Nation taking serious steps to become regional transit center

Important steps are being taken in Azerbaijan to ensure and establish legal regulation in e-commerce.

Deputy Minister of Transport, Communications and High Technologies of Azerbaijan Elmir Velizade made the remarks at an ecommerce forum in Baku on September 24.

Velizade noted that one of the important components is to ensure the possibility of bringing local products to international markets, and in this aspect, serious steps are being taken to turn the country into a regional transit center.

“The legal and regulatory acts adopted in the country, including the Law on E-commerce, the National Strategy for the Development of the Information Society for 2014-2020, and strategic road maps for the main sectors of the economy, as well as other legal documents create opportunities for implementation of the goals in this area. The initiative to form a digital trade hub in the country is also playing an important role,” Velizade said.

The deputy minister said currently a joint project of Azerpoct LLC and SilkWay Group on e-commerce is successfully implemented in the country. The project provides for delivery into the country of the goods ordered through electronic trading platforms in China. The ordered products are processed and forwarded to other countries.

Velizade also stressed the importance of joint activity with international organizations, adding that Azerbaijan is taking an active part in the unification of digital markets in the Eastern Partnership program.

“One of the seven directions of this initiative is the full digitization of relations between the Eastern Partnership and the EU in trade, logistics, customs, etc. Jointly with the EU, the ministry has been implementing a project for development of e-services and e-commerce since 2017,” he said.

Transformation of the country into a transport and transit center of the region, development of the transport infrastructure at a high level create an excellent opportunity for Azerbaijan to become a logistics center, Velizade mentioned.

In turn, Head of the EU Delegation to Azerbaijan Kestutis Jankauskas emphasized that ecommerce is an important component of Azerbaijan’s economic diversification.

Talking about cooperation with Azerbaijan in e-commerce, Jankauskas noted that the EU has both multilateral and bilateral programs in this sphere.

“We have Digital Europe Program encompassing all Eastern Partnership countries, including Azerbaijan. We work there for the harmonization of the e-trade. But more importantly, we have the bilateral one and we’re just finishing one of the EU-funded projects called Enhancing Development of E-Services and E-Commerce in Azerbaijan. We have done it for about 16 months, spent around 300,000 euros,” he said.

The head of the EU Delegation noted that e-commerce and the whole work done in this sphere is an important component and is going in line and in support of the economic diversification, which is now happening in Azerbaijan.

“In that respect the EU is working in all areas. We work on development on small and mediumsized enterprises, export promotion, agricultural sector and so on. We believe this will help to bring EU and Azerbaijan closer. It is also an important component of what Azerbaijan aspires next – creation of transportation hub here, which can only succeed if properly accompanied by variety of the electronic services,” he added.

Addressing the event, Deputy Chairman of the State Customs Committee Igbal Babayev stressed that in 2018, about 400,000 manats ($235,200) from e-commerce turnover have been transferred to the state budget of Azerbaijan in the form of duties on the basis of customs declarations.

Babayev noted that such high dynamics of growth in revenues in the field of e-commerce has become evident over the past two years.

“In 2016, this figure was just 20,000 manats ($11,700). Worldwide, e-commerce accounts for about 10 percent of total trade turnover. At the same time, the annual growth rate of e-commerce is 10 percent. Speaking in figures, while today the total world e-trade turnover is about $3 trillion, this figure will reach $5 trillion by 2021,” Babayev said.

The deputy chairman of the state customs committee noted that the main focus is on the B2B segment.

“I would very much like the situation in the field of e-commerce in Azerbaijan to improve. At the same time, I would like to note that this sphere is developing dynamically in the country. Currently, efforts are aimed at ensuring effective legal regulation of the industry. In this regard, work is underway to prepare new bills. The main focus is on statistics, business-customs cooperation and capacity-building. We are developing new data collection technologies. For example, the statistics on ecommerce orders is maintained worldwide. There are countries where the greatest demand is for clothing, toys and other household goods. In Azerbaijan, the vast majority of imports falls on mobile phones and computer parts,” Babayev said.

He noted that thanks to the strengthening of the e-commerce regulation, revenues to the state budget in the form of duties from goods imported into the country through e-commerce channels are expected to be at the level of 200 million manats ($117.65 million) for mobile phones alone.