Economic zone of the Araz valley - avoid mistakes

Baku/05.10.21/Turan: On October 4, President Ilham Aliyev signed a decree on the creation of an industrial park "Economic Zone of the Araz Valley" in the Eastern Zangezur economic region, on the territory of the Jabrayil region.

The document says that the territory of the Eastern Zangezur economic region liberated from occupation with a predominantly flat relief and the position of the entrance gate in the southern direction provides favorable conditions for the creation of an industrial park. "The opening a border - customs point in the direction of the historical Khudaferin bridges, located in the south of the Eastern Zangezur economic region, on the territory of the Jabrayil region, will be more effective with the start of the industrial park. At the same time, the creation of a logistics center in the Jabrayil region, various services and innovative industries, including enterprises for the production of building materials, will be useful for the restoration of other areas liberated from the occupation." The industrial park was initially allocated 500,000 manat from the budget.

Currently, there are 5 industrial parks in Azerbaijan. A decree signed by the head of state in May this year also created the 6th Agdam industrial park.

On December 26, 2014, President Ilham Aliyev approved the "State Program for the Development of Industry in the Republic of Azerbaijan for 2015-2020".

The standard regulation on industrial parks states that an industrial park is an enterprise with the necessary infrastructure and management tools for entrepreneurial activity, used to produce and provide competitive products and services through the use of modern technologies, as well as a territory for the effective functioning and development of entrepreneurs.

However, according to some experts, the activities of industrial parks do not fulfill their function, and their benefits for the Azerbaijani economy are very insignificant. What is the state of industrial parks operating in Azerbaijan? Is there a need to create new industrial parks?

According to the Ministry of Economy, in the first half of 2021, industrial parks produced goods worth 841 million manat, which is 45 percent more compared to the previous period. "If in the first half of 2020, residents of industrial parks exported products worth 195 million manats, then for the same period of this year, exports amounted to 270 million manats."

The ministry noted that in the first half of 2021, the share of industrial parks in the non-oil sector of the country's industry amounted to 12.2 percent, and in the export of non-oil products - 22 percent. The share of investments in industrial parks in investments in the non-oil sector of industry in the first half of 2021 amounted to 13.4 percent.

Chairman of the Milli Mejlis Committee on Economic Policy, Industry and Entrepreneurship Tahir Mirkishili told Turan that industrial sectors in Azerbaijan account for 35 percent of the gross domestic product. “Currently, there are 6 industrial parks and 5 industrial quarters in our country. In the last 3 years alone, these parks produced goods worth 2.7 billion manat, of which about 760 million manat were exported."

The chairman of the committee noted that 9,300 people are currently employed in these parks. “Over the past 3 years, these 9,300 people were paid a salary of 320 million manat by residents of industrial parks. That is, the significance of these parks in social life is quite large, and also has an important economic significance, since the products are produced and exported. Therefore, today the role of industrial parks in the industrial policy of Azerbaijan is great."

According to the deputy, the seventh industrial park "Economic zone of the Araz valley" is located in a rather significant place. “If we look at this zone from the one hand, the opening of the Zangezur corridor will provide connections with Nakhchivan, Turkey and the West, on the other hand, a checkpoint to Iran is currently open from Khudaferin, which creates access to the Iranian and Southern markets, and from third party, the implementation of the resources of the East Zangezur and Karabakh economic regions in this zone and the processes taking place in the region will create conditions for a fairly effective activity."

Economist Togrul Veliyev noted that the situation with industrial parks is different. “The Minister of Economy Mikail Jabbarov periodically announces rather high figures concerning the products produced by industrial parks, or investments in parks. But the fact is that our only source in connection with these figures is the speeches of the minister or other officials. Unfortunately, there are no reports and no assessment has been carried out."

The expert noted that the enterprises that are part of the Sumgayit Industrial Park were once located in Sumgayit. “Then everything was rebuilt, because there is infrastructure there, but they present it as an industrial park. However, this will have no effect. Even at the beginning of last year, there was data on the activities of industrial parks, and their performance was unsatisfactory. "

According to him, the new industrial park has its own purpose. “If the goal of Aghdam Industrial Park is industry, then in Jabrayil more attention is paid to logistics and transport. But the goal must always be substantiated and socialized. Unfortunately, we have not seen the economic justification of these parks anywhere, it has not been published anywhere. It's just that the decree has been published and it is written that Jabrail is located on the border with Iran in order to play the role of transit in the future. But what's the difference if it was not a park, but another enterprise, and the role of the park was not specified. Therefore, there are many doubts about its effectiveness."

The economist says that some businesses operate in Baku just to avoid paying taxes, since their legal address is the territory of an industrial park, they attribute their income to the park. “Companies operating in parks are more often state-owned companies or state-related companies. In many cases, their purpose is to use tax incentives. For example, in the Balakhany Ecopark, as they say, many companies are registered, but the park does not carry out any activity, although it lives on subsidies." -0-