decree on accelerating the establishment of the Alat Free Economic Zone. In 2018, the law was adopted. This is a very progressive law that fully meets the interests of both our state and investors. This is very important. Because if there were any uncertainties for investors in the legislation, of course, it would not be possible to attract them here. In particular, the global economic and financial recession of recent years has reduced the volume of investment. Of course, the pandemic has also had a negative impact on the global economy. Taking this step at such a historic moment, of course, requires great courage and is underpinned by our confidence of it. Therefore, I believe that the work done in the field of legislation fully meets the interests of both investors and the Azerbaijani state. After that, specific work began already in 2018. This 850-hectare area has been allocated, the development of the concept of the Alat Free Economic Zone has been started, a working group has been established and work has already reached a practical level.
Of course, the pandemic interfered in our work and delayed our plans for a while. But now the pandemic is slowing down both in our country and in many others. I think that this groundbreaking ceremony being held today shows that we are fully ready for it. After that, practical work will begin, and I am confident that this work will be completed on time.
- Mr. President, why is the Free Economic Zone being created specifically in Alat?
-First of all, there are large vacant lands in the territory of Alat settlement, and the vast majority of these lands is not suitable for agriculture. On the other hand, Alat settlement is close to Baku. This is one of the important conditions. There are all the prerequisites for the implementation of infrastructure projects here. There is a 300-megawatt power plant in Sangachal, and the cost of infrastructure projects will be relatively low. The International Trade Seaport is also located here. This is one of the important factors for the operation of the economic zone. I think that the development prospects of Alat can be very successful. If this zone evolves the way we want, and I am sure that it will, the development of this region will have a great positive impact on our overall development. These factors have played the key role in selecting this location. At the same time, our international corridors pass through here. The East-West and the North-South corridors pass through Alat. Therefore, this place is very convenient in terms of logistics and transport. That is why Alat was chosen for this purpose.
- Mr. President, in your opinion, what will attract investors to this Free Economic Zone and why would they invest here?
-We asked ourselves this question too, which is why the work done to create this zone had to answer this question. After all, there are free economic zones in different countries of the world today. As I mentioned, in some countries this is due to natural conditions and geographical location. The practice of creating free economic zones in countries without access to the high seas has not been very successful. We have studied and analyzed successful and unsuccessful experiences. We believe that there are all the prerequisites for the attraction of investors to this zone in Azerbaijan. I think that, first of all, the geographical location of this place is favorable – it is located by the sea, next to the seaport, and it is a fairly large area. At the initial stage, 60 hectares of land are ready for development. However, a total of 850 hectares of land has been allocated. Land adjacent to this plot of land has already been earmarked so that no construction takes place there. This is necessary for future development.
Azerbaijan has a very good investment environment. We demonstrated this both during the implementation of oil and gas projects and as a result of reforms carried out in other areas. A very good investment environment has been created. It is no coincidence that Azerbaijan is ranked 28th out of 190 countries in the World Bank's Doing Business report. This is a great achievement on a global scale. We are ahead of many developed countries in terms of these parameters. In other words, a good investment climate is certainly one of the main conditions for attracting investors.
Another important reason why we believe that investors will come here is the availability of modern infrastructure. We have been consistently creating this infrastructure for several years. Today, we can say with reference to authoritative international organizations that we have made great progress in this area as well. We know that potential investors are primarily looking at the World Bank's Doing Business report, as well as the rankings of the Davos World Economic Forum. In both cases, our advantage is obvious. Notice the places Azerbaijan is awarded in terms of the level of infrastructure projects. In the field of electricity supply, Azerbaijan ranks second in the world in the Davos Forum’s report. Just imagine that we are in second place on a global scale. We are in eleventh place for the efficiency of railway services and in twelfth for air transport efficiency. We share 24th and 27th places for the quality of roads. The Caspian Shipping Company is ranked 25th for the quality of shipping services. All these are great successes we have achieved. These successes ensure dynamic development of our country today. Because major infrastructure projects have already been completed or are nearing completion. These are very important conditions for investors – investment environment and infrastructure projects.
Also, a very strong human resource potential has emerged in Azerbaijan in recent years. Special attention is being paid to this area. The state has sponsored the education of thousands of young people in the world's leading universities. Most of them have returned to Azerbaijan and are working in various places. Azerbaijanis working in the oil consortia are already contributing to the development of our intellectual potential. There is the human potential that will attract investors.
Security is guaranteed in Azerbaijan. Azerbaijan is perhaps one of the safest countries in the world. This factor is also very important for investors.
The intercultural dialogue and religious tolerance in Azerbaijan are already cited as an example in the world. We want all countries of the world to come and invest here. This factor is also very important.
On the other hand, the existing stability in our country is one of the main conditions for every investor. No-one would invest in countries without stability. This is an axiom. If we look at the experience of countries that are attractive in terms of investment, you will see this. One of the primary conditions, if not the most important one, for investment in Azerbaijan today is the public and political stability and the unity between the people and the government.
Another important factor is that our words and deeds never diverge. In other words, we do what we say. We keep our word, and life has shown this many times. Very attractive conditions have been created for investors. It is enough to look at the oil and gas projects to see that not a single comma has been changed in the contracts signed since 1994. However, in many places, after a certain stage, countries try to revise the conditions in a way that suits them best. We did not do that. Because if we do that, we will scare investors away. In other words, all these factors and, of course, the victory we won in the second Karabakh war and the settlement of the Nagorno-Karabakh conflict have already created a new situation. I think that long-term stability and peace are as clear as day for investors. I am sure that the presence of all these factors and our confidence will attract foreign investors to this zone.
- Mr. President, my last question is about when the Alat Free Economic Zone will be ready to receive first investors.
-The foundation laid today is already giving an impetus for the work to start. The initial work has already been planned, 60 out of 850 hectares have already been designed and detailed design work has been completed. Starting from today, construction work will begin along with infrastructure projects, a business center, a customs checkpoint and other necessary sites will be built. I think that in about a year, starting from July next year, we will be ready to receive investors.
Until then, the leaders of the Free Economic Zone will hold various events both in the country and abroad. Presentations should be made and direct contacts with potential investors should be established. At the same time, representatives of the Free Economic Zone will be sent to different countries and potential investors will be invited here from abroad. Also, I am telling our embassies in foreign countries to inform potential investors about the establishment of this zone during their contacts. We have intergovernmental commissions with many countries. I am also telling heads of these commissions to ensure that the Free Economic Zone are represented at the meetings of such commissions and that this issue is on the agenda. I want to say this again because we have such commissions with many countries. But when analyzing the work of these commissions, I see that foreign companies usually try to act more as contractors in Azerbaijan. In other words, they mostly want to make money in Azerbaijan – this is what it means. We do not mind that because we are attracting foreign contractors even to the liberated lands now. But we want foreign investors to invest in Azerbaijan. Public investment has already played its role. We have implemented all major infrastructure projects. Of course, large-scale construction work is now under way on the liberated lands. This will lead to a major economic recovery. But we must understand that without direct foreign investment, our country cannot develop the way we want. Therefore, the intergovernmental commissions with other countries should, first of all, try to attract funds to Azerbaijan from abroad. I think this zone can be of interest to potential investors.
So in one year, in July next year, the zone will be ready to receive investors. I am sure that we will see the pictures shown here being reflected in real life. So far, all our initiatives and plans have been reflected in real life. There has not been a single initiative that was not implemented.
The most difficult projects, transnational projects, the projects we have implemented in a very difficult geopolitical situation have been successfully completed. There is no need to list them because everyone knows what I am talking about. Therefore, I am sure that the establishment of this zone will be yet another step towards our success.
- Mr. President, thank you very much for answering our questions in detail. Thank you!