Ilham Aliyev chaired a conference dedicated to the results of the fourth year of the “State Program on the socioeconomic development of districts of the Republic of Azerbaijan in 2009-2013”
12 february 2013, 10:45
President Ilham Aliyev has chaired a conference dedicated to the results of the fourth year of the “State Program on the socioeconomic development of districts of the Republic of Azerbaijan in 2009-2013” at the Baku Business Center.
The head of state reviewed an exhibition at the Center describing the work carried out in 2002-2012 to facilitate the socioeconomic development of the republic.
The exhibition comprehensively reflects the development road covered by the Azerbaijani economy and the districts of our country in 2003-2012. It is thanks to the focused and comprehensive state policy pursued in the past years that our country accounts for three quarters of the economy of the South Caucasus.
Minister of Economic Development Shahin Mustafayev informed President Ilham Aliyev that the gross domestic product has increased three times since 2003, including by 2.4 times in the oil sector. Over the past nine years, Azerbaijan's strategic currency reserves have increased by 28.8 times to exceed $46 billion. The poverty rate has declined from 44.7 to 6 per cent, while the unemployment rate has dropped to 5.2 per cent. Of the investment of $128.3 billion made in the Azerbaijani economy in 2003-2012, investment worth a total of $65.7 billion was domestic, while the country’s foreign trade has increased 6.4 times. It is Azerbaijan that has become the first country in the South Caucasus to be awarded an investment rating by the most influential international agencies Standard & Poor’s, Fitch and Moody’s. In the "Global Competitiveness Report", Azerbaijan ranks 46th out of 144 countries and has been first in the CIS for four consecutive years. Azerbaijan's international image has been steadily increasing and Azerbaijan has advanced into the group of countries with "high human development" and "a high average income".
It was noted that the Heydar Aliyev Foundation, which conducts multifaceted activities, is also actively involved in the social and economic development of districts. As part of the Foundation’s programs and projects such as "A new school for modernizing Azerbaijan", "Development of orphanages and boarding schools", "Supporting education", "Best care for the children with diabetes", "In the name of life without thalassemia", etc., a series of measures have been taken in different regions of the republic. The Foundation has implemented hundreds of projects in the regions covering social services, infrastructure, information and communication technology, healthcare, education, sports, culture and other areas. Numerous charity events have also been held.
It was noted that the Nakhchivan Autonomous Republic has also covered the road of rapid and comprehensive development within the framework of the state program on the socioeconomic development of districts since 2003. The autonomous republic's gross domestic product has increased 12.5 times and 11 times in per capita terms. Industrial production has increased 45.4 times, agriculture 4.4 times and trade turnover 12.2 times. In 2003-2012, the volume of investment in fixed assets made in the Nakhchivan Autonomous Republic increased 15.5 times, while a number of infrastructure and social facilities were built and put into service.
Industrial production in Azerbaijan, a country where the policy of industrialization is one of the main priorities, has increased 2.6 times since 2003. It is expected that even greater growth will be achieved in the coming years thanks to the comprehensive measures being taken.
The country is also implementing a lot of infrastructure projects. In terms of the application of information and communication technologies and the overall development of this sector, our country is already in one of the leading positions and has recently launched Azerbaijan’s first telecommunications satellite into orbit.
Currently, the focus is on the development of the agricultural sector. In 2003-2012, the agricultural sector grew 1.4 times, while the production of animal husbandry products increased 3.4 times. Since 2003, more than 15,000 business people have been provided with preferential loans in the amount of 936 million manats through the National Fund on Entrepreneurship Support. The implementation of projects financed by concessional loans has led to the creation of more than 104,000 new jobs.
Over the past period the volume of the loans provided has increased 20.3 times. 43.4 per cent, or 406.3 million manats worth of loans, were made available thanks to the repayment of the earlier provided loans. In accordance with the President’s instruction, a total of 496.8 million manats of the preferential loans were channeled into the implementation of 248 investment projects based on new technologies. Preferential loans were also provided to 1,640 women entrepreneurs, 1497 young entrepreneurs and 892 entrepreneurs from among the displaced persons. In the environmental sphere, our country has been paying special attention to the application of international standards and is implementing a number of projects.
The tourism industry is booming in our country. Since 2003, the tourism sector has grown 8.5 times, while the number of tourists visiting our country has increased 3.3 times.
The development of the social infrastructure is also under scrutiny in both the regions and the capital of the country.
The exhibition has allocated a large area to information stands and video clips reflecting the key socioeconomic indicators of the country’s economic regions.
The video clips describe the visits of the head of state to various regions and the measures taken on the basis of public programs.
Quite rich in terms of their content are the sections of the exhibition describing the activities of the Fund on the Promotion of Exports and Investment in Azerbaijan and the Azerbaijan Investment Company. Also on display is an electronic catalog of the goods produced in the country, the passports of economic districts, printed materials and presentations about the Sumgayit chemical industry park and the Balakhani industrial park prepared by the Ministry of Economic Development.
In general, the state programs on the socioeconomic development of districts change their appearance beyond recognition, improve the living standards of the population, consistently resolve social problems and develop private enterprise.
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The head of state made opening remarks at the conference.
Opening speech by President Ilham Aliyev
- Today we will traditionally discuss the implementation of the State Program on the socioeconomic development of districts, analyze the objectives for 2013 and provide routine recommendations.
The State Program on the socioeconomic development of districts has been successfully implemented for nine years. I believe that the adoption of the program was very important for the country’s economy and for the solution of social issues.
The program shows that the intentions we stated in 2004 are already becoming a reality.
There were several reasons for the adoption of the program in early 2004. First of all, the development of the districts, of course, was at the center of our attention. We were faced with issues of implementing infrastructure projects for the development of districts. At the same time, the main gist of the program was the development of entrepreneurship, strengthening of public support and coordinated solution of all these issues. Issues of increasing domestic production, reducing the dependence on imports, creating jobs and subsequently eliminating poverty and unemployment have also been of tremendous importance. So the State Program on the socioeconomic development of districts has essentially become the most important and fundamental economic tool for the successful and sustainable development of our country and for its economic diversification.
I remember that when we were adopting a five-year program in 2004, we set quite specific goals towards eliminating unemployment. I am very pleased that thanks to the implementation of the first five-year program, the results we achieved in the creation of jobs proved even more optimistic than we had originally predicted. More than 600,000 jobs have been created. We achieved the goals we set in 2004. But this process was continued in the subsequent period too.
As you know, the second state program was adopted in 2009. At the end of this year the program will be completed.
I am confident that we will successfully fulfill all the tasks facing us this year and thus our second five-year program will be implemented. Today there are a number of factors suggesting that this will be the case. In 2004, these factors did not exist. Today our economy is very strong. We have very large exchange reserves.
It is possible to say that all the initiatives we have put forward in the oil and gas sector are already being implemented. In 2004, we announced our intention and mobilized our will. In 2004, the Baku-Tbilisi-Ceyhan oil pipeline, which is part of our oil strategy, had not been built yet. We had not yet ensured the inflow of large amounts of currency into the country’s economy. Despite this, I think that this bold and thoughtful step in 2004 gave an impetus to the comprehensive development of our economy.
Today we have all the opportunities to complete the program successfully. Let me repeat that our economic position is strong. The Azerbaijani economy is the fastest growing economy in the world. From this point of view our country is adequately evaluated by all the influential international organizations.
We already have a good experience. At present, the number of local companies involved in various projects has increased significantly in Azerbaijan. Tens of thousands of new businesses have been created over the past nine years.
Our international relationships have further expanded. Whereas earlier we were more dependent on foreign sources of finance in implementing projects, today it is no longer the case. Azerbaijan has itself become a creditor.
The Azerbaijani state has actually provided a credit to the International Finance Corporation, which is part of the World Bank.
So it is beyond doubt that over the years our country has been successfully moving forward in all aspects. So I do not see any obstacles or problems impeding the successful completion of the program this year. Local executive authorities, local business people and the central executive bodies should, as always, work in a coordinated and conscientious manner and honorably fulfill all the orders.
Our economic reforms began in the mid-1990s. At that time, on the initiative of great leader Heydar Aliyev, our country embarked on drastic, fundamental and radical economic reforms. This led to the liberalization of the economy and promoted the attraction of investment to the country. There is no doubt that the new oil strategy launched by the great leader and successfully implemented today has also been of great help in this area. Of course, our oil strategy has played a role in the implementation of the State Program on the socioeconomic development of districts as our financial capabilities have improved.
But, of course, it would be wrong and naive to link all our successes with the oil factor even though some time ago, especially in the mid-2000s, certain foreign analysts and organizations attempted to explain our achievements solely by the oil and gas factor. In some cases this was done out of ignorance, in others people wanted to cast a shadow on our successes. They said that Azerbaijan simply has oil, this is why it develops. Then we gave a tangible response to those unfounded speculations. Today I also want to say that there are countries in the world that produce and export many times more oil and gas than we do. If we look at the financial position of some of them, we will find out that oil and gas do not yet guarantee the successful development of a country. Sound policies, political and economic reforms, unity, cohesion between the government and the people, popular support for the economic reforms carried out in the country, the liberal economy and, at the same time, strong authorities, stability – these are the key factors behind our success.
Today, we no longer come across the suggestions expressed in the foreign media in previous years that Azerbaijan would be exposed to the "resource curse" and the "Dutch disease" or that the country would be developing in a lop-sided fashion. Those unfounded speculations are already in the past, and the economic performance of the last year shows again that the path we have chosen is the right one. Because last year the non-oil sector of our economy grew by almost 10 per cent. This growth indicates that the ongoing reforms are paying off.
In general, if we analyze the period from 2004 to the present day, we will see that all the work has been carried out in a consistent manner. The developments in the country are going in a positive direction. There is statistical information confirming this. Over the past nine years, the economy has grown more than three times. I believe that this is an unparalleled indicator in the world. Industrial production has almost tripled, about $130 billion has been invested in the national economy, while last year the investment reached record levels – more than $22 billion. Of this, $13 billion is local investment.
International financial institutions are giving a high assessment of the work ongoing in Azerbaijan, while the leading organizations analyzing credit ratings have upgraded Azerbaijan’s credit rating. This happened at a time when credit ratings of some European countries were downgraded. The experience of the last few years has been particularly positive because even in the years of the global financial and economic recession the Azerbaijani economy continued to develop, thus securing the development of our country.
At the same time, we are seriously engaged in addressing social issues. Our reforms in the economic sphere are underpinned by strong social policies. If we look at the statistics of the last nine years again, we will see that in 2004 the average salary in Azerbaijan was about $100, but today it is $500. The average pension was $20, but today it is $200. Of course, we can’t be complacent with these figures, and I believe that the average pension and the average wage must and will continue to grow. The salaries of people working in the public sector, as well as pensions, will be raised. At the same time, thanks to the conditions created for the development of entrepreneurship, those working in the private sector will also improve their financial situation. But let me repeat that this big difference shows that we have made great strides in addressing social issues.
Over the past nine years around 2,500 schools, more than 500 medical institutions, 35 Olympic centers and other social facilities have been put into operation. Infrastructure projects have constantly been in the spotlight. Infrastructure projects are part of the State Program on the socioeconomic development of districts because we effectively had to start infrastructure projects from scratch in the countryside. The entrepreneurs working in the districts are well aware of that. We are gradually eliminating problems with electricity, gas and drinking water.
Now we are seriously engaged in the construction of rural roads. Of course, I want to repeat that we had to do all the work consistently and with respect for our priorities.
In particular, as far as infrastructure projects are concerned, first of all we had to tackle the construction and repair of highways. This was followed by the construction of rural roads. That is, this process is ongoing, and the improvement of living standards in the countryside, the creation of jobs and the implementation of infrastructure projects, including those of social infrastructure – these are the realities of today. Our regions and cities are becoming nicer and improving. New living conditions are emerging in the regions.
There are still a lot of problems. We know these problems and are working to resolve them. Of course, after the second state program is completed this year, new programs will be submitted. So the state is fulfilling all its responsibilities. At the same time, we are doing specific work to develop entrepreneurship because partnership between the state and the private sector is of particular importance for achieving our goals.
Very serious steps have been taken to develop entrepreneurship. First of all, there is a very strong political will to develop private enterprise. The support provided to entrepreneurs at a high level, at the level of the President, certainly encourages them and helps to eliminate the problems they sometimes face. Such problems are still there – bureaucracy, obstacles, unjustified interference in business affairs. Of course, the President’s support for private enterprise and entrepreneurship development also serves to improve the business environment. But a lot still remains to be done in this area, there are certain shortcomings.
We have taken major steps to develop entrepreneurship. As I mentioned earlier, the extensive creative work and the infrastructure projects ongoing in the regions provide an excellent environment for businesses. If a city has no electricity or if electricity is supplied intermittently, the roads and utility infrastructure are in poor condition, there can not be a normally functioning enterprise there. Therefore, the investment made by the state has served, among other things, to facilitate private enterprise development. At the same time, an important role in private enterprise development is played by the financial support of the state. In recent years, the National Fund on Entrepreneurship Support has provided business people with low-interest loans in the amount of 1 billion 200 million manats. This financial support has certainly given a great impetus to the development of entrepreneurship. The projects implemented through such loans are, of course, also realized using entrepreneurs’ own money. So here we are also seeing a partnership between the government and the private sector. The loans are granted in a focused manner, first of all to the areas that are important for the development of the country and to ensure food security. We will talk about that later. A few years ago we set the goal of providing ourselves with the main food commodities. And we are gradually getting closer to this goal.
Of course, the development of entrepreneurship in both the regions and major cities will promote a successful development of our country. The path we have chosen is the path of a market-driven and liberal economy. The business environment and the investment climate in Azerbaijan are good. They could be even better. But I believe that they are good. Otherwise, we would not have received investment worth $9 billion last year. In the coming years we should remove the obstacles faced by entrepreneurs.
I think that such annual meetings are a very significant event. We analyze all the work again – both during the meeting and on the eve of it. I am sure that the instructions to be issued after this meeting will help to speed up the work in the regions.
All the organizations should work in a coordinated manner on these issues – local executive authorities, business people and central executive bodies. This is our common cause. I have repeatedly said this and I want to say it again today: there is no difference between a private and a public company for me. Both are Azerbaijani companies, both operate in Azerbaijan and in the name of Azerbaijan. Therefore, the attention paid to private and public companies should be equal, and I believe that we are achieving that.
If we look at the share of the private sector in the GDP, we can see that it already exceeds 80 per cent. According to the latest data, the share of the private sector in the GDP is 83 per cent. For a country that has lived in a market economy for only 20 years, this is a high indicator I think.
To this day, we have carried out work to diversify the economy, ensure complete food security, strengthen our industrial capacity, increase the export potential, reduce the dependence on imports and improve the business environment. And this work will continue to be done in the following years too. The successful development of our country, economic diversification and excellent prospects give reason to say that the remaining problems, errors and deficiencies will also be rectified. To do this, of course, every citizen – both government officials and business people – should first of all realize their responsibility because our goal is to develop the country and turn Azerbaijan into a developed state.
Of course, the steps being taken in the energy policy make us even stronger. The work carried out in this area and the initiatives we have put forward will ensure our long-term financial resources. And we are using these opportunities very rationally. The new projects and initiatives Azerbaijan has put forward are highly appreciated by the world community. Azerbaijan is already taking on tremendous responsibility. Our joint work with foreign partners both in Azerbaijan and abroad is rising to a new level. Today Azerbaijan is already beginning to invest in foreign countries. For us, this is a new process. But we have prepared for it properly. Azerbaijan is recognized worldwide as a reliable investor and a friendly country. Of course, our international relations, in particular the growing number of friendly countries and the new business projects, should secure our economic interests. We will talk about that later.
As I said at the last meeting too, we should explore the possibilities of accessing new foreign markets. Of course, to access foreign markets, it is first of all necessary for the products manufactured in our country to meet the highest criteria. I am very glad that new enterprises meeting the highest standards have been put into service in recent years, while the loans provided by the state have helped not only to resolve financial issues, but also to facilitate state supervision. Recommendations of the state also play a role. Thus production of exported goods is increasing. If we want to successfully develop agriculture in the future, then we must already secure great export opportunities and enter new markets. Although Azerbaijan is developing and its population is growing, our market is quite limited.
But we have great potential. Therefore, if we do not have access to foreign markets, then after a certain number of years the work we have done in the agricultural sector will not be stalled, but will not be able to develop beyond a certain level. Therefore, we are already doing this work. Both I and other Azerbaijani structures discuss these issues in meetings with foreign partners. Investment in foreign countries will first of all diversify our investment portfolio. At the same time, we, as investors, gain a lot of trust in many countries. Thanks to this confidence our export capacity to these countries will also increase in the future.
Of course, private entities should maintain close contact with the government, because sometimes private entities find it difficult to access foreign markets. Sometimes they are not even interested in that. But, again, the country has an economic policy. This economic policy should first of all secure comprehensive development of Azerbaijan. It is necessary to make the most effective use of internal resources. We need to access foreign markets even more broadly.
Today we will talk about these issues.
Closing speech by President Ilham Aliyev
- The implementation of the second State Program will be ensured before the end of this year. Thus, a period spanning 10 years will be left behind. But it is already possible to say that the implementation of the two state programs adopted in 2004 and 2009 has played a very important role in the development of our country. If these programs had not been adopted, there could be no question about the development ongoing in the regions today. This decision taken in 2004 provided a comprehensive, sustainable and diversified development of our country.
The first program was over-fulfilled. The issues not provided for in the program in 2004 were incorporated into it in the following years. The program adopted in 2009 also underwent numerous additions, because life goes on and the country faces new challenges. While implementing these programs we launched new initiatives to address emerging issues. In short, the program is constantly updated. Thus, the suggestions and applications coming from the regions, the proposals expressed during meetings with the local population during my trips to the regions were certainly incorporated into the programs. At the same time, following the adoption of the second program in 2009, large funds for regional development were allocated from the Contingency Fund of the President. In particular, for infrastructure, transport, rehabilitation of rural roads and landscaping.
The ideas voiced today and, on the whole, the positive changes ongoing in the country suggest that the second State Program will be fully implemented by the end of this year. This program, I want to say again, will be over-fulfilled. Before the end of the year we must address all the issues contained in the State Investment Program and the State Program on the socioeconomic development of districts.
I believe that the volume of investments in the economy this year should not be less than last year. Last year investment totaled $22.1 billion. I think that the same amount should be invested this year. I believe that we will be able to reach this figure both through the state and as a result of private sector activities. And this, of course, will contribute to the successful completion of the State Program on the socioeconomic development of districts.
First of all, it is important to continue infrastructure projects. The work carried out in this direction can be evaluated positively, and it must be continued. In particular, in the foreground are issues of completing the construction of main roads and repairing and building rural roads. We can say now that the construction of rural roads has assumed large proportions in all the regions. We are implementing these projects on the basis of suggestions and requests coming from the regions. First of all, we rebuild roads in the regions with the highest population density, the roads connecting the largest number of villages. The goal is to renovate at a high level all our rural roads so that this issue is resolved.
As a result of the work on improving power supply we have carried out in recent years, we can say that the shortage of electricity is no longer experienced. In recent years we have achieved the construction of new power plants with a capacity of 1,500 megawatts. This process continues. This year, as a result of commissioning of the "Janub" power plant in Shirvan, we will obtain about 800 megawatts of new capacity. The construction of the "Shimal-2" power plant is ongoing. This is another 400 megawatts. So this will significantly strengthen our energy potential. At the same time, the construction of hydroelectric power plants has continued. Last year we opened several stations on small rivers. In parallel with the implementation of major projects, the process of creation of hydroelectric power stations, renewable and alternative energy sources is under way. Among them I can cite the recently opened Fizuli hydroelectric power plant. This station has a capacity of 25 megawatts and is a renewable source of energy.
The construction of a power station which is part of the plant for recycling household waste has already been completed in Baku, in Balakhani. There we will generate about 20 megawatts of electricity.
The construction of the Takhtakorpu water reservoir is under way, and this ambitious infrastructure project will be realized this year. Tens of thousands of hectares of land will be irrigated and, at the same time, a power station with a capacity of 25 megawatts, which is a part of the project, will be built. So we have a sufficient generating capacity.
As you know, Azerbaijan currently exports electricity to neighboring countries. But we can’t be content with the condition of transmission lines. Relevant instructions on this issue have already been given. The investment program for this year also includes the issue of upgrading transmission lines. We should pay more serious attention to this issue and improve the condition of transmission lines in a short time. Baku and the regions have a great need for that.
Work has begun on the creation of renewable energy sources. I do hope that this direction will also become very promising. Thus, we have rich deposits of oil and gas, and Azerbaijan will have no problems with internal sources, i.e. sources of energy, at least for the next 100 years. But I think it is also necessary to create renewable sources of energy, to enhance this process. First of all, this will provide us with additional financial resources. On the other hand, I think that by creating these new technologies, renewable energy technologies, "green energy" we will make our contribution to the solution of environmental problems in the world.
Of particular importance among the infrastructure projects is the process of gasification. I am sure that the instructions I issued in the past will be fulfilled and gasification in Azerbaijan will reach 90 per cent before the end of this year. Large investment projects are being implemented in this area. The process of gasification is under way in all our regions. In most districts we have to bring and will bring gasification to 100 per cent. In some mountainous regions the level may be lower. We in all our regions, in all our villages we will carry out work related to sustainable energy supplies. The population will have stable supplies of energy and gas.
A special place among the infrastructure projects is occupied by drinking water and sanitation projects. Last year, as part of the State Investment Program, major funds were channeled into this area. This year too, about 800 million manats, perhaps even more, is envisaged. And here we set the maximum goal again: in all the residential settlements, in Baku, in all our cities and villages we must implement projects to ensure sustainable supplies of clean water meeting the standards of the World Health Organization.
This work has assumed large proportions in all the regions. This is a huge problem that has haunted us at all times and I am sure it will be resolved in the coming years. I also want to note that we are implementing these projects with the potential population growth in mind, so that they could be effective at least until 2035. Thus, after this issue has been resolved, we can say that utility and infrastructure projects will be realized in all the regions.
Another group of projects that occupy an important place in the investment program are projects on land reclamation. These projects are directly linked to the development of agriculture. Our country is implementing two grand projects where perhaps the biggest volume of non-oil sector investment has been made – the Takhtakorpu and Shamkirchay water reservoir projects. As I noted earlier, the Takhtakorpu water reservoir should be put into operation this year, while Shamkirchay in two years. As a result of these two indispensible projects, tens of thousands of hectares of new land will be included in the turnover. As I said in my opening remarks, this is very important for our food security. At the same time, it will create an additional export capacity. We already have to map out our plans on conducting land treatment activities on tens of thousands of hectares of the lands which will be put into circulation as a result of these projects. Additional equipment must be purchased. We have been purchasing equipment through “Agroleasing” using the funds allocated from the state budget for several years, and this equipment is leased to the population, to farmers. We will probably have to purchase additional machinery and fertilizer, take other measures to enable farmers to effectively use the new lands that will be included in the turnover.
At the same time, there has to be a plan of comprehensive measures to provide the new irrigated lands with water and necessary equipment. I believe that this work must begin now. The necessary instructions have been given. But I think that the Ministry of Economic Development and the Ministry of Agriculture should submit more specific proposals to me in the coming months. The boundaries of irrigated lands should be determined together with the land reclamation company, so that we could be ready for the cultivation of new lands and waste no time.
The process of creation of large farms has started. As you know, I gave this instruction a few years ago. But I indicated at last year's meeting that although instructions had been given, no work was carried out. Now I believe that the work done over the past year has given an impetus to this process. About 5,000 hectares of land have already been allocated and large crop production farms established in Agjabadi and Beylagan Districts. Of course, we expect a rich harvest from these lands. I believe that there should be high yield on this land. By implementing these projects we are taking a very important step towards providing ourselves with grain. Now I will touch upon the issue of self-reliance. But before that I want to say that according to the information provided, at least 50 large crop production farms should be established so that we could provide ourselves with grain. Our intention to provide for ourselves is based on several reasons. First of all, it is the importance of food security. Issues of food security have become part of our agenda in recent years. We used to focus more on energy and transportation security before, and I can say that we have made great strides in addressing these issues.
The initiatives and projects Azerbaijan has put forward in the transport and energy sectors are providing and will continue to provide not only for our own interests, but also for the interests of the region and the continent. Azerbaijan has already become an indispensable partner in these areas. I can say that the share of Azerbaijani oil in the energy mix of some European countries is already reaching 30-40 per cent. Thus, our oil resources already provide for the energy security of some countries. The TANAP project launched on our initiative will secure the transportation of Azerbaijani gas to various countries. Thus, Azerbaijan will become an invaluable partner in matters of energy security in the gas sector too. In particular, after building the Baku-Tbilisi-Kars railway we will create a new and permanent corridor. The number of countries using this corridor will increase. During ongoing bilateral negotiations, we are already observing the interest of many countries in this project. I also want to note that this project was initiated by the will of the Azerbaijani state. Of course, as initiators of the project, we took on tremendous responsibility. I am very glad that the neighboring countries participating in this project together with us are also making efforts and contributions.
Food security is a relatively new concept. That is, it is not a new concept per se, but as a problem these issues have arisen in recent years. And there are several reasons for that. I do not want to talk much about it. In some cases, it is monopolistic trends, in others it is the drought, in others still it is the use of plants for the production of alternative fuels and changing the use of farmland. In any case, we faced this problem a few years ago. You will probably remember the implementation of contracts, i.e. the contracts relating to imports, being in question because some producing countries experienced a drought. They could not meet their own needs for grain. Of course, we came out of that situation – after all, there are no hopeless situations. But it was a signal for us. After revisiting the issues of self-sufficiency, we saw that there was very large room for development.
Of course, Azerbaijan is part of the global economy. We have long been integrated into the global economy and are committed to the principles of a market economy. But at the same time, I think that every country, especially if its natural and climatic conditions permit, should resolve issues of self-reliance with staple foods. In recent years we have done a lot of work in this direction too. I will bring to your attention some of the figures associated with this a little later.
I spoke about this at the previous meeting and want to talk about the development of agriculture again. Because I believe that very serious work still needs to be done in this area.
Specialization of our districts should be conducted. Each district has its own characteristics, its own nature and climate. These climatic conditions must be taken into account. Specialization projects should be implemented for each district. Instructions have been issued. But I do not see any results yet. I believe that specific suggestions for each district should be submitted to me in the near future. What district should produce more of which agricultural products and what additional steps we should take to do that. We usually give general instructions. For example, general instructions are given to meet domestic needs for agricultural produce by producing it in Azerbaijan, to increase export opportunities. But as regards the distribution of this production among districts, more specific suggestions should probably be provided.
I believe that the time has come for the application of new technologies in agriculture. In general, as you know, the application of new technologies, information and communication technologies has assumed large proportions in Azerbaijan. We are the regional leader in this field. We are also in leading places in overall global rankings. I think that ICT issues in agriculture are also important. These include the issue of electronic registration of farmers. This project will pursue several goals. It will increase the efficiency of subsidies and clarify the issue of boundaries of farmland. There is a great need for that. In general, we have to bring modern technology to the villages. A major project has already been launched in this area. We will lay broadband Internet lines to all our towns. This is a project worth several million manats. Due to its importance, the project is directly funded by the State Oil Fund and supervised by the Ministry of Communications and Information Technology. That is, we have to and we will bring broadband Internet to every village. It is our intent. In parallel, we need to use information technology for the development of agriculture. We have the "e-government" project. I believe that this issue should be resolved in the villages too.
As I noted earlier, last year we started to create large farms, and the results are already available. This initiative is exclusively meant to address issues of food security. Special state support has been provided in this area. And this is natural because issues of food security need to be at the forefront. But we should know that the bulk of agricultural production is provided by small farms. Of course, we are not forgetting and will not forget them. The work done in the regions over the last nine years, particularly in the agricultural and processing sectors, and the support provided were meant for small farms. So this area should always be at the center of attention.
As you know, we are taking comprehensive measures to facilitate agricultural development, ensure food security and eliminate unemployment in the regions. As you know, in the mid-1990s great leader Heydar Aliyev began radical economic reforms in the villages. Farmers were exempted from all taxes except for the land tax, and today we have preserved those benefits although about 20 years have passed and farmers are already up on their feet and have extensive opportunities. Azerbaijan has also covered a very long road. But we are leaving these benefits in force, which I think is a good policy.
Every government should support its farmers. Every government should provide subsidies. We are also doing that. The subsidies and loans we provide are quite diverse. I mentioned that preferential loans in the amount of 1 billion 200 million manats have been provided. 83 per cent of these loans were channeled into the agricultural sector of the regions. The purchase of equipment and the establishment of "Agroleasing" have been our initiatives. As regards the development of animal husbandry, breeding stock is purchased by the government. Another order was signed yesterday. The state and the government provide methodic guidelines. The Ministry of Economic Development already has a great experience in this field. Farmers are even provided with methodological advice as to what work can be done using the money. Of course, the subsidies, i.e. the material support, are provided by us, but unfortunately sometimes we can not achieve transparency in this area. The subsidies either do not reach their destination or someone embezzles them. In some cases a part of the subsidies meant for farmers disappears in the pockets of government officials. In others, the volume of production and the size of the farmland are exaggerated in order to receive more subsidies. In some cases the necessary equipment and facilities are imported from abroad at high prices. In other words, we need to ensure complete transparency in this area. The state has always supported and will continue to support the peasants. It is necessary to make sure that this support reaches the farmers to the maximum extent – by one hundred per cent.
Therefore, I think that in the coming months it is first of all necessary to re-examine the experience available in the provision of subsidies, make suggestions and, along with the positive sides, identify shortcomings. In this I am urging the farmers to submit their proposals to the Presidential Administration, the government, the Ministry of Economic Development, the Ministry of Agriculture and local executive authorities. Make your suggestions so that we know more precisely what the issues of concern are for you. I am aware that there are problems in this area and that transparency is not at the required level. These deficiencies must be rectified in a short time. Farmers should be able to receive whatever they are entitled to. Let no-one set his eyes on this money!
I want to voice some figures related to self-sufficiency. On staple foods we have achieved the following levels. Last year we provided ourselves with meat and meat products by 92 per cent and this year will provide by 95 per cent. Poultry – 88 per cent and expected to be 93 per cent by the end of this year. Eggs – 96 per cent and according to the forecast for this year will be 100 per cent. Vegetable oils – 70 per cent and will rise to 75 per cent. Butter – 50 per cent and will be only 52 per cent this year. This is a very low indicator. We need to think about that. We provide ourselves with milk and dairy products at the level of 73 per cent. By the end of this year it will be 78 per cent. Grain – 65 per cent and will be 70 per cent. As I said, by establishing 50 large farms we will reach a level of 100 per cent. Grapes – 94 per cent and will be 96 per cent. Potato production – almost 100 per cent and will remain at that level. Melons – 100 per cent. This year there will be greater export opportunities, the level of production will be 104 per cent. Fruits and berries – 126 per cent and will be 130 per cent. So we have great export opportunities. Vegetables – 99 per cent and will be 108 per cent. Salt – 71 per cent and will be 75 per cent. Sugar and products made from sugar. Here we need to remember that only 12 per cent is provided by local raw materials. But sugar and products based on imported raw materials will be at 180 per cent.
This table above all shows the work being done in this area. For example, if we compare some items to 2009, we will see that whereas then our self-reliance with poultry meat was at 66 per cent, this year it will be 93 per cent. Meat was at 84 per cent and will be 95 per cent. How has that been achieved? Through the loans issued by the National Fund on Entrepreneurship Support. When we saw two years ago that poultry develops a bit slowly, we tackled this area and the creation of poultry farms assumed broad proportions.
So this table shows that apart from several positions, we have resolved issues of food security. And this is also a great and historic achievement. In the coming years we should focus on areas in which we are still unable to provide for ourselves. The Ministry of Economic Development is aware of that. The volume of loans provided to these areas should be increased and we need to make sure that Azerbaijan can fully provide itself with basic food commodities in the coming years, which would be a historic achievement. As I noted earlier, we also need to explore export opportunities to enter foreign markets with export products.
Livestock breeding, dairy production, horticulture, viticulture – there are huge opportunities for the development of these industries. At the same time, we will achieve growth in yield capacity. This is the goal of the new enterprises that have been set up in recent years or are emerging now. They have new technologies and are resolving all issues in a comprehensive manner. For example, grain yield in the new farms should reach 40-50 quintals. We are getting an average of 27 quintals of yield per hectare. Compared to previous years, this is a good indicator. But developed countries produce 50, 60 and in some places 70 quintals per hectare. We also need to reach that level. We already have the experience, the capabilities, the will and the resources. We have to spend them on significantly increasing the yield capacity. Therefore, the process of inclusion of new farmland into the turnover will be continued. Thanks to the land reclamation activities, as I said, tens of thousands of hectares of farmland will be included in the turnover. But we should know that we have limits. We can not continually expand crop areas. This is why the intensive method should prevail and, as I said, we need to expand export opportunities to enter new markets. Probably in this area too, that is, in entering the markets, a role is and will be played by bilateral external relations. At the same time, a new procurement system must be put in place. I believe that the government should only provide support in this matter, indicate the directions, while private companies should be involved with procurement. I believe that the establishment of logistics and procurement centers should be taken as a priority at the next stage both in Azerbaijan and in the countries to which we will export our products. As a result of Azerbaijani investments, logistics and procurement bases should be built. Some work is already being done.
I believe that serious talks on the issue should be held with relevant countries and their government agencies this year so that we could organize this work. Because there are problems with the sale of produce and these problems must be resolved. In previous years, production was at a low level, so there were no problems. But now production is growing, but produce sometimes remains unclaimed. We need to help farmers.
As far as the loans are concerned, loans amounting to 250 million manats will be provided by the National Fund on Entrepreneurship Support this year. Most of these funds will be provided on the account of repayment of earlier issued loans. This is also a good indicator which suggests that business people receiving loans approach this issue in a very responsible manner. We can say that all the loans are being repaid on time. Local executive authorities should work even harder to support entrepreneurs.
I want to say again that support for the private enterprise will ensure the successful development of our country. I always meet with entrepreneurs. The number of enterprises I have inaugurated both in Baku and in the regions may now be in the hundreds and thousands. But all the heads of local executive bodies and authorities should assist entrepreneurs. They should support their activities, should not offend them, should not interfere with their work or make illegal demands. There are such cases. I can not say that they have acquired a wide scope, but they do exist and must be stopped. Private enterprise development is a state policy, while the head of an executive authority is a person implementing state policy on the ground. He can not do anything that runs counter to the public policy. Therefore, I repeat, all the heads of executive authorities should remember that whoever hurts entrepreneurs will be punished. Those making illegal demands will be punished. They only need to help businesses to enable them to work more effectively.
There is a question of social responsibility of entrepreneurs. I spoke about this at the meeting last year. I welcome the attention business people are paying to the issues of social responsibility. I am aware that in many places entrepreneurs are implementing social projects on their own initiative – building schools, kindergartens, etc. This is all very good and commendable. But all this work should be done voluntarily. Executive authorities should not force business people to do that. There are such cases too. They are made to do the landscaping work and then do not get paid. Every district has its own budget. Every district receives funds from the state on a regular basis. Funds are also allocated from the Contingency Fund of the President. It is necessary to use this money to do this work. Don’t attract business people to this work. If someone is interested in helping, let them help. But sometimes they are made to do so, incur major expenses and then do not get paid. This is not right. If anyone thinks that this information does not reach me, they are wrong. All the information reaches me, and this must be stopped.
The social responsibility of business people is purely their voluntary initiative. I welcome this, but no-one should be forced. Let everyone know this.
In general, work in the regions is moving in a positive direction, the heads and representatives of local executive authorities are fulfilling their duty. The work being done in the regions is a manifestation of public policy. Local executive authorities are working effectively and hard. In most cases the relationship between entrepreneurs and local authorities is built on a sound basis. But, as I said, there are facts we are very seriously concerned about, because sometimes the actions and steps of local executive authorities totally contradict our public policy.
Local executive bodies, the heads of executive authorities must realize their responsibility and carry out the state policy. Citizens of Azerbaijan are at the heart of our public policy. We do everything for the citizens of Azerbaijan. That is our goal. We are working, building, creating everything for our people in order to strengthen our country. We want Azerbaijan to become a powerful state. We all want this, every normal person who loves his country wants to make our standing even stronger and our strength to grow further. What for?! In order for our people to live better. This is the main goal. The stronger our state, the more comfortable and safer our people will feel. They will feel, and they already do, that they are backed by a strong state of Azerbaijan which will not leave them in the lurch and will always support them.
The human factor, the human capital. I said back in 2003 that we have to turn the oil capital into the human capital. This involves not only the funds being invested in science, technology and education. The point is that citizens of Azerbaijan should be respected everywhere, government agencies should treat them normally, should not intimidate and offend them. Are there such cases?! Yes there are! Who does that?! Government officials! Who can offend a citizen?! A government official! Let me repeat that in general, the activities of executive authorities in the regions are positive, but there are such things. This is unacceptable. Every civil servant should serve his people. When appointing every head of executive authority, I indicate a few key areas in a meeting with him: development, creation, effective work, humility and service to people! This applies to everyone sitting here, all the heads of executive authorities. I have appointed all of them. In some districts this has actually happened several times. Why? They did not live up to my confidence. I said to each one of them: go and support people, help them. Respect people. But in some cases I do not see that. And when I do not see that, I take action. Sometimes government officials look down on citizens, do not reckon with them, insult them and act impudently. There are such cases and they must be eliminated.
Every public official should honorably fulfill his duties, serve the people and be humble. But sometimes there can be no talk of modesty at all. They arrange large receptions, sumptuous weddings, anniversaries for themselves. Is this a behavior befitting a public official? I celebrated my 50th birthday in Agjabadi, with the IDPs. This is my nature. Secondly, I am showing the way: this is the way you should act.
Sumptuous weddings, birthday parties, anniversaries, expensive gifts. Stop all this, it is enough! Those who do this will know who I mean. This applies to both local executive authorities and heads of central executive authorities. So I think that after these words they will change their behavior. Themselves, their families, their children.
A few years ago I issued the instruction to remove the films from all the cars and to put an end to that. I said back then: I am the President and there is no film on my car. But the cars of third or fourth grade officials are covered with films. Who are they hiding from?! Or are they afraid that someone might see them?! What will happen if people see them?! Will they melt? What will happen?
I said that, then measures were taken and the films were removed. This morning, before coming here, I enquired and the minister of internal affairs told me that films were removed from 24,000 cars last year alone. Don’t these 24,000 people have ears?! Can’t they hear what I am saying?! Or do they forget?! This may not be such a big issue. But it is an indicator in itself. What kind of discrimination in society is this?! You have a position, money and you think you can distinguish yourself from others?! Distinguish yourself with your work, the things you do, your intelligence, your benefit for the country, not with the film and expensive things! Therefore, I am saying, as I said to the minister of internal affairs today, that if I ever hear or find out one more time that there is a car with a film, this car will be confiscated. I don’t know whether it is necessary to make appropriate amendments to the legislation, we will do that. This is not right! They act impudently and do not reckon with anyone! The children of government officials act impudently, offend people and can’t behave. Who gave them this status in society?! The people they are supported by, so to speak, were appointed to their positions by me and I will be the one to fire them if I deem it necessary. If I find out again that a member of anyone's family bullies others and behaves inappropriately, then that person will be arrested and his father dismissed. Let everyone know that! Let this also be known to those who are turning the streets into an arena of competition! Everyone will be arrested! This is it! The minister of internal affairs will be informing me about that on a daily basis. Bully-drivers, anyone who can not behave, violates public order, does not respect the law and tramples our customs and traditions will be punished. Let everyone know that!
I thought that the words I have said about this several times had got to everyone. But I see that they are forgotten. This is the last warning. There are and must be rules of normal conduct in society. We carry on as a nation thanks to our traditions, customs and rules of conduct. Those who want to break them will be punished.
The fight against corruption and bribery should be stepped up. I believe that we have not achieved the desired result in this area although the fight is and will continue to be waged. But, unfortunately, this fight is not at the desired level. Corruption is a great evil. If we are to become a developed country, we have to get rid of corruption. This requires a number of factors, all of which are available in Azerbaijan. A strong political will and international experience. We are studying this experience, there must be and will be penalties and systemic reforms. We approach this issue in a comprehensive manner, certain work has been done. But I want to say that I am not satisfied with this work. The fight against corruption should be waged even more vigorously, it should produce even more serious results. But in some cases where people mired in corruption are arrested, they have tens of people who defend them, create committees and issue appeals. Everyone must be accountable according to the law, all are equal before law. Therefore, all the bodies, law enforcement agencies should wage even more serious struggle. At the same time, systemic reforms should be conducted more seriously. Among them are electronic services, “ASAN xidmət”, the "e-government" initiative – all this will also be a major tool in the fight against corruption. The “ASAN xidmət” program is already in operation. Before the end of this year it will fully cover at least Baku, all the districts of Baku, and the cities of Ganja and Sumgayit. At least! Other cities may also be covered by the system before the end of the year. In the coming years, this system should be introduced to all the cities of our country. We are seeing excellent results of this.
I want to express my thoughts on a number of other issues as well. In connection with industrial production we have chosen the right direction. Industrialization is under way. This is confirmed by the figures for the previous year. Industrial production in the non-oil sector has increased, industrial parks are under construction. High-tech parks will be set up, especially when we consider that this year is the Year of the ICT, the University of Information Technology. The staff trained there will work at the high-tech park. In other areas industrial production also needs to go even faster.
As for the sector of building materials, we must fully provide ourselves with building materials. I do hope that the cement plant put into operation recently and other cement plants currently under construction will enable us to fully provide ourselves with cement in a few years’ time. The production of aluminum on a modern basis has already started. We are faced with the issues of reviving the steel industry. We have to resolve these issues too. That is, we have a well thought-out program to improve industrial production as a whole. The industrial parks are applying special financial and tax regulations, and the government for its part will again make a contribution to the industrial development.
Industrial parks are already being set up. I think that time is ripe for establishing agricultural parks. Relevant instructions on these issues were issued a few months ago, the experience of other countries where such agricultural parks are available can be studied. I believe that this will also be a modern approach and give a further impetus to the development of agriculture.
The demographic situation in the country is positive. Since the first program was adopted, our population has increased by 1 million 86,000 people. In 2003, we had a population of 8,270,000 people, while in 2012 it reached 9.356 million. So this is also a very positive indicator, which attests to the overall development of our country. And I am very glad that the population of Azerbaijan is growing. I would like to see it grow even faster. In any case, the work being carried out in our country, the stability, peace, public and political order, economic development, development of districts – these factors will further strengthen these positive trends.
In connection with the work ongoing in the regions I also want to point to the development of tourism. Modern tourist centers are emerging not only in Baku, but also in the regions. Of course, these facilities will provide new jobs and a new infrastructure in the regions. I am very pleased that work in this direction is being done at a high level and the new tourist facilities established in the regions meet world standards, i.e. they are no inferior to world standards.
Investment. Perhaps this issue is not directly related to the development of the regions. But I also want to note that we are expanding the geography of investment in foreign countries. We started with the region. We invest the most in the economy of the region. After that, we have already started to invest a portion of our funds in European countries. At present, I believe that the Asian continent is a promising region for investment. Our relations with Asian countries are generally very successful and very positive. In general, these relations are based on mutual respect, trust, non-interference in each other's affairs and absence of mutual edification. Therefore, given these strong political relations, we need to further deepen the economic cooperation with Asian countries. First of all, this region is very attractive in terms of investment, and I think that it is very acceptable for us. At the same time, opportunities for the expansion of Asian companies into Azerbaijan are opening up, and I welcome that.
We have established fruitful and businesslike relations with all the countries. All we want is that each country should build its relations with Azerbaijan on an equal footing. We want, require and achieve that. We are establishing equal relations with all countries regardless of their size. There can be no relationships beyond this. We do not and can not have any obligations whatsoever to any country, no-one can teach us. We are honoring the commitments we have assumed in the international organizations we are members of. And the international organizations we are not member of have no right to make any comments about us. Let everyone hear this again – both you and those to whom it applies. So as far as the diversification of our portfolio is concerned, I think that Asian and Latin American directions appear attractive now.
With regard to our future plans, I want to note that the second State Program is coming to a close at the end of this year. I want to say again: I am sure that the program will be successfully completed. But we have to and we do look to the future. I think that it is already necessary to start working on the third State Program. I am confident that the third State Program, a five-year program, will be adopted in 2014. This program will address the issues we have not been able to, i.e. have not had time to resolve. Thus, the successful and sustainable development of our country will be ensured.
Azerbaijan is on the right track, our foreign policy is also very positive. We are a member of the UN Security Council, the top organization in the world, are in 46th place in the world and in first in the CIS in terms of competitiveness. We have significant financial resources. Our foreign exchange reserves amount to 70 per cent of the gross domestic product. This is a very high indicator on a global scale. Poverty has dropped to 6 per cent, unemployment is being eliminated, and we look to the future. The launch into space of Azerbaijan’s first telecommunications satellite a few days ago is a historic event that shows the overall development of Azerbaijan. I am confident that this development will continue to be successful and sustainable. To ensure this development, all the organizations and officials should be aware of their responsibility and work more effectively for the development of the country.