Opening speech by Ilham Aliyev at the 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”

- 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.