Shahin Mustafayev, Azerbaijani Minister of Economy and Industry: Interview

Interview: Shahin Mustafayev

What is the level of cooperation with the GCC?

SHAHIN MUSTAFAYEV: Azerbaijan successfully cooperates, both politically and economically, with GCC countries, with the Joint Intergovernmental Commission playing a special role in developing bilateral relations. The volume of trade between Azerbaijan and Saudi Arabia has been on the rise, with $400m invested in our country to date by Saudi-owned enterprises. Ties with the UAE are also expanding, with the first overseas representative office of the Dubai Chamber of Commerce and Industry opening in Baku in 2012. Some 208 UAE-owned companies are already registered in Azerbaijan, while several Azeri companies are operating in the energy, finance and banking sectors of the UAE. In terms of foreign direct investment, the UAE has invested some $555m in non-oil sectors in Azerbaijan.

There are also great opportunities to develop bilateral relations with Qatar. About 15 international documents have already been signed, and there are direct flights between our countries. A Joint Economic Commission is in the works, which will help foster bilateral trade and economic relations. Another 20 agreements have been inked with Kuwait, and several Kuwaiti-owned enterprises are already operating in Azerbaijan.

What are the most important factors in the development of an export-oriented, non-oil economy?

MUSTAFAYEV: Diversifying the economy and developing non-oil sectors are economic policy priorities, and creating special economic zones, industrial clusters and modern industrial complexes will play a crucial role in achieving these goals, as the government aims to boost the export capacity of traditional industries, including food, chemicals, metallurgy, machinery and electronics. The construction of the Baku-Tbilisi-Kars railway and an international sea trade port in the Caspian Sea will also drive non-oil growth, paving the way for the expansion of the transport and logistics, and communications sectors. Agricultural development is another priority, and we are therefore offering tax incentives, subsidies and preferential credits, as well as state support for agro-leasing and agro-services.

How does Azerbaijan 2020 compare to, or perhaps draw on, the diversification strategies of the GCC?

MUSTAFAYEV: As hydrocarbons extraction and exports dominate GCC economies, we examined their diversification policies when drafting Azerbaijan 2020. At the same time, there is a practice of adopting long-term strategies in GCC countries, with economic diversification and reducing oil dependency emerging as key themes, alongside the need to develop a knowledgebased economy. Azerbaijan has also recognised this need and has implemented a state programme to sponsor the education and training of young Azeris abroad.

Special attention will also be paid to developing oil and gas exports. Work is under way on the Trans-Anatolian and Trans-Adriatic Natural Gas Pipelines, which will help diversify export routes, play a key role in ensuring Europe’s energy security and strengthen Azerbaijan’s global status as a reliable strategic partner.

How did Azerbaijan develop its industrial model?

MUSTAFAYEV: Our ministry has analysed the best practices of different countries to prepare a suitable industrial park model and create a relevant legal basis for Azerbaijan. As the Gulf states and Azerbaijan face similar challenges in creating a competitive non-oil economy, the significance given to industrial zones by GCC countries was a very important factor for us. While we too are focused on developing value-added and techintensive products in export-oriented industrial zones, Azerbaijan lacks access to the open sea. As such, we are developing two projects to leverage our favourable location between Europe and Asia – the Baku-TbilisiKars railway line and the largest commercial port in the Caspian basin (south of Baku), the first phase of which was completed in 2014. These two projects will help to create a competitive transport corridor, which is crucial for the creation of export-oriented industrial zones.