Minister: Bill on FTZ in Azerbaijan ready

By Azernews

By Amina Nazarli

The UAE-based Dubai Port World (DP World), one of the world’s major port operators, which provides consulting services for creation of Free Trade Zone (FTZ) in Azerbaijan, has prepared a draft law “On a Free Trade Zone”, said Shahin Mustafayev.

Azerbaijan’s Economy Minister made the remarks during the presentation of a report on the FTZ in the Alat township of Baku’s Garadagh district.

“Last year we signed a contract with DP World. The company has done a great job, which can be divided into three main areas. This is the preparation of the territory’s general plan, development of a draft law “On a Free Trade Zone” and feasibility study of the project,” noted the minister.

Mustafayev said that proposals, prepared by DP World after discussions with representatives of relevant government structures, will be presented to the head of state.

The minister further added that the freight traffic increased significantly in the first quarter of 2017.

“The volume of oil transportation increased by 34 percent and non-oil – by almost 50 percent in the 1Q17 as compared to the same period of 2016. Moreover, the volume of road freight also increased by 50 percent. Last year, the Port of Baku transshipped three million tons of cargo, and after completion of the port’s construction, its cargo transshipment capacity will be 15 million tons of cargo per year after the construction of the first phase is completed,” said the minister.

DP World Adil Al Zarooni, in turn, said that the company has proposed creating an independent arbitration system in the FTZ.

This system will be able to focus not only on Azerbaijan, but also on international law, according to Zarooni.

"The legal system of any state chosen by the parties when signing the agreement can become the fundamental legal system. This may be both the legal system of Azerbaijan and, for example, the UK," he said.

This arbitration, according to him, should deal with both administrative and criminal hearings between residents of the FTZ, as well as between residents and non-residents of FTZ (both locals and foreign).

"Compliance with arbitration decisions concerning residents of the FTZ should be controlled by the FTZ itself, and with respect to non-residents by the appropriate courts in the appropriate order. As for the judges, they can be local or foreign arbitrators," said Al Zarooni.

Also, DP World representative added the FTZ will have to observe its labor, environmental and investment regimes.

President Ilham Aliyev signed a decree March 17, 2016, on measures to create a free trade zone type special economic area covering the territory of the Baku International Sea Trade Port in the Alat township.

The free trade zone is expected to bring up to $1 billion just in the first few years. Special tax and customs policy, which will be pursued in the territory of the free trade zone will also stipulate further development and simplification of a number of procedures.

Moreover, seeking to become the largest logistics zone in the Caspian region, the FTZ will offer comprehensive logistics services to its residents and international clients, serv­ing as a major regional intermodal distribution hub. Taking into account that many manufacturers now prefer to put the final touches onto their products at the distribution centres, such as FTZ’s nearby consumer markets, the provision of value added logistics services at the FTZ becomes an even more compelling prospect. This would not only generate signifi­cant non-oil trade for Baku Port at Alat and Azerbaijan in whole, but would establish it as a regional logistics leader with all three main services of import/export, transit shipment and logistics.