Baku, January 26, AZERTAC
A conference dedicated to the results of second year implementation of "The State Program on socio-economic development of the regions of the Republic of Azerbaijan in 2014-2018” has been held.
President of the Republic of Azerbaijan Ilham Aliyev attended the official opening of the conference.
The head of state addressed the conference.
x x x
Opening speech of President Ilham Aliyev
- Today, we will discuss the implementation of the "State Program on the socioeconomic development of regions". The third program was adopted in 2014 and was successfully implemented. We discuss the implementation of this Program every year and identify the directions of future activities. In short, the implementation of this program is a very successful step of ours. In 2004, when the first program was to be adopted, we set the task of ensuring a rapid development of Azerbaijani regions. We should implement infrastructure projects in the regions and create jobs and social institutions so that the development of our country was inclusive and sustainable.
In 2015, the global economic recession deepened further. The global economy has yet to come out of the crisis. While attending the recent Davos World Economic Forum, I witnessed again that the global economy will still remain in a difficult situation. Despite this, we in Azerbaijan resolved many issues in 2015. Everything we planned to do early in the year has been achieved. Given the difficult geopolitical situation and the global economic crisis, it is a great success, of course, because our region is still experiencing bloody clashes and wars. New pockets of confrontation are springing up. Europe is experiencing an economic crisis. At the same time, the situation with migrants is deteriorating. People who have lost their homes, loved ones and property are looking for salvation in Europe, and we all see what awaits them there. Unfortunately, the migratory crisis leads to a strengthening of radical forces in Europe. This is a big threat to Europe, to us and the whole world.
Over the years, Azerbaijan has played a role in strengthening the dialogue between religions and civilizations. Unfortunately, on a global scale we are seeing conflict, misunderstanding and hostility instead of dialogue. Such is the economic and geopolitical situation. Of course, we are very concerned about this situation in the region and the world. At the same time, we need to work even harder in such a situation in order to successfully implement our policies and resolve the problems facing the country.
I think that in 2015 Azerbaijan managed to maintain the momentum of successful development in all areas. Our international credibility has enhanced greatly. Last year, I paid 20 visits abroad – both official and working ones. Azerbaijan was visited by over 15 heads of state and government, which in itself is quite indicative. This shows that Azerbaijan is playing a very active role in the international arena and enjoys great sympathy in the world. I see it every time during my foreign visits. While attending the Davos forum this time, I saw again that our country's policies, the position of principle and achievements have earned a huge sympathy and respect. Today, Azerbaijan is a country enjoying great respect in the world.
Our cooperation with international organizations successfully continues. We are strengthening our activities within organizations we are a member of. We have built a relationship with all other organizations on the basis of mutual respect and intend to deepen these relations. I believe that in 2016 our activities in international organizations will be even more proactive.
Azerbaijan maintains public and political stability. The main reason for this is the unity between the people and the government, because our policy protects the interests of the Azerbaijani people. For me, the interests of the Azerbaijani people and the Azerbaijani state are above all else. The essence and goal of all our work is to create an even stronger state and the best conditions for our people, so that the Azerbaijani people could live and develop in prosperity and security.
Therefore, the fact that Azerbaijan provides for political stability is only natural. Let me repeat: this reality is ensured by national accord, the unity of our people around a single idea, a thought-out policy and achievements. At the same time, the situation in adjacent regions and many countries is exacerbating. There is infighting taking place. In such a situation, of course, the example of Azerbaijan is very significant for the world, and I can say that Azerbaijan's experience is studied in many places.
Last year, we took important steps towards democratic development. Azerbaijan is confidently moving along the path of democracy. This is our conscious choice. I am absolutely convinced that fundamental economic reforms and economic development can't be achieved separately from the democratic process. Therefore, political and economic reforms in Azerbaijan are and will be conducted in parallel. The parliamentary election held in Azerbaijan at the end of last year also proved again how committed we are to democracy. According to all the observers, the parliamentary election was transparent and fair. The will and desires of the Azerbaijani people were fully provided. The election results are a huge support for the policy we have pursued in recent years. This is how I see the results of this election: the Azerbaijani people have once again expressed great support for our policy. I am grateful to the people of Azerbaijan for this and want to reassure the people of our country that despite the global developments and crises, Azerbaijan will continue to develop steadily.
Last year, our economic development was secured. It is true that as compared to previous years, the gross domestic product has not grown a lot – it grew by only 1.1 per cent. But in the current situation when oil prices have plummeted fourfold, I think it is a positive result. The most positive result is that our non-oil industry grew by 8.4 per cent. This is the main indicator, as it shows that the industrialization policy ongoing in our country is bearing fruit.
Growth in the agricultural sector – this area has also been given special attention in recent years – has accounted for 6.6 per cent. These are our key indicators. They show that we are developing and will continue to develop even in the years of crisis. The projects to be implemented this year – we will talk about that today – will enable our economy to grow in 2016, create new jobs and industrial enterprises, and we can not only maintain but also accelerate this trend.
Year 2015 was a memorable one in the energy sector. We have been taken very important steps in implementing the Southern Gas Corridor. As you know, earlier this year Baku hosted the first meeting of the Advisory Council of the Southern Gas Corridor. The event was attended by senior officials of the countries participating in the implementation of this corridor. A specific program was approved. The Declaration was adopted, stating a special and leading role of Azerbaijan in the implementation of the corridor. The Southern Gas Corridor is a project of energy security of Europe. For us, the realization of this corridor will provide additional political, financial and economic opportunities. It will give us the opportunity us to export our ample gas resources to world markets for decades. And this will bring us economic profit, provide the inflow of foreign currency, and our sustainable development will become even stronger.
This year, additional measures will be taken to implement the Southern Gas Corridor. As you know, the Southern Gas Corridor consists of four projects - Shah Deniz, the South Caucasus Pipeline, TANAP and TAP. Work on each project is well under way.
Last year, Azerbaijan asserted itself in the world as a very strong transit country. As you know, these opportunities are created by investment in the transport infrastructure. Today, the roads from east to west and from north to south pass through Azerbaijan. This is also a novelty for the world. We created it. By investing and creating an excellent business environment, we turn Azerbaijan into a unique transport hub. Last year and this year, we have taken very important steps in this direction. Cargo not only from Central Asia but also from China and South Korea are now passing through the territory of Azerbaijan.
At the same time, we are restoring the historic Silk Road for the first time in history. Along with this, first cargoes from Europe to Asia, i.e. from Ukraine to China, are also transported through the territory of Azerbaijan. The cargo that was transported from Turkey to Central Asia through Georgia and Russia in previous years now go to Asia through Azerbaijan, across the Caspian Sea.
So all of these opportunities have been created by us. If we didn't do this work, could Azerbaijan become a transit country today? If we had not taken the initiative and signed the TANAP project with Turkey in 2012, could anyone talk of the Southern Gas Corridor today? Could anyone ensure the energy security of Europe without us? We are doing that. Why? Because it is necessary for our people. This strengthens our state and country, and serves our interests.
All social programs were implemented in 2015. I want to reiterate that although our financial situation is not the same as in previous years, not a single social program will be reduced. On the contrary, this year we have raised wages, pensions and social benefits. And this forms the basis of our social policy.
In short, I believe that last year was successful for our country. The world economy is in a state of stress. The price of oil has fallen fourfold. We tried to keep the exchange rate of the manat stable till the end and managed to achieve this to a certain extent. However, the falling of the oil price fourfold and the depreciation of national currencies in neighboring countries by more than 100 per cent did not let us keep the exchange rate of the manat at the desired level. However, it is also true that we live in a market economy and can't artificially keep our national currency at the desired level.
However, the social security package resulting from the measures taken, price controls, as well as very deep economic reforms, will enable us to successfully come out of this situation. 2016 should and will be a year of very serious economic reforms. Relevant decisions have already been made and changes introduced to the legislation. I have signed several decrees and orders. Additional orders will be signed, so that we could further strengthen our economy this year. The main goal of these reforms is to make the Azerbaijani economy as transparent as leading economies of the world. I am confident that we can do that together.
I would like to say that the State Program of socioeconomic development of regions adopted in 2004, in general, is a historic event and a historic achievement. Over these years, our country has developed rapidly. We have implemented infrastructure projects. Over these years – from 2004 to the present day – 25 power plants have been built in our country. The total number of power plants is 34, of which 25 were built in the last 12 years.
In 2004, there was almost no gas in the districts. During my visits to the regions people mostly asked to provide them with gas. However, we could not provide for ourselves. Until 2007, we bought gas abroad. Today, gasification in Azerbaijan is approaching 90 per cent, and all cities in the districts are supplied with gas by 100 per cent. We have built gas lines even to places that had been received gas in Soviet times. Today, gasification in the regions is close to 80 per cent.
Over the past 12 years, more than 10,000 kilometers of roads have been laid. We did not have a single highway before. Many people will probably remember the condition of our roads. Today, we have built and are still building highways – roads connecting cities and other countries. Our rural roads are tens of thousands kilometers long. I believe that this year we should allocate additional funds for the construction of rural roads, so that we do not put off this program.
Projects of drinking water have already been implemented in many cities. Clean drinking water meeting international standards, the standards of the World Health Organization, is supplied on a round-the-clock basis. These projects are under way and will be continued. The population of all our cities should be supplied with clean drinking water around the clock. Along with this, treatment plants have been built in villages located along the rivers. These opportunities have benefited half a million people. They used to drink water from rivers and canals before.
Such is the work we are doing. Huge work has been done in the social sphere. A whole new social infrastructure has been created. Over 12 years, we built and renovated about 3,000 schools and nearly 600 hospitals. In total, we have about 5,000 schools, of which 3,000 have been built in the last 12 years. We built 41 Olympic Centers in our districts. I am not even talking about Baku. Baku has hosted the European Games at the highest level.
Salaries have been raised almost five times and pensions seven times. We have built 89 settlements for the displaced persons and 225,000 people have moved into new homes and apartments. This is equal to a large city.
There are very positive results in other areas. We have provided great support for the development of entrepreneurship. Loans amounting to 1.7 billion manats have been provided on favorable terms. If we consider this year too, this amount will reach 2 billion manats. Azerbaijan has received investment of 200 billion manats. Half of this is foreign. If we hadn't created stability, development and excellent business and investment environment, what foreign company would be interested in investing here? Look at the countries where stability has been disrupted. Does anyone invest there? No, and this is natural. Who would want to risk! Although we have the resources today, would be want to invest in a country where there is no stability? Of course not.
Therefore, we had to create all this. The Azerbaijani people are happy that great leader Heydar Aliyev came to power at the request of the people in 1993, put an end to all the negative processes and civil war, initiated political and economic reforms, and in 1996 our country began to gradually develop. Until 1996, there was a period of stabilization. Look what the former leadership of Azerbaijan had done. Even great leader Heydar Aliyev took about three years to stabilize the situation and enable the country to enter a period of development.
Today, Azerbaijan is one of a handful of countries on a global scale, a worthy country conducting an independent policy. The source of our strength is the people of Azerbaijan and a powerful economy. If we hadn't provided for economic independence, we would be dependent on other countries. This is what is happening to certain countries today. If they are not self-sufficient, there is no other way – they should obey the will of others.
We are self-sufficient. It is true that last year was challenging. But what to do – we have to deal with these difficulties. There wasn't a more difficult period than the 1990s. It happens, the global economy is cyclical. For many years, we were on an upward trend. Today, for reasons beyond our control, the world economy is undergoing a recession. We, too, are part of the global economy. We have not isolated ourselves from the international community and economy. We are integrated and conduct open market policies, a liberal economic policy. Therefore, it is having a toll on us. But we will still develop confidently. We must meet all our objectives.
I want to say again that in the last 12 years we have come a long and glorious way. We have implemented the Baku-Tbilisi-Ceyhan oil and Baku-Tbilisi-Erzurum gas pipelines. The Baku-Tbilisi-Kars project will be completed this year. Over these years, Azerbaijan has become a space-faring country. Just imagine – Azerbaijan is turning into a space-faring nation. The development of the space industry, information and communication technologies is one of our top priorities.
Over these years, Azerbaijan has made an enormous contribution to the development of multiculturalism in the world. It is no coincidence that Baku will host the Seventh Global Forum of the Alliance of Civilizations this year. This is a global forum and it will be held under the auspices of the UN. These are our achievements, our contribution and our realities. I am sure that we will achieve successful development this year. Although we have created 1,500,000 jobs in the last 12 years, there is still a need for more jobs. We will talk about that. I am sure that the State Program on the socioeconomic development of regions will be successfully implemented in 2016.
Closing speech of President Ilham Aliyev
- Today, we have created conditions for entrepreneurs to speak out. Civil servants have broader opportunities to do that. Therefore, I wanted entrepreneurs representing all our regions to have their say today. I wanted them to inform us about the work done and, at the same time, discuss their problems.
Today, after the break, ministers, government officials, heads of executive authorities and entrepreneurs will continue to work in sessions. I am sure that the issues discussed there will be significant. Some specific proposals should be made as a result of these discussions.
A lot has been done to develop private enterprise. Today, a significant portion, i.e. more than 80 per cent of the Azerbaijani economy, is generated in the private sector. This is a result of the work done in recent years. However, the new times and the new situation require new approaches. Therefore, in the present circumstances, we need to take additional measures to further expand entrepreneurship, create better conditions for businesses and accelerate local production. I have already instructed relevant government agencies, but I want entrepreneurs from the ground to talk about these issues themselves, so that we could quickly resolve them.
Regarding plans for this year, first of all I want to say that all social programs will be fully implemented. As you know, we have raised salaries, pensions and social benefits. Social security is one of the main directions of our policy. Azerbaijan is committed to the market economy. Azerbaijan is successfully developing a market economy. However, while conducting reforms, we must always remember about social issues. We must not forget that we are working for the people. Our policy is centered on the people of Azerbaijan. We have to resolve their problems. Therefore, all our efforts, including economic development, should serve this goal. To do this, Azerbaijan is and will be conducting a strong social policy. We will implement all social programs as far as we can.
This year we should implement all the infrastructure projects planned in the regions. Many projects have already been implemented. In my opening remarks, I already expressed my thoughts about it, but there is still a lot to do in connection with energy supply, gasification and especially the construction of rural roads. I believe that this year we should allocate additional funds for the construction of rural roads, because this is a priority need. Proposals are being made from the ground. At the same time, it will attract people from the regions to this work and eliminate unemployment. In recent years, we have done a lot to eradicate unemployment. As a result, the unemployment rate in Azerbaijan has reduced to 5 per cent in recent years. This is a truly historic achievement. Along with unemployment, poverty has also dropped to 5 per cent. In the current circumstances, however, unemployment can grow and is rising. At the same time, some jobs are created, others are closed. For example, more than 80,000 permanent jobs were created and 40,000 jobs were closed last year. We need to keep accurate statistics this year too. The places and regions where jobs are closed we need to work harder. This issue should be the focus of both government agencies and the private sector.
The construction of rural roads is a very important step in this direction. It has two goals – both the infrastructure is improving and people are involved in the work. In building rural roads we do not need external engagement. All the necessary goods and materials are manufactured in Azerbaijan. There is no foreign currency component in the construction of rural roads. And this is a very important factor in the current environment.
Drinking water projects must be implemented as well. These projects provide people with drinking water and help create new jobs. By implementing drinking water projects, we also use our own domestic resources. The attention we have been paying to domestic production in recent years and the investments made provide today's realities. If we had not done that, we would be more dependent on imports now. I will talk more about that. Therefore, infrastructure projects must be implemented. Some believe that due to the fourfold drop in the oil price we must further reduce our expenses. Of course, this is true, but I think that by implementing infrastructure and business projects in 2016, we can make our country even more dynamic, and we will do that.
In recent years, about 1,500 artesian wells have been drilled. At the end of last year, an additional 10 million manats were allocated from the contingency fund of the President for this purpose. Perhaps more funds will be allocated this year. The process of drilling artesian wells should be continued.
Social infrastructure projects will be implemented. Both in Baku and other cities and towns, there is a great need for the construction of schools and medical centers, especially kindergartens.
Of particular importance this year will be the creation of new jobs, because, as I said, some jobs are closing. Over the past 12 years, we have created 1.5 million jobs, of which 1 million are permanent. But the population of Azerbaijan has also increased over the years. This, of course, is also a sign of development. In 2003, the population of Azerbaijan was 8.4 million, but this year it is 9.7 million. So the population has increased by 1.3 million people. It is our great advantage and a sign of development. If you look at the dynamics of growth, you will see that in a period of dynamic development the population grows faster. This is an advantage, but at the same time, as I have repeatedly said, this requires hard work because a growing population means a growing need for jobs. We have created a million permanent jobs, while the population has increased by 1.3 million people. This means new schools, new kindergartens and the construction of new roads.
Urban planning should be carried out more carefully. Our cities are growing. The urban infrastructure must be built in accordance with that. For example, all our drinking water projects should envisage possible population growth until 2030. So we need to constantly deal with the creation of jobs. Of course, we are proud to have created a million permanent jobs over a short period of time, but the population is also growing. Therefore, what areas should we create jobs in? Our human resources are sufficiently large. This has always been the case. It was the case in Soviet times and so it is today.
Therefore, it is a very serious matter. I am very glad that the population is growing. I am perhaps the biggest supporter of that, but the economy, infrastructure and jobs should increase in line with that. Therefore, the government should work hard on this issue. It is necessary to draw up a specific long-term plan for that: what steps should be taken to provide the labor force with work.
Given the current conditions, I think that entrepreneurs can also take additional measures to create jobs. I am told that in the past 12 years more than 70,000 enterprises have been created in Azerbaijan, while their total number is around 100,000. Among them, of course, there are large and small companies. But I think that if businessmen approach this issue from the perspective of social responsibility, hire the unemployed or not cut those who are planned for dismissal, they will contribute to our common cause, because it is social responsibility. This is our common cause. Along with this, I have instructed the Ministry of Labor and Social Protection of the Population of Azerbaijan and state-owned companies to work together. State companies need to open up new job opportunities for people applying to the Employment Department. Of course, I want to say again that we live in a market economy and will not abandon that principle. We are all aware that the market should regulate everything itself – how many people should work in a company and how much it should produce. At the same time, I think that we must begin the process of creating temporary or permanent jobs. In Baku and in all our regions, state companies together with the Ministry of Labor and Social Protection should set an example. Let the people who have lost their jobs apply to these departments, and I am sure we will have the opportunity to provide them with jobs. Therefore, first of all, this should be done by state companies. The private sector should take this factor into account, especially when we consider that the state provides business people with a lot of help – both political and methodological support. The Ministry of Economy prepares business plans for all projects and provides financial support. Over the past 12 years, entrepreneurs have received concessional loans worth 1.7 billion manats. If we consider this year too, it will amount to 2 billion manats. So this is state support. Therefore, employers should also create jobs, expand production sites and feel social responsibility wherever they operate.
Work is under way in Azerbaijan to improve the business environment. Appropriate instructions have been issued and orders signed. This area must definitely be in the focus of our attention. International financial institutions appreciate the work we are doing in this direction. The World Bank, in its report Doing Business, has honored Azerbaijan with a high place. The Davos World Economic Forum has awarded Azerbaijan 40th place in terms of economic competitiveness. We are in 40th place globally and in first place in the CIS.
Therefore, improving the business and investment environment, complete transparency of the economic and financial sector, fiscal and customs bodies, broadening of the tax base, proper keeping of statistics – these are all very important issues. I can't say we have achieved too much in addressing these issues. Much remains to be done. There are flaws, they are being eliminated and addressed. Year 2016 will play a decisive role in this. In 2016, we need to organize our entire financial and economic system using the experience of developed countries. Of course, a special role in this is played by statistics. Our statistics should also include all the parameters characteristic of the statistics of leading countries, because information is of top priority. We need to know exactly what is done where and which products are manufactured. Otherwise, it will be difficult to plan future activities.
We must protect the domestic market and local production. At the same time, we must not allow monopolies. This is also a very important issue. Of course, I want more Azerbaijani products to be manufactured, so that we could further reduce our dependence on imports, create jobs and produce exportable goods. But at the same time, if we create artificial obstacles for imported goods, there will be no competition. Competition is important. Free and fair competition is the main condition for the development of any country. It is necessary to take into account two factors here. Price regulation and all artificial barriers to imports should be eliminated. At the same time, we need to protect domestic production. Therefore, relevant agencies should work very hard on these two factors. Local production and reducing the dependence on imports is the main issue for our future sustainable development. At the same time, we can't allow monopolies. In some cases, we have natural monopolies, because the market is not so big. One or two large companies assume control of the whole market. Of particular importance here, of course, is the role of the anti-monopoly service. We should try to eliminate all obstacles to free competition.
We have already established and are applying a system of investment promotion. Decisions have been made. We need to attract more foreign investment. Promotion of investment plays an important role here. In general, I can say that the investment climate in Azerbaijan is positive. Otherwise, foreign companies would not have invested $100 billion in Azerbaijan. We must now try to direct foreign investment into the non-oil sector and production of export-oriented goods. At the same time, we have taken specific steps to promote exports. I have already signed appropriate decisions to create a system of export promotion in Azerbaijan. In the past, we talked a lot about it, but we need to act today. And we are doing it. We have to pay attention to the experience of other countries and apply their best practices.
The state should provide benefits to entrepreneurs producing competitive goods in Azerbaijan and delivering them to world markets. The Ministry of Economy is currently working on these issues. I believe that entrepreneurs should also make their proposals on the issue at this conference.
I have already stated this and I want to reiterate that a large-scale privatization program will be realized in Azerbaijan. There is a great need for that. First of all, it will bring our country additional investment and currency. On the other hand, we will revitalize idle enterprises. There are enterprises that have been idle for 20 years. They are locked, are in a dilapidated and run down condition, but somehow they are not being privatized.
First of all, we must carry out a serious analysis: what enterprises should first be opened to privatization and what dividends the country's economy will get as a result of privatization. Of course, a business plan related to the future activities of each privatized enterprise should be submitted, so that the privatized enterprises don't turn out to be closed. Business plans, obligations and responsibility – all this should be taken into account. To carry out large-scale privatization, we certainly need influential international consulting companies. It is necessary to apply to them. Within the framework of the Davos forum, I held talks about that. There are certain proposals. Let them consult us, provide help and exercise control in a good sense. The forthcoming privatization should be transparent and the interests of the Azerbaijani state must be as secured.
Additional measures will be taken to improve the activity of the banking sector. The issue of insuring deposits has been examined. I think this is a very serious step taken by the state. But the process of reviving the banking sector should go even faster. There are great opportunities for development. Banks that do not meet the requirements and criteria, unable to work properly and committing major flaws can't function in our banking sector. The government has repeatedly convened on this issue. The issue has been tabled, but unfortunately things are not moving fast.
We need to improve the banking sector. This is a very important issue for any country. We must make sure that the banking sector is more beneficial to the Azerbaijani economy, attracts more credit resources to the real economy, so that we could work not only at the expense of the state budget or the personal funds of entrepreneurs. The banking sector has become a very serious tool in this and be more active. Therefore, the Azerbaijani state is working to improve the banking sector, and the reforms in this direction should go even faster.
As I said, our non-oil industry has grown fast – by 8.4 per cent. Azerbaijan is in the process of industrialization. Industrial parks are being created. Industrial clusters should emerge. I have already ordered to create an industrial zone in each district. But this process is slow. All heads of executive authority of cities and districts should be more active in these matters. This work should be carried out by them, the Ministry of Economy and entrepreneurs. Today, after the break, this issue must be discussed by all means. Each district should submit specific proposals on selected industries. Heads of executive authority should pay very serious attention to these issues. In general, the flow of investment to our regions was largely provided by the state and entrepreneurs. I believe that local executive authorities should be more active in these matters. The evaluation of their performance will largely depend on this factor: how much investment has been attracted, what conditions have been created for entrepreneurs, how many enterprises have been established and jobs created! Therefore, first of all, there should be proper statistics everywhere, so that there are no cases of exaggeration. This is an old disease, and the whole work should be built correctly. This year, every district should start creating industrial zones.
In general, I want to quote a few figures about our self-sufficiency opportunities on non-food products. This reflects the work done, and will serve as a "road map" for entrepreneurs, heads of executive authority and representatives of government agencies – where there are gaps and what needs to be done.
Let's take cement production. We provide ourselves with these products at the level of 92 per cent. Here, the dependence on imports is 10 per cent. These are the main additives and packaging materials. Therefore, the production of cement should be higher than 100 per cent. We have production facilities and have to export cement. We need to try to produce the remaining 10 per cent of the external component. On bentonite, we provide our own needs and there is a great export potential. On cardboard, we provide ourselves by only 60 per cent. We must definitely build new cardboard factories. In terms of production, we are dependent on imported materials by 50 per cent. This, too, should be gradually eliminated. On polyethylene pipes, we provide ourselves by 60 per cent. Local production has a 70-per-cent external component. This is raw material. On lime, we provide ourselves not completely – only at the level of 50 per cent. The external component is 13 per cent. Gypsum – 1.6 times, i.e. we provide ourselves by 100 per cent and also have export potential. But in terms of production there is a 50-per-cent external component – additives and packaging materials. Packaging materials apply to all industries. What does this mean? This shows that this area has not been given proper attention. Therefore, today it is necessary to begin the production of a variety of packaging products. On bricks, we provide ourselves by 99 per cent and the external factor accounts for only 2 per cent. On concrete building blocks, we provide ourselves by 100 per cent and 30 per cent is an external component. On plaster slabs, we provide ourselves by 95 per cent and 48 per cent of the cost depends on the external component. The main role here is played by metal profiles. On metal structures, we provide ourselves by 40 per cent, on electrical cables by 48 per cent and on electrical equipment by 62 per cent.
This shows that huge investment has been made in this area in recent years. The state and the private sector have been of help, and we managed to significantly improve the situation. But much still remains to be done. The first task is to achieve self-sufficiency by 100 per cent, the second is minimize external dependence in terms of the cost. Of course, I know that we can't do it by 100 per cent, but we must try. In that case, whatever the price of oil, there will be no changes in consumer prices.
Last year was a "Year of Agriculture" in Azerbaijan. Growth in agriculture was 6.6 per cent. This is a very good indicator. Yields have increased, particularly in grain production. I want to emphasize the activities of large farms. Yields there are about twice as high as average. So this is a good example. We must continue creating large farms this year. This will enable us to reduce our dependence on imports. But we should not forget small and medium-sized farms either. They also need constant attention and favorable conditions.
Food security is a priority issue for us. Several decrees were signed last year. There are already tangible results of these decrees. Additional funds have been allocated. Agriculture is a sector that will contribute to non-oil exports, food security and jobs. Therefore, last year was a "Year of Agriculture". But we should think that this year is a "Year of Agriculture", too. Every year should be a "Year of Agriculture".
It is necessary to deepen the reforms. We must keep an accurate record of the land fund. We are going back to the issue of records, because there are inconsistencies in some cases. The lands, real and actual land parcels provided earlier do not correspond to those on the documents. Today we have the possibilities of Azersky satellite. I have instructed them to keep accurate record of our land fund. For example, there is a land parcel on paper, but the farmer actually works on another parcel. We need to rectify this imbalance. I think that documentation, of course, should be accurate, because we can't tell farmers now that this is not your land. Where he works is his property. But we need to keep proper records and documentation. This work requires time. I believe that serious steps should be taken in this direction this year. The "E-agriculture" program is being implemented. I have recently been provided with information. We need to spread this more widely.
In order to develop agriculture, we have implemented major reclamation projects. We have built Takhtakorpu and Shamkirchay water reservoirs. We have implemented a project on the reconstruction of the Samur-Absheron canal. We have cleaned Lake Jeyranbatan and created modern sewage treatment plants. So we are using the waters of Samur both as drinking water and for land reclamation. Therefore, we will soon have thousands of hectares of new lands to be irrigated. On these lands in the western and northern areas – these are Siyazan, Shabran, Khizi, Shamkir and adjacent districts – new farms should be established soon.
The Ministry of Agriculture has put forward new proposals on the development of animal husbandry. We used to acquire more pedigree cattle in the past. This still continues, but there are opportunities to improve the quality of breeds in Azerbaijan. It is necessary to widely apply the system of artificial insemination. According to my information, we can completely improve the breed of cattle within a few years, which will usher additional opportunities.
There is great development in plant growing. Last year, the development of agriculture was largely associated with plant growing. I think that we should seriously engage in cotton growing, because this involves more jobs. Many people will be working in cotton fields and receiving salaries. At the same time, this product brings currency. We must sell raw cotton, export it, produce yarn and then textiles from it. We should certainly do this. I think that cotton growers should be paid more. I am told people get 42 gapiks for a kilo of cotton. I think this is too little. Payment should be significantly increased. Cotton-growing should develop rapidly, alongside tobacco- and tea-growing. We also have great traditions in this industry. So much cotton was picked in Soviet times – 1 million tons. Tea and tobacco. We need to revive these sectors.
I have similar information on food products. I will voice it shortly. I am voicing this for the public to know what achievements there are and for businessmen and local executive authorities to know what areas should be given more attention.
Thus, here is a note on self-sufficiency help for basic food products and the level of dependence on imports: on beef, we provide ourselves by 92 per cent. The dependence on imports in the cost is 5 per cent. This is mainly food and medicines. On lamb, we provide ourselves by 99 per cent and the external factor in the cost is only 2 per cent. Food and medicine now: on poultry, we provide ourselves by 98.6 per cent. The past few years have seen a lot of progress in the production of poultry meat. Why? Because poultry farms were created! The state has provided support, loans and guided businessmen, so that we could fully provide ourselves with poultry. We have already achieved that. However, the dependence on imports in the cost is 65 per cent. What is this dependence made up of? Of corn, soybeans, sunflower seeds and medicines. This is room for entrepreneurs. It is necessary to grow corn, soybeans and sunflowers. Medicines must be produced in Azerbaijan. Why can't we provide ourselves with medicines? We should. In this case, we will have domestic poultry meat by 100 per cent.
On eggs, we provide ourselves by 99.6 per cent. Once again, the external factor in the cost is 65 per cent. On milk and dairy products, the self-sufficiency factor is 80 per cent. Here, too, there is great progress. We depend on external factors only by 10 per cent. Again – medicines and feed. I think that this year we should pay great attention to the construction of dairy factories, because we need to provide ourselves with milk by 100 per cent and export it. I am aware that it is exported today, but there are imports too. Imports should only be possible on the range of assortment. Dependence should be completely eliminated.
Grain production has increased in Azerbaijan. We grew 2.3 million tons in 2014 and 2.9 million tons in 2015. It is great development. However, we provide ourselves only at the level of 64 per cent. Therefore, we should continue the process of creating large farms. In large farms, the yield is 50 quintals per hectare, maybe even more, while the average yield is 30 quintals. In fact, we achieved this only this year. Previously, it was 23-24 quintals. It is necessary to include new lands in the turnover. The state should implement infrastructure projects. We have to provide ourselves with grain by 100 per cent. By 100 per cent! This is the task. Have a discussion and let us know when we can do this and what needs to be done. Here, in the production of grain, the dependence on imports in the cost is 20 per cent – fertilizer and medicines.
On potatoes, we provide ourselves by 90 per cent. I think that this is unacceptable. We have to provide ourselves with potatoes by 100 per cent and export it. So you need to pay serious attention to this issue and bridge this gap. The external factor in the production of potatoes is 35 per cent –fertilizer and medicines again. On onions, we provide ourselves by more than 100 per cent. There is no external factor here. On melons, 100 per cent and not dependent on external factors. On fruits and berries, about 110 per cent and the dependence on the external factor in the cost is 30 per cent –fertilizer and medicines again. Therefore, a fertilizer plant is under construction, but this should be done more quickly. We started this project in order to reduce dependence on imports, but it is taking too long. This is unacceptable. This year we have to do a lot of work. The fertilizer plant should become operational soon. As for the drugs, as I said, have a discussion. What should be done, where do we need to create enterprises, how much do we need and what is the annual demand?
On salt, we provide ourselves by 87 per cent and the external factor is 5 per cent. It is packaging. On sugar and products made from sugar, we provide ourselves by 191 per cent due to the sugar factory in Imishli. But there is 80-per-cent dependence on the external component here. Raw sugar is imported from abroad. Therefore, we should try to reduce this external component. What do you need that? Obviously, we should grow more sugar beet. This will create jobs and eliminate dependence on the external factor.
On vegetable oils and margarine, we provide ourselves by 67 per cent. Here too, we depend on imports by 80 per cent. Imports of what? Of raw oil and packaging materials! Due to the development of plant growing, we can significantly increase oil production. On butter, we provide ourselves by only 60 per cent and the external factor is 10 per cent. I believe that we have to produce butter in Azerbaijan by 100 per cent. Make proposals what is necessary for that. On pasta, we provide ourselves by 52 per cent, but 95 per cent of domestic production is provided by raw materials supplied from abroad. Therefore, the production of grain and quality flour will enable us not to depend on external factors in the production of pasta. On fruit and vegetable juices, we provide ourselves by 105 per cent. On canned fruit and vegetables, we provide ourselves by about 90 per cent and 10 per cent is the external factor.
What do these tables suggest? First of all, they show that we have made historic achievements in recent years. In Soviet times, we imported butter, meat, milk and cheese from Russia and Ukraine. Today we can largely support ourselves thanks to a policy of economic diversification. But at the same time, it shows that much more needs to be done. These two tables should become the main document, a "road map" for business people, government and local executive authorities. We must accomplish this as soon as possible.
Tourism should develop at a faster pace. In particular, after European Games, the interest in Azerbaijan in the world further increased. We need to take advantage of that. The higher the number of tourists, the more people will discover Azerbaijan. Tourists will bring currency to our country. Over the past 12 years, about 300 hotels have been built in Azerbaijan. Today we have world-class resorts – Shahdag and Naftalan. Gabala has turned into an international resort. Galaalti is a spa center. In Nakhchivan there is Duzdag resort. We simply need to be more active to attract tourists. We have taken additional measures to simplify visa rules in order to attract more tourists. We should also develop traditional Azerbaijani crafts, including carpet weaving, which are of interest to tourists. This is our great national asset. I think that it is necessary to create conditions for women to be in carpet weaving, especially in the villages. They should be provided with materials, tools and yarn, so that they could weave carpets and make money. This would enable us to sell them to foreign markets.
This year we should also take environmental measures. In particular, the process of planting trees is under way. More people could be engaged in the planting of trees, especially in the regions. We should create temporary jobs here. Local executive authorities and the Ministry of Ecology and Natural Resources should prepare proposals on how many trees we will plant this year and how many people will be involved in this work.
In general, I want to say that at a time when the world is in crisis, many countries give preference to public work. We are not in crisis. The Azerbaijani economy is developing rapidly and our development is sustainable.
I want to completely eradicate unemployment in Azerbaijan. Not everyone can find a job. Therefore, my instructions and recommendations must be fulfilled. This year, we need to involve more people in temporary public work. They will be paid wages, and let them work for the people and the state.
Control over consumer prices should be permanent. We are and will be fighting artificial price hikes and apply penalties. I am talking about artificial price hikes.
The fight against corruption and bribery is under way. It bears fruit. Corruption is a huge evil for all countries, including Azerbaijan. We apply penalties, take administrative steps and institutional measures. The room for corruption and bribery has narrowed down. New public services are created. Over the course of two years, "ASAN xidmət" has provided services to 7 million people. Seven million people over the course of two years were not faced with corruption in "ASAN xidmət". But earlier, wherever they applied, they were asked for something in return for legitimate certificates, permits, etc. Institutional measures are very effective. At the same time, punishments are and will be applied against corruption. No-one can have privileges here. No-one is untouchable. The recent developments in Azerbaijan have shown it again. If certain high-ranking officials break the law and can't perform their duties, they will be punished. The people, the public see that. Let everyone know that no-one is untouchable in Azerbaijan. All are equal before the law.
I have already mentioned that local executive authorities should work harder to create jobs and attract investment this year. They must regularly inform the President, the Presidential Administration and the Cabinet of Ministers about their progress. Government officials should be together with the people. I have always said that all government officials, including the President, are civil servants. The people have shown confidence in us, and we have to justify this trust and confidence every day.
Government officials and their family members should behave modestly. They should be together with the people and not be arrogant. They should not think that they have a special status. They have the status to serve the people, solve their problems and take care of them. They should not vex people. On the contrary, they should show care and attention, and try to help. All of these factors I have cited will play a major role in the evaluation of their activities.
State bodies. Some speakers mentioned here that local production in Azerbaijan is developing very fast, including the production of furniture. But do our government agencies use local furniture? No. Every minor official wants foreign furniture in his office. Why? What kind of manners are these? We produce excellent furniture. It is not only Embawood. We have perhaps dozens of companies producing furniture. But drat, our high- and low-ranking government officials do not like it. However, its quality is no different from other furniture. But no, they say that this is an Azerbaijani product and it doesn't suit me. I prefer Italian and Romanian furniture. This must stop! From now on, the offices of all government officials should have local furniture. All inspecting authorities - the Chamber of Accounts, the Ministry of Finance and other bodies should control that.
And it is not only about furniture. When purchasing goods and other materials, somehow preference is given to foreign goods. Recently, during a government meeting, they showed me shoes and said: look how wonderful the shoes made in Azerbaijan are. But some of our military agencies do not like it and they buy shoes for the soldiers abroad. Why? This area should be under strict control. We will thus prevent waste and reduce costs, the currency will not go abroad and local production will be increased. So my instruction applies to everyone. From now on, this should be the case. We are not in a situation when someone can buy himself a special car at state expense. We have a car plant in Nakhchivan. Let government agencies acquire cars there. And these are good cars. They are not particularly different from foreign cars. They are great. Let them buy more. So the government should pay very serious attention to this area. If there are violations somewhere, they must immediately inform me, and measures will be taken.
Entrepreneurs should invest more in the country's economy. I know that Azerbaijani entrepreneurs are investing abroad now. I myself was a proponent of that. I wanted our companies to access world markets and become recognized. In fact, I must say that even during my visits abroad I always promote Azerbaijani businessmen. I want them to work abroad. But in the current environment entrepreneurs should invest most of their resources in Azerbaijan. Of course, business people should be responsible and pay taxes in full. To do this, we need to keep tax records correctly, because entrepreneurs are sometimes told to pay so much, i.e. pay to the state. In some cases perhaps there are other facts. And this worries entrepreneurs because entrepreneurs have to pay tax on the income earned. Therefore, accurate records are the most important issue here. Entrepreneurs should work transparently and invest in agriculture, processing industry and the production of industrial materials.
I have repeatedly said that we have to work as if we do not have oil and gas resources. In fact, the oil price has led to a situation when this is almost true. Frankly, we expected the post-oil period in Azerbaijan to start after the 2030-40s, because our forecasts suggest that oil production in Azerbaijan will remain stable for decades to come. The benefits of the Southern Gas Corridor, which will be implemented in two or three years, will to a certain extent prevent the decline in oil after the 2040s because we access the market with large volumes of gas.
But the oil price has plummeted fourfold, and we are already experiencing a post-oil period. We are doing work in a short time for people not to feel it. Therefore, from now onwards reforms, transparency, accountability, the development of the non-oil sector, production of exportable products, reduced dependence on imports – all these factors will ensure our sustainable development. I am sure that in 2016 and subsequent years Azerbaijan will be successfully developing. We are on the path of independence and development. I wish you and the people of Azerbaijan success on this way. Thank you.
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