Closing speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in the first half of 2015 and objectives for the future

13 july 2015, 13:30

- We have to maintain the high pace of economic growth until the end of the year. I am confident that we will achieve this, as the figures for the first six months are very positive. In the next six months, we should work just as hard to end the year with excellent results. I am sure that macroeconomic stability will be provided, because inflation, as I said, is only 3.5 per cent. And in general, we believe that one-digit inflation is an excellent indicator for any country. In recent years, we have maintained inflation at a very low level. This level, of course, provides for a normal economic development and improves people's welfare.

The state investment program is being implemented. It is of a very specific nature. The investment program is an important means of addressing the fundamental issues facing our country. We should continue the implementation of all the necessary infrastructure projects until the end of the year and new projects should be carried out as well.

Relevant executive orders related to the construction of rural roads in different regions have been signed lately. New orders will be signed as well. Additional funds should be allocated for the construction of rural roads both from the state budget and the Contingency Fund of the President to ensure that this process goes as fast until the end of the year. I can say that in recent years this area has been given a lot of attention, so new roads were built in many villages. But there are also villages where roads are in poor condition. We have all the information. When visiting the countryside, I discuss these issues with representatives of local executive bodies and give my instructions. They make suggestions, which are then taken into account and implemented.

Gasification should be continued. I am informed about that on a monthly basis and what villages now have gas supply. We can say that several villages are gasified every month. I believe that this work should be carried out more quickly. Gasification in Azerbaijan is at a very high level. But we must try, if possible, to further expand this area, as there is a great need for that.

This year we established the "Azerishyg" Open Joint Stock Company. The company has been tasked to ensure that energy supply in the regions is the same as in Baku. It is a pretty straightforward task but it is not so easy to execute it. Funds are needed and technical issues need to be resolved. In the regions, unfortunately, there is a lot of outdated infrastructure. The new infrastructure, transmission lines and transformers – i.e. the entire power engineering sector in the regions should rise to the level of Baku.

Work continues in Baku too even though we resolved power supply issues of Baku a few years ago. But, of course, the city is growing, the population is increasing, new industrial facilities, public facilities, sports facilities are springing up, a city within a city is under construction, such as the "White City". All this should generate additional energy resources. Therefore, new substations are under construction and the construction of new power plants is being considered. Currently, we have enough generation capacity, but we must look to the future. Generation capacity should always exceed the demand by 10-15 and perhaps even 20 per cent. We have to have it in reserve. On the other hand, we also have export potential. We export electricity. In the future, we can do it in an even greater volume. But, of course, first of all, the entire energy infrastructure should be at the highest level in the country, especially in the regions and remote villages.

In many districts we have already completed projects related to drinking water and sewage. But much still remains to be done. To this end, a large sum is envisaged in this year’s investment program. Nevertheless, I believe that additional funds should be allocated before the end of the year. Appropriate instructions have been issued because this work should be carried out both in Baku and in other cities and districts.

As a result of the measures taken in recent years, continuous supply of drinking water in Baku covers 78 per cent of the population. Of course, in comparison with the previous period this is a good indicator. But this figure does not suit us. In such a beautiful and modern city as Baku drinking water should be supplied to 100 per cent of the population around the clock. This is a very difficult issue, because it requires major investment and technical issues are quite complex. Of course, investments are allocated, technical issues are addressed, so we should try to fully supply Baku with drinking water. In all regions and districts we have special projects. As I said, they have been completed in many districts, in some places they are either already under way or preparatory work is being done.

Of course, drinking water tasks primarily rest on the "Azersu" Open Joint Stock Company. At the same time, I should note that this work is also being done by other agencies. The Ministry of Ecology and Natural Resources is building water treatment plants. According to my information, 90,000 people were provided this year, water treatment plants have been built in 48 settlements. Since the program began, a total of 530,000 people living in villages along the river are already using these installations. This process should be continued. The "Land Reclamation and Water Management" Open Joint Stock Company continues the drilling of artesian wells. Every year we allocate funds from the Contingency Fund of the President, orders are published in the press indicating the names of all the villages – for the rural population to know and for monitoring purposes. This year, 300 wells should be drilled in the villages. Of these, 170 have been drilled, and this program already covers 630,000 people. Thus, together with "Azersu", environmental and land reclamation organizations have provided clean drinking water to 1.16 million people. This is a very serious social issue. First of all, it is a social issue, i.e. the funds allocated for that will never return to the state budget, because the price of water in Azerbaijan is very low. However, we have to do it for public health and for normal lives of our people.

As to the projects related to irrigation, a large part of them has been completed. The Takhtakorpu and Shamkirchay water reservoirs have been built and commissioned. This is a great and historic achievement. Currently, the construction of new canals is under way and additional funds should be allocated from the budget for this purpose before the end of the year. In particular, we need to quickly build the canals extending from the Shamkirchay water reservoir to farmlands, so that we could maximize the use of this infrastructure.

Canals are already under construction in Khizi District. Areas of land irrigated from Takhtakorpu have been identified. Thousands of acres of land will already be irrigated this year, and we expect a good harvest there. Thus, very important steps are being taken to ensure food security.

This year we completed the construction of the Tovuzchay water reservoir. This is also a very important project. Irrigation on an area of 20,000 hectares will be improved and new lands of 300 hectares will be irrigated.

All of this work, of course, is directly related to agriculture. As I said in my opening remarks, the development of agriculture is a priority for us. Growth in agriculture was 7.3 per cent, and I believe that we must maintain this high pace.

We have taken all necessary measures – structural reforms have been undertaken and relevant orders signed. We must maximize the use of our potential and provide our people with food by 100 per cent. We are approaching this goal. Every year, while discussing the execution of the "State program on the socioeconomic development of regions", we emphasize that. Along with this, we obtain access to export markets. I have repeatedly said this and I want to say again that if we do not have much access to export markets in the future, this may limit the development of agriculture. After all, if we do not access foreign markets having met the domestic demand, we will not be able to produce additional goods. In order to enter export markets, products should be competitive. On the other hand, we should also have logistical capabilities in these markets. At the same time, I should note that our relations with friendly countries should be at the highest level because countries today protect their domestic markets. We can say that developing countries are seriously engaged in domestic production. This is natural. Just as we are dealing with that, so are others. Therefore, the problem of accessing markets in the future may become crucial. We need to be prepared for that.

The process of industrialization is well under way. As I said, our non-oil industry has grown by 14 per cent. I do not remember our non-oil industry ever experiencing such growth. This is a record figure indeed. We did experience industrial growth in the past too, but it was largely due to oil production. In those years, there was rapid growth in production. Our non-oil industry has grown by 14 per cent now. This is really due to the work done. Each district will have industrial estates and industrial parks. According to my information, the Sumgayit Chemical Industry Park is expected to receive investment of 700 million manats from four residents. This is also an excellent indicator, as it shows again that the establishment of industrial parks was a right and timely step.

We also need to fully provide ourselves with building materials. There is also great progress in this area, as we have already started to export construction materials. This work should be continued. Along with food products, we need to identify new markets for the export of building materials.

The creation of jobs, as I said, should be a continuous process because, unlike some other countries, the demographic situation in Azerbaijan is very positive and the population increases. This, of course, is due to improving living standards. Under such circumstances, jobs always have to be in the spotlight. Our population increases by an average of 100,000 people annually. This means further opening of 100,000 jobs. We must take this into account. Here, of course, we need a sound strategy. I know that relevant agencies, the Ministry of Economy and Industry, the Ministry of Labor and Social Protection of the Population and other institutions have developed such a strategy. It will always be in the spotlight.

I should note that the development of the non-oil sector is very reassuring – this year it has increased by 9.2 per cent. Of course, this is largely due to the development of entrepreneurship, the activities of entrepreneurs, because growth in the public sector is mainly provided by the energy sector. Therefore, private enterprise development should always be in the spotlight in Azerbaijan. As you know, we provide benefits, farmers receive subsidies, fuel and fertilizer on favorable terms. Currently, new conditions are being created for re-seeding. Other issues are being resolved. The National Fund on Entrepreneurship Support provides concessional loans. Now there proposals now to further reduce interest rates. I support that so that farmers and business people could work more comfortably and earn even more. In other words, the government is trying to keep this issue in the spotlight all the time. This is why Azerbaijan today has a strong class of entrepreneurs.

At the same time, of course, business people should be responsible. We require nothing else from them, let them just pay their taxes in a timely manner. Of course, if a businessman wishes to take on some kind of social responsibility, I can only welcome that. But I think that social responsibility of entrepreneurs is already forming in society as a concept. This may have various shapes. I do not want to give any advice here, but as far as the requirements are concerned, business people must fully pay taxes. Earlier, oil prices were high. The country received a huge flow of revenues. I believed that we had to create the best conditions to develop entrepreneurship, that entrepreneurs should receive more money and reinvest it in the economy. But now our revenues have declined. This is natural. Everyone should know this. Even though, as I said, our economy and non-oil are sector growing and social programs are fully implemented, our public investment has declined. Capital investment has reduced.

In my opening remarks, I noted that foreign investment exceeded domestic probably for the first time in the past few years. Why? Because domestic investment has declined. A significant part of the domestic investment was made up of public funds or the State Oil Fund. This is a reality and everyone must know this. This being the case, of course, each government entity should see where our reserves are. We have identified these reserves. We saw that in many cases taxes are not paid and there are evasions. This is known to all – business people and society. Unfortunately, we have not fully developed a culture of paying taxes in a transparent way. State-owned institutions pay taxes. Of course, to get this tax does not require much skill. The State Oil Company is completely transparent. It is a state-owned institution. Other government agencies also fully pay taxes. But does the private sector also pay taxes in full? No, it does not.

I am told that the Ministry of Taxes has been very tough and demanding lately. Here we need to distinguish two issues. The Ministry of Taxes should try to ensure that taxpayers pay taxes legitimately and in full. There can be no other talks and concessions here. But there should be no unreasonable demands. I want to highlight that. Therefore, to put it in simple terms, entrepreneurs should pay their tax by 100 per cent, that's all. In addition to that, they should not pay anyone a single manat. I am ordering them to do that. At the same time, I am sending a serious instruction to state-owned institutions that they should not put forward any unfounded demands. Unfortunately, such facts are available. The Ministry of Taxes, the police, local executive authorities in Baku and the districts set a fee, want a share of the profit and provide a "cover". This is an intolerable phenomenon and it must end. If they think that no-one will find out, they are wrong. This is a very serious matter, and I receive signals that in some places it has acquired a large-scale nature. This must be stopped completely. So today, I give instructions to all relevant entities and entrepreneurs. Let them tell me, not be afraid, write letters and send emails. If such facts are available, then those who are engaged in these nefarious deeds will be immediately punished.

Our country will develop thanks to private enterprise, and if someone strangles business for a personal gain, hangs a padlock on the entrepreneur’s door and leaves, this is unbearable. Those doing that are betraying the state. Those doing this are not earning money, but betraying the state. I take it this way, so let everyone know this and draw conclusions.

For the rest of the year we will deal with the creation of social infrastructure. I have issued the instruction to allocate additional funds for the construction of schools, kindergartens and medical institutions.

The problems of IDPs are always in the spotlight. Necessary measures are taken in this area and funds are allocated through the State Oil Fund, new buildings are under construction. At the same time, benefits are provided in the state budget. This question is constantly in the spotlight. We have to try to resettle these people to the new apartments and houses as soon as possible in the future. As you know, an average of 20,000 people move to new apartments each year.

I want to mention another issue. Let the public know. In fact, this issue has long been debated and instructions have been issued. This is an issue related to the pharmaceuticals market. Unfortunately, there was a very chaotic situation here for years. I should note that this issue remained somewhat out of focus, because we live in a market economy today. Everything is regulated by the market, while supply, price and demand are all economic tools. We believed that everything is regulated by the market today, there is purchasing power and there are prices. But then, having deeply analyzed the matter, we realized that there was a huge injustice here. Prices are artificially inflated. In Azerbaijan, the prices of some medicines are several times higher than elsewhere. People have to buy these medicines. In many cases, poor-quality medicines are sold. This issue has been studied quite deeply.

The Ministry of Economy and Industry, other bodies, the Ministry of Health have reported that they were dealing with this issue for the past few months. I think that there is a lack of responsibility and in some cases a manifestation of greed on the part of doctors. They write out unnecessary prescriptions and say that you have to buy this medicine in a particular pharmacy. Even the vitamins that do not require a prescription are sold with one. It is an extensive business network. At whose expense does it operate? At the expense of ordinary people! Ordinary people have to buy medicines on prescriptions written out for them. They don’t even know what they are buying. After that, unfortunately, no-one ever wonders if a medicine was of any help. On the other hand, there are medicines produced in different countries. In developed countries, they are also expensive. In countries that are not so developed, the prices are lower. They bring the cheapest medicines of the poorest quality and sell them at the highest price. This is only a small part of the issue. I do not want to talk about it for a long time, but there have been very serious violations in this area. These violations must end. So the entire issue has been analyzed. After a few months, we will start applying the changes. I believe that by September this issue should rise to a new level. Transparency will be ensured, so that every citizen knows what medicine he is buying and at what price. We will set a price threshold. No-one will be able to sell medicines above this level. Sellers will also receive an income. They should also have a normal level of income. However, this level should not be 100, 200 or 300 per cent. Such an arbitrariness does not exist anywhere else. As a result of the measures already taken and those to be taken in the future, the prices of medicines should sharply drop by the end of the year. I want the people of Azerbaijan to know that. This issue will also be in the spotlight.

I believe that when we discuss social issues, these issues, of course, are purely social in nature. But these are also issues of morality. Medicines are not clothes or cars. Medicines are about people's lives and health. People committing violations in this are unashamed. Do you see what they are doing? What should people do? A person receives a prescription and buys a medicine. What is he buying and of what quality? Should he take it or not? How can he know? That is the point. Therefore, we will eliminate these social and moral violations.

Another social issue is associated with mortgage lending. I have already ordered to allocate additional funds for mortgages from the state budget before the end of this year. There is a great need for that, especially for young people and people of other categories. Their living conditions should improve. I believe that before the end of the year we need to allocate at least 200 million manats, maybe even more, for mortgages from the state budget. The Ministry of Finance and the Central Bank are working on this issue. They have received appropriate instructions. They should report to me after some time on how the issue is being dealt with. What will the mechanism be? There are two approaches here. I want the public to know that, too. The funds provided will either be spent to purchase apartments in existing buildings or new buildings will be constructed. Of course, to revive the construction sector, it seems more appropriate to construct new buildings. But this may take time. So maybe it would be nice to use a synthesis of these two approaches. In any case, this is not crucial. The main thing is that funds should be allocated and you should determine who will receive them. Of course, the conditions should contribute to a greater interest in mortgages.

I have repeatedly raised the issue of the environmental situation, and I am glad that the environmental situation in Baku is improving. The latest important achievement is related to Lake Boyukshor. During the broadcasts of the opening and closing ceremonies of the European Games from the sky, we also saw the panorama of Lake Boyukshor. We saw that it is a clear and beautiful lake now. It used to be an environmental disaster in the past. During World War II, it was used as an open oil storage facility. Then, sewage, produced water and garbage were dumped into the lake, and it was impossible to stand near it. A part of Lake Boyukshor has already been cleared and a beautiful boulevard created. It pleases the eye. This shows that nothing is impossible. You just need the desire.

We need to continue the cleaning of the rest of Lake Boyukshor. This year and next year, funds should be allocated for that. Thus, the city will have a beautiful lake. You know that in order to conduct treatment work, we divided the lake into two parts with a dam. At the same time, this dam will be turned into a road in the future and will function as an additional traffic artery.

This year we should also begin the process of cleaning Lake Zykh. You should envisage funds for this purpose in the state budget, so that this issue is not delayed any further.

In addition, the White City Boulevard was commissioned in Baku this year. This boulevard has also been established in the zone of an environmental disaster. The Bayil Boulevard has reached the oil derricks. So we can’t go any further, because there is oil production there. We can’t move in the opposite direction either because there is an oil refinery there. So we will apparently have to wait a few years. The oil refinery named after Heydar Aliyev is expected to undergo major overhaul. I believe that the refinery located near the White City Boulevard should be moved out of there. It is necessary from an environmental point of view. Moreover, this is in the interests of more efficient organization of work. Today, people approaching these places immediately feel the composition of air. We need to clean the air. It is contaminated by the installation that has operated there for many years.

I am sure that after the European Games the flow of tourists to Baku and Azerbaijan will increase. Visitors were delighted with the beauty, comfort and safety of Baku. I should note that these issues were the focus of visitors all the time. Of course, we should try to increase the number of tourists. The European Games have been a great opportunity to introduce ourselves. The guests have personally seen our possibilities.

At the same time, we need resolve all the other issues to be able to invite even more tourists here. First of all, there is the issue of visas. I have repeatedly given instructions in connection with this matter. Some steps have now been taken, but the issue has not been fully adjusted yet. Of course, the visa regime should be such that those who want to come to Azerbaijan with evil intentions should face a large and sturdy wall. This is unequivocal. At the same time, this should not become an obstacle to those who want to come as tourists and guests. Therefore, we should resolve issues such as the issuance of electronic visas and the option not to go to the embassy abroad. Everyone who wants to come to Baku should be able to receive an e-visa and not have to go to the embassy or elsewhere. People should be able to get their ticket and visa through a computer and then come through a travel agency. That is all. The Ministry of Foreign Affairs, the Ministry of Culture and Tourism and other agencies have been instructed, but where is the result? It is not there. If someone tells me that there is, I will say that there is not. This is why I ask. Visitors coming here admire and say what a beautiful country we have. But the problem is that it is difficult to come here and one needs to plan a month or two in advance. In today's world, people move quickly. Tourists who want to visit a place book a hotel two or three days in advance, buy a ticket, get a visa and come. That is all. We must resolve this issue.

In some cases the prices of air tickets are inflated artificially. The question is: why? What for? A good service is provided. I welcome that. Our airline AZAL does provide a high level of service. This is confirmed by people flying with AZAL. I welcome that. But Azerbaijan does not buy fuel abroad and produces it itself. In comparison with other countries, kerosene is available at a low price! Why are the prices so high? AZAL receives large subsidies from the state. All aircraft are purchased at the expense of the state, all airports are built by the state and all other conditions are created by the state. Why should tickets be more expensive than in other countries and cities? Why? Therefore, I instruct the Government, the Ministry of Finance, the Ministry of Economy and Industry to address this issue. Draw the comparisons. We need a regulatory mechanism. Everything should be transparent and prices should not be artificially inflated.

I am receiving messages that prices in our hotels are too high, especially in the regions. There are well-known brands in Baku today. Of course, they operate throughout the world. Now Baku has the most prestigious network of hotels. They have their own pricing policy. We can’t intervene in this too much. But why are the prices in hotels that are not five-star so high? In the regions, prices are so high that people do not even want to go there. Let me say this again - people may think that prices are regulated by the market and that if there is demand, there is supply. But not everyone can travel. We have a lot of five-star hotels. I am very happy about that. This demonstrates the strength of our country. It is prestigious. In other words, it is a manifestation of the processes occurring in the country. If the leading five-star brands of the world are located in Baku, it means that Baku deserves it and they deserve to be in Baku. At the same time, there are very few three-star hotels and no two-star hotels at all. The families that do not have large financial opportunities can’t travel at all. That is a reality. Azerbaijan has so many wonderful places that one doesn’t even need to go abroad. There are mountains, forests, the sea, rivers, lakes and a ski resort. Therefore, we should definitely consider these three issues – visas, ticket prices, hotels and the construction of three- and two-star hotels. Let the Ministry of Culture and Tourism provide recommendations. At the same time, let entrepreneurs also hear this.

Of course, the European Games have been a historic event for our country and Europe. We took on this honorable mission and implemented it at the highest level. The European Games were held at the level of Olympic Games. This is the power and potential of our country. The most gratifying thing is that our athletes have pleased us and finished second in the team standings. They have won 56 medals, including 21 gold, and proved that Azerbaijan is a nation of sports. Azerbaijan is a strong state. All organizations worked very hard, the organization, security, transportation issues, facilities, sports facilities, volunteers – everything was at the highest level. This is our great victory.

As President of the National Olympic Committee, I attended the opening of many of the Olympic Games. I have enough opportunities to compare. But European Games were held at the highest level. In the previous Olympic Games, armed men walked through the streets of London, there were air defense installations on the roofs of buildings. It looked as though you visited a country in a state of war, as if there was a state of emergency there. In Baku, no-one saw an armed person. These are our opportunities. Security, culture, the level of people – these are our assets. Azerbaijan has shown that it is a strong country with great potential. These games are a triumph of the Azerbaijani people and the Azerbaijani state. We are proud of our country and our people and are successfully moving forward. Thank you.