Newly-formed economic zone major step in country's swift progress
Azerbaijan continuously implements various important projects to ensure the development of the non-oil sector, diversify various economic sectors, increase the country’s export potential, improve the business and investment climate and attract foreign investment.
Nowadays it is possible to say that Azerbaijan is transitioning to a new stage of national economic development.
When the whole world faced great economic and financial difficulties due to the coronavirus pandemic, Azerbaijan successfully continued the process of the country’s development. One such example is the creation of the Alat Free Economic Zone (AFEZ).
Foundation laid
In 2017, Azerbaijani President Ilham Aliyev signed a decree on the creation of a special economic zone near the Alat settlement, and on July 2021, laid the foundation stone for the country’s first free economic zone.
The total area of the Alat FEZ will be 850 hectares. On 60 hectares of the total area of the economic zone, the planning has already been completed and the construction has started.
The main objective of the creation of the free economic zone is to provide export-oriented valueadded production in accordance with the best management practices.
The creation of FEZ will ensure the attraction of investors and the creation of tens of thousands of new jobs. In addition, it will contribute to the dynamic and sustainable development of the country’s economy by ensuring the cooperation of foreign investors with Azerbaijani companies.
Opportunities and prospects
The realization of the Alat FEZ project will not only bring economic dividends to Azerbaijan but also strengthen the country’s position in the region. This project's implementation will also increase the strategic importance of Azerbaijan, which plays an important role in such transit transport corridors as East-West and North-South.
Moreover, the creation of the Alat Free Economic Zone will form conditions for increasing state and budget revenues.
Azerbaijan has carried out the big work to develop the country’s non-oil sector in recent years. However, so far, the trends show that investments in the country’s non-oil sector are mainly done by the state or local companies, while foreign companies still prefer to invest more in the oil and gas sector.
Therefore, it is possible to say that the creation of the FEZ will serve the development of the nonoil sector of Azerbaijan’s economy.
The new economic free zone will create the base for the attraction of foreign investors and new technologies. It will create opportunities for creating new jobs, increasing the average salaries, producing competitive goods, and expanding the export opportunities for the non-oil sector.
Securing foreign investments
Speaking about the attraction of foreign investments to the country, Azerbaijan’s State Economic University Professor Elshad Mammadov in an interview with Azernews said that the internal potential for sufficient investment growth is available in Azerbaijan.
“The volume of money supply allows to significantly increase both the money flow into the economy as a whole and direct investment in the form of direct capital investment,” he said.
The expert underlined that Alat FEZ should give incentives for the inflow of foreign technology to the country. He highlighted that it is not a coincidence that the head of state has had numerous meetings with the leadership of various transnational corporations specializing in high-tech areas.
“Today, a new technological paradigm is being formed in the world, where high-tech technologies, biotechnology complex, nanotechnology are in the first place. We certainly need to import these advanced innovative solutions and the Alat Free Economic Zone in this context should become a stimulus for building up the innovative areas of the economy,” the expert stated.
Mammadov stated that the import of state-of-the-art technologies will give access to a more equivalent foreign trade exchange with the rest of the world. In addition, it will give the opportunity to diversify import flows and at the same time will give real results in import substitution.
“I think that the potential of the Alat FEZ is, of course, connected with these directions. Firstly, we need to achieve a significant increase of capital investments in the country’s economy,” he noted.
The expert underlined that in order to come to outstripping rates of economic development in real format, it is needed to increase the volume of investments into the economy by not less than 10 percent per year.
“To this end, it is necessary to soften the monetary policy, and when the domestic investment begins to rise, foreign investors will join. Because Azerbaijan and the whole region have great potential, great prospects for stimulating economic growth,” Mammadov added.
It is worth noting that benefits and exemption from a number of taxes in FEZ will increase interest in the country and the region as a whole and consequently attract foreign investors and investments. The Alat FEZ project will become the main driver of economic development in the non-oil sector.
The Alat Free Economic Zone will be ready to receive the investors in next July.