Closing speech by Ilham Aliyev at the conference on outcomes of the first year of implementation of the “State Program on socio-economic development of districts of the Republic of Azerbaijan in 2014-2018”

- Appropriate instructions have been issued in connection with the work due to be done this year. The State Investment Program has been adopted. This is a fairly large program. I am confident that the program will be implemented and 2015 will also remain in the history of Azerbaijan as a successful year. In order to carry out all our plans, there must be a stable macroeconomic environment in the country. A lot of work has been done in this direction. The macroeconomic situation has been in the focus for many years. Our performance is also very positive. Last year inflation was only 1.4 per cent, the economy grew by about 3 per cent and our non-oil sector by 7 per cent.

As I have already mentioned, the rate of the manat is stable. The drop of the oil price in the world has not affected the rate of the manat. In fact, the manat is growing even stronger. I think that we need to consider this issue, because when we conducted the monetary reform, the manat was equal to the dollar. Then, as the manat strengthened, it was equal to $1.3. The manat was somewhat attached to the euro. One manat – one euro. Today one manat is more valuable and more expensive than one euro. Of course, this is a positive factor to address social issues. However, we need to approach all issues comprehensively. For the economy and for our export potential this is not a very positive phenomenon. Therefore, I believe that further appreciation of the manat compared to the euro is not a positive fact. I believe that macroeconomic stability will be provided if one manat remains at the level of one euro. At the same time, it will only have a positive impact on people's daily lives. There should be no problem for our exports either, as now the economy of Azerbaijan should develop as export-oriented economy. I will explain my thoughts on this subject in greater detail later. So development and promotion of exports are the matters on the agenda. The rate of the manat plays a very important role. Therefore, I believe that relevant structures, the government and the central bank should pay attention to these issues to prevent excessive appreciation of the manat.

Our financial resources are sufficiently large. Our foreign debt accounts for only 8 percent of the gross domestic product. This is one of the best indicators in the world. We are probably among top 10 countries in the world for this indicator. We have done all the work at the expense of internal resources. This figure clearly demonstrates that. We decided not to borrow no matter how necessary it may have been. We could have done it. Currently, the credit rating, the macroeconomic situation and the exchange resources of Azerbaijan create a positive picture. We can get any amount on foreign markets – 10billion, 20 billion, 30 billion – but we don’t do this, because, as I mentioned, we have a responsible approach to this issue. Foreign debt should always be at a low level. In fact, we can repay the debt in one day because our foreign debt accounts for only 10 per cent of foreign currency reserves. Therefore, foreign debt is at a low level. This is a positive fact and should remain as such. This year our budget provides funds for the repayment of foreign debt.

At the same time, it should be noted that the drop in oil prices inevitably affects our revenues. We will not be able to increase our foreign exchange reserves as we did in previous years. This is a reality and should be known to everyone. In this case, of course, we should not allow waste. While in previous years we sometimes included projects that were not such a big priority in the investment program, those days are over. The investment program must include only priority issues. At the same time, we should exercise rigorous control. Both government agencies and state-owned companies should not allow unnecessary expenditure. Waste should not be allowed in general – in life, in politics, in economic issues, especially in the current environment. All oil-rich countries possessing great potential are cutting their budgets significantly. They are reducing costs. And this is natural. Everyone should live by the means. The same applies to governments and states. So I repeat that our regulatory authorities should exercise control over that. Waste should not be allowed on the ground. All funds should be used with great effectiveness, so that our macroeconomic situation remains at a high level.

At the same time, all priority projects will be implemented, including infrastructure and social projects. This year we envisage construction and renovation of schools. In recent years, the construction of health facilities, sports centers, in particular kindergartens, has become widespread in Azerbaijan. This process must be continued. As a result of the elimination of unemployment, both parents are now provided with work. Under such circumstances, there is a great need for increasing the number of kindergartens. So you can see how these issues are related to each other. Economic development, job creation and elimination of unemployment require this issue to be resolved. At the same time, economic development and positive demographics require the focus on job creation always to be at a high level. For Azerbaijan it is an ongoing process. We have a positive demographics situation, the population is growing – it is approaching 10 million. Therefore, we have to create tens of thousands of jobs every year to keep unemployment at a low level.

The implementation of infrastructure projects will be continued. Particularly important is the repair of power lines, as we have already created new capacities. Funds have also been allocated for transmission lines. All lines should be reconstructed and repaired. Projects of drinking water and sanitation, as already noted here, are being implemented by "Azersu" and the "Land reclamation and water management" joint stock companies, as well as the Ministry of Ecology and Natural Resources. So this work is being done by three structures. Modular treatment plants are being built in the villages along rivers. Funds have been allocated from the Contingency Fund of the President for this. This year we will continue the drilling of artesian wells. We have also allocated funds from the Contingency Fund of the President for this purpose. This year 300 artesian wells will be drilled. This area is constantly in the spotlight.

In all cities we are creating public spaces, parks, alleys and promenades. I welcome this. In fact, I myself was the initiator of all this. Baku and all our districts are getting prettier. At the same time, wonderful opportunities are being created for people to rationally spend their leisure. This area should also be in the spotlight.

The development of the non-oil sector has always been a priority for us. Thanks to that the country's economy today is recognized as a diversified economy worldwide. Last year our non-oil sector grew by 7 and in 2013 by 9 percent. The non-oil sector dominates our gross domestic product. This figure will and should gradually increase. Of course, we are taking the necessary steps to achieve these goals. A positive role in this, of course, is played by the development of entrepreneurship, because it is thanks to the development of entrepreneurship that our non-oil sector has made considerable progress.

Over the past 11 years, preferential loans amounting to $2 billion have been provided through the National Fund on Entrepreneurship Support. These loans were allocated for the real sector of the economy. The vast majority of the loans are aimed at agricultural issues, while the rest is intended for the creation of industrial enterprises. Funds are also envisaged this year and, as we have seen, these loans are giving excellent results. On the one hand, the confidence of entrepreneurs is growing, because the state of Azerbaijan acts as a party to in these projects, so to speak, provides its share on concessional terms and allocates funds. On the other hand, to facilitate the successful activity of entrepreneurs, the Ministry of Economy and Industry has prepared a variety of guidelines, so those interested in starting a business of their own can take advantage of excellent visual aids.

The banking sector has been rapidly growing in recent years. Currently the banking sector of Azerbaijan is undergoing consolidation. The tightened requirements regarding registered capital have had a positive impact on the banking system as a whole, protecting the country and the population from surprises, because our banks already have large fairly large registered capitals. Some of our banks have access to foreign markets and are investing abroad. I do not mind that in principle. At the same time, I believe that banks possessing large resources should first of all invest in the country's economy. I have already talked about that, but I want to reiterate that preference should be given not to consumer loans, but to the real sector. The activities of the banking sector should focus on the creation of new businesses and jobs because the Azerbaijani state has played a huge role in the formation of the banking sector. The Azerbaijani state and government have always supported the banking sector by providing them with financial resources and creating a source of income for them. So the banking sector should properly evaluate that and be grateful for such state care. The state, in turn, expects it more active work from banks today. I believe that information about that should be provided at least twice a year.

There should be information about how much money Azerbaijani banks have allocated, the nature of projects, their location in the districts or the city of Baku. This is what information should be like, so that both myself and the public could see that the banking sector cares not only about its own pocket, but is also working hard to develop the country. I have already talked about that, but I want to reiterate that we expect social responsibility from banks. At the same time, there is such a favorable business environment in Azerbaijan today that investing in our country is and will be justified.

Last year was declared "the Year of Industry" in Azerbaijan. This is evidence of our policy because a policy of industrialization is well under way in Azerbaijan. If industrialization were not carried out, we would forever remain in the dependence on the oil factor. Numerous industries have been created. On my instructions each district should establish an industrial estate. This process will start in the near future. In this we need great support from local executive bodies. They should organize this work on the ground in order to determine such places. Infrastructure projects must be implemented and communications laid there. Of course, the state has assumed that, but local executive authorities should take an active part in dealing with organizational matters.

Technology parks are being created in Azerbaijan, and this process is powering ahead. Industrial clusters are and will be created. Large and giant industrial facilities will be built. In particular, I want to mention the construction of a metallurgical complex, as it will be a new industry for us. The resource base is already available and there are fairly extensive export opportunities. Therefore, this industry is receiving public investment. The state invests and should invest in sectors that are of strategic importance to our country, which, in turn, will enhance our export potential and give an impetus to private sector development. The commissioning of the large metallurgical complex will give rise to thousands of private companies which will manufacture end products here in Azerbaijan. Thus we will reduce our dependence on imports.

Baku, Sumgayit and Ganja are our major industrial cities. At the same time, Mingachevir should also become a major industrial city. Sumgayit is the second largest industrial city not only in Azerbaijan but also in the South Caucasus. Ganja, I am sure, will become the third largest industrial city in the South Caucasus. Necessary measures are taken to this end.

Our rapidly developing industrial sector has also allowed us the opportunity to provide ourselves with building materials in recent years. With regard to construction materials, there is a favorable picture in this area. I will cite a few figures in order for the public and business circles to know which areas to invest more in.

The Azerbaijani market is growing. Azerbaijan can’t be considered a small country now. Our population is approaching 10 million people. In terms of the population, we are a medium-sized country. However, in a country with such a dynamic development, of course, the domestic market is either filled with local produce or it happens in a few years. Therefore, our export potential will be the driving force of the Azerbaijani economy in the future. Export potential can be created, and we are creating it. This is evidenced by the figures I am about to cite. However, we must also obtain access to foreign markets.

Currently, there is a struggle for markets. Large states and countries with major industrial capacities, connections and influence have seized all available markets. Quite often, taking advantage of their political clout, they take their products to the markets of other countries and are quite right to do so. We also do and should do that. Political power should support business. So does the Azerbaijani state, we also support business. When manufacturing industrial products, business people should first enter new markets. I have repeatedly talked about this in meetings with ambassadors working abroad. I told them: you need to create conditions for Azerbaijani businesses in the countries where you work, so that we could enter these markets with our exports.

The oil factor no longer dominates our gross domestic product, but natural resources still account for the bigger part of our exports. We need to access foreign markets with finished products. We are doing that now and we will continue to do so. Therefore, the figures I am about to cite should become a reference for business people because these are the areas in which we have already supplied ourselves. If you want to invest in these areas, you should create an industrially competitive business in order to win the competition with existing companies. If we provide ourselves with a certain product by more than 100 per cent, why establish a similar industrial enterprise? Therefore, the Ministry of Economy and Industry which governs this work should do even more to ensure that we access foreign markets.

Thus, here is the latest information on the production of basic building materials. Cement: consumption in Azerbaijan is 4.4 million tons. Domestic production is currently 3 million tons. At the same time, production capacity in the country is 5.2 million tons. Therefore, next year and perhaps even this year we will fully provide ourselves with cement and will export the products of cement plants. Therefore, at present there is no need for building a new cement plant.

Bentonite: consumption is at 8,000 tons and production is 85,000 tons. We have exported 72,000 tons and production capacity is 250,000 tons, or more than 100 per cent. Gypsum - our consumption is at 58,000 tons, domestic production is 193,000 tons and the capacity is 300,000 tons, or three times more.

Concrete slabs and pipes: consumption is at 100,000 tons. Production is also 100,000 tons. The capacity is 300,000 tons, or more than 100 per cent. Gypsum cardboard – consumption is at 12 million cubic meters. Domestic production is 11 million and production capacity is 16 million, or more than 100 per cent.

Polyethylene pipes: domestic consumption is 22,000 tons. We produce 18,000 tons. Production capacity is more than 300,000 tons. We are already exporting the pipes.

Marble and granite: consumption in Azerbaijan is 83,000 tons. We export 30 tons. We produce 62,000 tons and the potential exceeds 100,000 tons.

Lime: consumption is 20,000 tons. Domestic production is 14,000 tons and production capacity is more than 40,000 tons. It also exceeds 100 per cent.

Electric cables: consumption is 10,000 tons. We produce 5,000 tons and the capacity exceeds 40,000 tons.

Production of long steel products: consumption is 335,000 tons. Domestic production is 235,000 tons and the capacity is 500,000 tons. So here we do not provide ourselves.
Metal structures: 114,000 tons is domestic production and production capacity exceeds 200,000 tons, or more than 100 per cent.
Ceramic plates: consumption in Azerbaijan is 8 million cubic meters and our capacity is 4 million cubic meters. These are the main building materials. We can say that we have provided ourselves with main building materials and export them. Future investments in this sector should consider these statistics.

This year has been declared the "Year of Agriculture". It is a priority for us. Further development of agriculture and industry is the main focus of the non-oil sector. Reforms are under way. This has been mentioned here. On the one hand, structural reforms are carried out and, on the other, measures are taken to improve the efficiency of agriculture. Food security is of great importance for any country. In Soviet times we could not provide ourselves with staple foods. Not because we couldn’t but because in those years, in the Soviet period, there was division. Azerbaijan provided oil, heavy industry, petrochemicals, cotton, grapes, etc. But it was impossible to dynamically development animal husbandry at the time. Therefore, we imported the basic foods from Russia and Ukraine. This was the division. Such was the system of the Soviet economy. Therefore, in the early years of independence we were largely dependent on imports. We have taken very serious measures in recent years to change this situation, and we can say today that we have achieved food security. I will provide figures for this sector a little later.

Modern equipment and purebred cattle are being purchased. Benefits are provided to farmers. Farmers, as you know, are exempt from all taxes except for the land tax. We must apply the best practices to the development of agriculture. In the area of grain production we have established large farms and are seeing excellent results of that. These large farms yield twice the average yield – 55 quintals. This year's grain yield is 23 or 24 quintals. So this process will be continued. At the initial stage we covered acreage of 4,800 hectares. As part of the ongoing projects, large farms will operate on 30,000 hectares.

I want to say again that we need to apply the most advanced international experience and modern machinery, and take all measures necessary. Maintenance should be provided at the appropriate level. The issues voiced here must be resolved. Provision of feed is the main issue. We should establish a seed fund. We currently provide ourselves with new machinery. I believe that we will fully resolve this issue in the coming years.

There is also a lot of unused land. Someone once took it over or rented. They have rented the land and left it as it was. This was to suggest that they have land here and there. But if you have land, work on it. I believe that we need to take action in connection with unused land. If someone has rented land and is not using it, it means that such lease agreements should be terminated. Let these agreements be signed with those working on this land. Otherwise, people take land, change its function and then build various facilities on it. This is unacceptable. Representatives of local executive authorities should exercise control over that. If people in their districts are engaged in this, they should take appropriate action.

Central authorities should also make new proposals to get rid of unused land. We don’t have too much land anyway. We can’t afford to keep it without use or use it inefficiently. In fact, I spoke about it last year and I want to repeat that every district should carry out specialization – what should be grown and produced in each district. This is our thought-out work.

Therefore, the development of agriculture is a priority issue. It is a social and economic area, and it supports the development of the non-oil sector. Our advantage lies in the fact that there are big markets around us. We have traditional access to these markets. Azerbaijani products are well-known in these markets, and they expect an increase. Therefore, we need to work in the traditional markets and have a more active and broader coverage. We need to expand into new markets, both regional and international. We have to access European markets. Today, our processing plants meet world standards. These are remarkable businesses. I personally attended the opening of key processing enterprises, so I know them. The products they manufacture are of high quality. Why do we need to access European markets?! One day we will join the World Trade Organization – of course, when we are ready for that. And in order to be ready, we need to diversify our export potential.

Therefore, agricultural production, domestic demand and exports should form a single system. Agriculture must develop by intensive methods. At the same time, as a result of the construction of the Takhtakorpu and Shamkirchay water reservoirs, tens of thousands of hectares of land will be included in the circulation. This year work has already begun. Places resembling a desert will turn into flower beds, gardens and orchards. This is our job.

Such places have already been determined. Agricultural parks are currently under construction in Azerbaijan. On the opening day of the Shamkirchay water reservoir we laid the foundation of an agricultural park. Why? Because the Shamkirchay water reservoir has been built! If the Shamkirchay water reservoir had not been built, no-one would want to build an agricultural park there. What agricultural park can there be if there is no water? So these issues are interrelated. The construction of agricultural parks should become widespread.

We need to provide ourselves with food by 100 per cent and export it. I will cite these figures now. In general, I want to reiterate that the Azerbaijani economy, including the non-oil sector, can’t develop without exports because we are already meeting the domestic demand. I want to say again that exports are possible as a result of a prudent policy.

"Green markets" are being created in Azerbaijan. This will also be a novelty. They are being created in Baku. And in the future they should be established in all our cities.

With regard to the system of electronic registration of lands, I set out my views on the matter last year. This is the key condition for rational use of lands. We need to know where and how much land we have, their quality and fertility. All these issues have long been resolved in developed countries of the world. Today we have this great opportunity. We have our second satellite “Azersky”. The advantage of this satellite is that it observes the Earth with great precision. So the Ministry of Agriculture and the State Committee for Land and Cartography should take advantage of these opportunities. This will be additional support for you. This satellite can observe where lands are located, who they belong to, their size, and what is and what should be grown on them. These recommendations should be given. This is a system of electronic registration. Today we are working spontaneously, using paper and maps. This will not work. It requires a modern approach. Moreover, I want to say again that we are creating all these conditions and allocating funds. I have repeatedly spoken about electronic registration of lands. I am waiting for a result. Therefore, make the right conclusions. At the next meeting I expect to receive a report on the electronic registration of lands.

Overall, the "e-agriculture" project is not being implemented on a proper level. Therefore, you should take serious measures. Heads of executive authorities and your departments on the ground must provide all the information precisely. This analysis should be carried out together. This information must be confirmed by “Azersky” observations. After that, by pressing a button we should be able to know where we have what, what we need to grow and which lands are not used, because I know that there is a lot of unused land. But who can tell me exactly which lands are used and which are not? There must be a control mechanism. It is necessary to send people to these places to make observations, which should then be confirmed by satellite images.

Today, when we have a satellite, it will be difficult to hide something or, on the contrary, increase or inflate figures. An end must be put to that, and this is being done. The decline in the production of certain agricultural products is due not only to drought. Perhaps the minister of agriculture did not want to talk about that. He said it was due to the drought. Not only drought! Earlier the prices were inflated. Why? Because of the subsidies! Aren’t those present here aware of the violations that occurred in the area of subsidies? They are aware, and some have actually been involved in such violations. This must be stopped. The state provides the money to farmers, not to officials. Therefore, the statistics are more realistic now.

So make your own conclusions. I want to repeat that all this work should be transparent. It is necessary to work effectively in all sectors. Only in this way can we achieve successful development of Azerbaijan.

As I said, there should be a system of encouragement. Such a system exists in many countries. Earlier we did not strive for that because we did not have export potential. We only dealt with reducing our dependence on imports. Now we have export potential, so we should have a system of encouragement. I am instructing the Ministry of Economy and Industry to develop such a mechanism. In the near future we will discuss that. This will allow businesses the opportunity to be more interested in exporting their products. So, additional benefits will be introduced.

This note reflects the statistics of the ongoing work related to food security. I will cite some figures now. Beef – self-sufficiency is 87 per cent, lamb – 97 per cent, poultry – 98 per cent, eggs – 100 per cent, milk and dairy products – 76 per cent, grain – 60 per cent, grapes – 98 per cent, potatoes – 90 per cent, melons – 100 per cent, fruits and berries – 120 per cent, vegetables – 103 per cent, salt – 87 per cent, sugar and sugar products – 170 per cent. But it should be borne in mind that 64 per cent of raw sugar in the cost of sugar production is imported, while 36 per cent is formed in Azerbaijan. Vegetable oils and margarine – 77 per cent, butter – 52 per cent and pasta – 58 per cent. This table shows the directions in which we should work even harder in the future. We must reach the level of 100 per cent on all these positions. The most difficult position here, of course, is grain. But I believe that by establishing large farms, we will achieve that.

I believe that as a result of the completion of the third program we should and will see all these figures at more than 100 per cent.

The environmental situation in the regions is generally good. When realizing environmental measures, we pay more attention to Baku, and it is natural. In the regions the situation is good, but it should always be in the spotlight.

Tourism is rapidly developing in Azerbaijan, new hotels and recreation centers of international level are being opened. Our tourism potential develops in the northern, north-western, southern and western regions, and, of course, in the city of Baku. We are restoring older tourist destinations which have become obsolete. For example, Naftalan is now regaining its glory. During Soviet times Naftalan was a center. Now it is an international center. There are three beautiful hotels there. I attended the opening ceremonies of all three of them. New hotels are built as well. So it is a beautiful tourist center. Great work is under way at the hydrotherapy spa center "Galaalti". It will probably be opened this year. The ski resort "Shahdag" in Gusar District is now a tourist center of world level. Tourism opportunities in other regions, for example in the southern and western districts, are also expanding.

Services are provided in the regions. The number of “ASAN xidmət” centers has already reached seven. This year we will open three more. Thus, there will be six centers in the regions and four in Baku. In the future, we will increase their number. Ten buses provide mobile services and all regions are sending very positive feedback on “ASAN xidmət”. “ASAN xidmət” has created a watershed in the fight against corruption and bribery. Therefore, we must apply this system to all spheres.
Great progress has been made in the fight against corruption and bribery. International structures also acknowledge that. The population is highly appreciative. We apply penalties and administrative measures and conduct reforms to eradicate this trouble and disease.

The relationship between citizens and civil servants is essential for a successful development of our country. Azerbaijan should be a model country in this sphere. Officials should not forget that they work for the people and are civil servants. I have repeatedly said that I am the first servant. The President should be the first public servant, because the people believe in us and have entrusted this mission to us. As officials we must live up to this confidence. Officials and representatives of government agencies should stand by the people, live with their concerns, avoid rudeness and arrogance. In some cases there is arrogance. Sometimes officials act very arrogantly. We can’t allow that. There should be a political culture. People must be treated with respect. I can say that in most cases we see a positive picture. But when we are faced with a negative picture, we take measures to punish officials. The officials who don’t justify our confidence will continue to be punished. Every time when appointing heads of executive authorities I tell them to work honestly, stand by the people, not engage in bribery and be loyal to our state and independence. These are my requirements, my key demands. This must be the case everywhere, because I want to say again that the development of Azerbaijan and the development of the public and political situation in a positive direction regardless of the crises occurring worldwide is our greatest asset. The independent Azerbaijan is experiencing a period of unique development. Azerbaijan is undergoing a process of dynamic development, informed and independent policies. These are the main factors underlying our success. Economic and political reforms are carried out, all freedoms are guaranteed, democracy is rapidly developing, and the unity between the people and the government is a major factor in our success.

There is a unique Azerbaijani model of development in the world today. We can already talk about this, because this model should indeed be of interest to any country. There is a political and economic reform, an independent policy, an inter-religious dialogue, national and religious tolerance of high level, social policy and the work that has been done. Our friends seeing this rejoice in our success, while our enemies are upset. We must continue to do everything possible to ensure that our people and our friends are happy, and the evil intentions of the enemy do not come true. I am sure that it will be the case. Azerbaijan will continue to develop successfully. Thank you.