How much do industrial towns help the economy of the Republic of Azerbaijan?

, in recent years, government officials of the Republic of Azerbaijan often talk about the impact of industrial estates on the development of the non-oil sector of this country. In the last seven years, 5.6 billion manats have been invested in this field in Azerbaijan. In exchange for an investment of more than 5 billion manats, a total of 38,600 people will be created jobs. So far, seven industrial towns have been put into operation (in Somqayit, Balakhani, Minghechoir, Qaradagh, Pirollahi, Aghdam and Jibraeil regions).

Private sector contribution In the first half of the year, the industrial areas in the non-oil sector of Azerbaijan were 16.5% and the export of non-oil industrial products was 20.7%. In the 9 months of this year, a total of 2.3 billion manats of products have been produced in industrial enterprises. Only 31% of it was dedicated to exports.

Who are the residents of industrial towns ?

The foundation of Sumqayit Chemical Industrial Park was laid in 2013. Residents have invested 5.4 billion manats in this industrial town so far. In the first 9 months of 2023, products worth 2.1 billion manats were produced in Somqayit Chemical Industrial Park. This industrial town was able to export about 400 million dollars during the year. Now there are more than 6 thousand workers here. Out of 38 registered companies, 23 companies are currently working. “SOCAR Polymer”, “SOCAR Urea Plant”, “Sumgait Technology Park” are the main companies of Sumgait chemical industrial town. It started its activity in 2015. It has only one company. At the opening of this industrial park, it was announced that a large number of economic enterprises will be established in it, but so far no enterprise has started to operate except for a textile factory. Although nearly 94 million dollars were invested in the Mingechoir industrial town, it was able to create jobs for only 750 people. A company has been established, such as Minghechuer Industrial Estate. The only company in this industrial town is Baku Shipbuilding Company. Currently, 490 million dollars have been invested here. Production and repair of ships and equipment with large, medium and heavy tonnage is planned in Qaradagh industrial town. About 2,000 people work in this company.

45 million dollars have been invested in Pirollahi Industrial Town. Now there are only four residents. Companies based in the industrial town are expected to produce syringes, diapers, medicines and various products as well as saffron jam and lemonade. 100 people are working in Pirollahi Industrial Town.

Balakhani Industrial Town, unlike other industrial towns, is under the management of Shahr Pak ASC. This industrial estate is mainly intended for waste recycling companies. Currently, 25 companies have registered in Balakhani Industrial City and about a thousand people are working here. So far, 52 million manats have been invested in Balakhani Industrial Estate by Shahr Pak ASC. 10% of the products produced in Balakhani Industrial Town are exported abroad. One of the main export products is paper.

Industrial towns created in the areas liberated from occupation, including Aghdam and Jibril, are still under construction. So far, about 12 million manats have been invested in Aghdam Industrial Town. This town has 19 native companies and 6 non-native companies. These investors plan to invest more than 176 million manats in the park and create more than 1600 permanent jobs. It is expected that the first company under construction in this town will start working next year. Araz” has been invested with an area of ​​200 hectares. This industrial park has five local companies and one non-local company. These investors want to invest about 33 million manats in the town and create more than 420 permanent jobs. One of the companies named “Azerbaijan Car Leasing” has already started working.

How to develop the industrial towns of Azerbaijan

It is clear from the indicators that only one local company in some towns The industry of Azerbaijan operates. Most of the investments made in these industrial parks are made by state-owned companies. But the main purpose of creating such areas is to develop the private sector and attract foreign capital to this country. It should not be forgotten that special privileges are given to entrepreneurs in industrial towns. Tax and infrastructure concessions have a major place in this field. In addition, the fact that state-owned companies still occupy the main place in Azerbaijan’s industrial estates indicates the existence of problems in this field.

One of the main reasons for the low interest of foreign investors in Azerbaijan is the insufficient level of rule of law in this country. The lack of independence of the judiciary is one of the main factors in reducing the confidence of foreign investors in Azerbaijan. In the “Economic Freedom Index” prepared by the Heritage Foundation, the Republic of Azerbaijan scored the lowest (16 points on a 100-point system) in the judicial system.

The lack of a free and competitive business environment is one of the main reasons for the decrease in the interest of foreign investors in Azerbaijan. The widespread expansion of bureaucratic entrepreneurship in this country creates a conflict of interest in management decisions, because the decision makers are also the owners of large companies and seek their own interests more than the interests of the market. In such an environment, what effective management decisions or competitive companies can we talk about? In this regard, independent experts think that if there is no rule of law in the Republic of Azerbaijan, if a free business environment is not created, industrial estates, like other initiatives, will not contribute to the country’s economic progress.

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