Import-substituting industrialization keeps priority for Azerbaijan

/AzerNews/

By Gulgiz Dadashova

Azerbaijan has entered a qualitatively new stage of industrialization and the import-substituting industrialization is an important issue for the government.

The main focus of the import substitution is that money circulates within the region when money earned locally is spent locally.

Azerbaijan has announced 2014 as the Year of the Industry. During the year, a number of measures have been adopted aimed to strengthening the industrial capacity, improving competitiveness and human resource capacity and upgrading the regulatory framework. Also a state program was approved for the development of industry in 2015-2020 based on the provisions of the Concept of "Azerbaijan 2020: Look into the Future."

The total volume of capital investments in Azerbaijan's industrial sector amounted to 5.35 billion manats in January-September 2014, which is 5.4 percent more than in the same period of 2013.

The total volume of capital investments in Azerbaijan's industrial sector stood at 7.08 billion manats in 2013, which is 16.4 percent more than in 2012.

Food

The country provides itself with staple foods to the highest extent, except for grain. This, of course, is a very important factor in ensuring food security.

The volume of agricultural production has increased by 3.4 times in Azerbaijan over the past ten years. The volume of investments made in Azerbaijan's agriculture in the mentioned period increased by 15 times.

Azerbaijan's Agriculture Minister Heydar Asadov has recently announced that the volume of fruits and vegetable supplies, which are the basis of Azerbaijan's agricultural export, has increased by 34.3 percent since early 2014 compared to the same period of 2013.

Asadov said the level of self-sufficiency in meat and dairy products is currently 92 percent and 76 percent, respectively.

"Earlier Azerbaijan imported a several tons of potatoes to meet the domestic needs but today the country annually exports over 50,000 tons of fresh potatoes. Also, the volume of export of fruits and vegetables, traditionally supplied by Azerbaijan to foreign markets increases year by year," Asadov said.

Azerbaijan now meets the population's demands for meat products by 90 percent, poultry meat by 81 percent, eggs by 80 percent, dairy products by 75 percent, vegetable oil by 65 percent, and butter by 50 percent through local production.

Over the past ten years, as a result of measures adopted in Azerbaijan to ensure food security, the production of husbandry goods has increased by 3.1 times, cattle-breeding by 3.4 times, meat production by 1.6 times, and grain production by 1.4 times.

Heavy industry

The import substation can also be viewed in regard to the industrial products. This will be effective in view of goods, the production of which is not so expensive, and which can be produced in Azerbaijan. The production of matches can be a good example. Today, Azerbaijan imports matches, although the country has enough opportunities for the production of this product.

Addressing the recent Cabinet meeting, President Ilham Aliyev noted that the approach followed in ensuring food security and becoming self-sufficient should be used in relation to building materials

"Great developments have been made in this field," the president said. "We have already provided ourselves with cement by 100 per cent. We need to provide ourselves and arrange exports to the maximum extent possible. Here we have in mind the development of aluminum, steel and metallurgy."

During this period, Azerbaijan was leading the former Soviet states in terms of the production of petroleum products, oilfield equipment, steel pipes, non-ferrous metals, synthetic rubber, electric motors, construction materials, household air conditioners, car parts, fertilizer, porcelain and pottery, carpets and rugs. The country manufactured 350 kinds of products and exported to 65 countries worldwide.

Azerbaijan, like many other post-Soviet states, in the 90s of the 20^th century has experienced massive deindustrialization.

After gaining its independence, the country began to fuel up the industry. Bulk of the capital investment was directed to this sphere.

If in 1990, the mining sector accounted for 5.3 percent of total industrial production in the country, in 2013, the share rose to 77.2 percent. As a result, the share of processing industry decreased from 90.1 percent to 16.5 percent.

Meanwhile, the number of enterprises operating in the mining sector increased from 88 in 1995 to 318 in 2013, from 1,844 to 2,149 in 2008 in the manufacturing sector and dropped to 1,764 units by late 2013.

Thanks to the "open doors" policy persuaded by the government, the number of foreign and joint industrial enterprises operating in the country grew significantly: from 1998 to 2013 the increase was 2.5 times, or up to 233 enterprises.

The Economy and Industry Ministry forecasted that more than 500 new industrial enterprises will appear in Azerbaijan in the next 10 years.

Azerbaijan is the most perspective metallurgical country in the region. The country is rich in terms of raw materials, natural resources, and metal industry and construction sectors on one hand and enjoys an experienced personnel open to a range of opportunities for development of heavy industry including metallurgical industry on the other hand.

The fundamentally new mechanisms observed in the modernization of the industrial sector of Azerbaijan bears its fruits, as the country has formed several different profiles of industrial parks and business incubators

Azerbaijan actively creates industrial parks, and has already opened Sumgayit and Balakhan industrial parks, as well as Hi-Tech Park. The main advantage of the industrial districts is that the entrepreneur does not waste money on infrastructure for enterprise. External and internal infrastructures are available on the industrial districts.

Light industry

Light industry has a sustained tradition in Azerbaijan and includes production, spinning and weaving of cotton and silk. The main raw materials for the domestic textile industry are cotton, wool, silk cocoons, leather and synthetic fiber.

Azerbaijan had a large share of silk production among the republics of former USSR. Following the crisis period in the mid1990s, cotton cultivation increased in the country. This indicator was 44,800 tons of raw cotton in 2013. The overall potential production of cotton in Azerbaijan is as much as 800,000 tons from approximately 280,000 hectares. ,

Other raw materials that are also important for the weaving industry of Azerbaijan are wool and silk cocoons. There is a capacity to produce over 9,000 tons of silk cocoons annually by increasing the area of mulberry plantations to 25,000 hectares.

There are also opportunities for leather production and processing in Azerbaijan as livestock-breeding has been growing rapidly for the last few years. Markets for Azerbaijan's textiles, in addition to the local market, include Russia, Central Asia and Iran. No export duty is payable on such products. Textile products exported to the EU are free of quotas and permits, and only the import customs duty is payable.

Azerbaijan's future development could be associated with the industrial development and the country will gain a lot because of its rich natural resources and diversified economy.