Opening and closing speech of President of the Republic of Azerbaijan Heydar Aliyev at the meeting with foreign entrepreneurs - May 14, 2002

Ladies and gentlemen!

Distinguished businesspeople!

I cordially welcome you and wish you successes. Our meeting today meeting is one of the significant measures of the Azerbaijani government in relation with the development of our economy. Azerbaijan pursues the course of establishing a democratic, legal and secular statehood since its independence and has achieved remarkable successes for the last 10 years.

Azerbaijan pursues the road of the market economy. Various measures have been implemented for the transition to the market economy in Azerbaijan since 1995-1996. Now we can confidently state that Azerbaijan has completed this transition, although the transition period is still accompanied with some problems. There are a lot to do in various spheres. But we are confident that the Azerbaijani economy is being established and developed on the market economy. We have realized a lot of measures to attain it. Privatization of the state property, conduction of economic and land reforms, as well as many others have already ensured the dominance of the private sector in the Azerbaijani economy. Since 1994-1995, our state has carried out a consistent policy and concrete measures on the involvement of foreign investments to develop the market economy in Azerbaijan.

The necessity of involvement of foreign investments in Azerbaijan is already known to our public. There is no need to explain it. We had the task to conduct privatization and develop private sector for developing the market economy. In order to secure and speed up this process, it was necessary to draw to Azerbaijan foreign investment, modern technology, contemporary management system, and know-how of the advanced countries.

We have been dealing with them over the past years. Now we can note with a sense of pleasure that the Azerbaijani economy is progressing year by year. There has emerged the private sector and the class of entrepreneurs. Huge foreign investment is made in Azerbaijan. Simultaneously, companies and people from abroad come here for business. As a result, the economy of Azerbaijan is growing year by year.

It means that businessmen, private companies and foreign investors are the leading forces of the market economy. Appreciating the work done in this sector, we believe that there are still untapped possibilities. The acquired experience should be used more efficiently. We consider the work done so far the first stage of the process of transition to the market economy in Azerbaijan. Based on this, we want to move forward more rapidly. That`s why we have created all conditions necessary for the development of the private sector and attraction of foreign investment. First of all, the domestic socio-political stability in Azerbaijan is the basis of our achievements in all the spheres, including economy.

Necessary laws were adopted, rules defined, decrees issued for the development of the private sector. They all have done their job. We should move forward more rapidly, as I have noted. We consider the business of the already established entrepreneurship in Azerbaijan very important; we assist them and will further do. In addition, we have taken necessary measures for the foreign companies operating in Azerbaijan to run their business on a high level and will further do. For this purpose, we always keep in touch with the representatives of the private sector. We keep contact with different firms operating in Azerbaijan, displays interest in their business and try to assist them.

As you are aware, we had a meeting with the representatives of the local entrepreneurs on April 25 and discussed the challenges facing us. I decided to meet today with the representatives of the foreign companies and joint ventures operating in Azerbaijan. That`s why I have invited you. I am very pleased that my invitation was accepted by the foreign companies and people running business in Azerbaijan and today we have come to meet you.

The purpose of the both meetings on April 25 today is to contribute to the development of business. In other words, they are aimed at obtaining information and proposals on additional measures necessary for the development of business and adoption of appropriate decisions by the government, as well as for finding out obstacles, which prevent the development of business and conduction of relevant actions for their elimination. Some of them are known to us. We know what other measures we ought to carry out for the further development of business in Azerbaijan. But there are also things we don’t know. We want to learn them from you.

We are aware of some of the obstacles which prevent the development of private sector and business and conduction of necessary measures. However, there are what we are not aware of as well. We want to learn them directly from you. That`s why our meeting today is quite informal. Like the meeting of April 25, this meeting is aimed at establishing close relations between the President of Azerbaijan and businessmen. This relation ensures only the development of business, attraction of more foreign investment and development of the economy in Azerbaijan. Therefore, I would like every participant to feel free at this meeting. We have to be honest with each other; there is no need for formality. My purpose is to extract information from you and eliminate each factor and common problems that hinder your businesses.

We have had a lot of ideas since the meeting of April 25. They aim at creating more favorable conditions for the private sector. I suppose that new information we shall receive at this meeting, your thoughts and suggestions will be quite useful for us to have a detailed picture and carry out necessary actions.

You are citizens of foreign countries. Azerbaijan has a young market economy and lacks sufficient experience. We started to establish the market economy with the alteration of the form of ownership, existing in socialism. It has been a difficult process. The most difficult factor was the lack of experience. Every year has enriched our experience and expanded our knowledge in this field. Yet we could not import all experience of the economically advanced countries to Azerbaijan.

You, the foreign citizens have gained business experience in your own countries. Therefore, your activities here are of great importance for the development of business and economy of Azerbaijan. Your experience and practical activity have benefitted Azerbaijan. But what should we do from now on? What are our challenges and obstacles? We want to learn information about them from you.

I ask those, who wish to speak to feel free and openly express their thoughts. You can criticize us as we need to be criticized. The importance of this meeting would be lost if all the participating businessmen appreciate us. In other words, problems and obstacles should be revealed and criticized. Thus, we divide our meeting into a few phases as we did on April 25. In the first phase, information will be provided following my speech. Later we shall ask all press representatives to have a rest, while we shall hold discussions here without the presence of media and officials. Afterwards, we shall hold our last session. I shall ask the press to attend the last session.

Only a few government officials are present here today. The others have not been invited. We want to give more floor and freedom to foreign companies and we should take advantage of it.

This meeting is also attended by the ambassadors of some foreign countries. I know that they want the businessmen  from their countries to run successful businesses in Azerbaijan. We want the same. We hold regular meetings with the ambassadors and use the information they provide. I think their participation at the meeting today very important.

Closing remarks

May 15, 2002

Ladies and gentlemen!

I thank you for your participation at the meeting, for your ideas, proposals, criticism. I would like to note that the meeting of April 25 and today are very important for solving the problems of the Azerbaijani economy and securing its development. You can be sure that all your suggestions, critical remarks, facts, as well as all your proposals submitted in written form will be analyzed carefully and exploited within our future measures planned for the development of business and economy in Azerbaijan.

The ideas voiced here concern different spheres of business. I don`t want to speak about them. We are having an open conversation with you in a closed meeting and will make use of its results. Summing up this meeting, I would like to note that despite all the flaws and defects, the Azerbaijani economy has been rapidly growing over the past years. Economic, political and legal reforms have successfully been carried out in Azerbaijan. We have done a lot of work and now observe their outcomes.

The consistent development of our economy over the past years is the result of the implementation of the necessary measures aimed at the transition to the market economy in Azerbaijan.

We had a socialistic economy when we gained our independence in the early 1990s. Despite hard circumstances, we could retain our independence, stopped the destructive processes in the Azerbaijani economy and started to develop the economy gradually. We even declared back then that attraction of foreign investment, exploitation of the experience of economically developed countries, liberalization of trade are among the main conditions for the development of the Azerbaijani economy.

We followed this way. As you know, implementation of the new oil strategy in Azerbaijan has been playing a crucial role in the development of the domestic economy since 1994. We believed in this and cherished great expectations in future when signing the Contract of the Century in 1994. We have gone through a difficult and challenging period given the hard and difficult conditions of the signature of the contract and the various obstacles for its realization in Azerbaijan. However, we have passed this period and its positive results are obvious. Major projects have been and are implemented in our oil sector. Twenty one contracts have been signed on oil shares. Many of them already yield their results.

Four hundred foreign companies are reported to participate in the implementation of oil contracts. It is an apparent evidence of attraction of foreign investment and companies not only to the oil sector, but to all the supporting areas as well.

The Baku-Tbilisi-Ceyhan main export oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline have already become a reality. Mr. Woodward said that the construction of the Baku-Tbilisi-Ceyhan pipeline would be launched by the end of this year. The construction of the Baku-Tbilisi-Erzurum gas pipeline will start next year. Besides them, we have other large projects. Simultaneously, we have always worked to attract foreign investment to our non-oil sector, encourage foreign companies to run businesses in Azerbajian separately and together with the Azerbaijani firms, and develop all sectors of our economy.

There are a lot of efforts and achievements. We have not managed to achieve most of what we desire though. Our way bears many difficulties both for us and for foreign investors, businessmen and companies. Thus, we are preparing an action plan in accordance with the results of the April 25 meeting and this meeting. Drafts of many decrees are being elaborated. A meeting with the government officials will also be held.

I hope that it will be possible to take necessary measures to eliminate many of the shortcomings.

The problems and difficulties impeding foreign businesses in Azerbaijan as you noted here are divided into many groups. Some of them are connected with the improvement of the Azerbaijani legislation.

Nevertheless, listening to you today and making some analyzes, I reckon that we have adopted many laws. Sometimes a law is interfering with a part of another law. Or one law repeats the other one. Perhaps it is difficult to enforce them due to their number. However, it doesn`t mean that laws should not be adopted from now on. Laws, especially necessary ones, will be adopted. I assure you that the contents of all laws will aim at the development of private sector and business in Azerbaijan and attraction of foreign investments to Azerbaijan. Thus, I can conclude from our meeting that the improvement of legislation is one of the main issues we are facing.

Everyone here has spoken of taxes. No one is satisfied with them. Every businessman wish there would be little or no taxes at all. A businessman must run business and gain profit. Yet the state must also exist. Taxes must be collected. But it seems that after today`s meeting we should think of and take necessary measures on taxes.

Many obstacles hindering businessmen were mentioned here. You mentioned both the Ministry of Taxes and its agencies and the Customs Office and its agencies. Perhaps you have spoken of them little or nothing. We are aware of the facts of intervention in the private sector, the inspection of foreign companies by our agencies and interrupting businesses. Abuses of the law enforcement officers hamper not only businessmen, but also the development of business in many areas.

A lot was said about licenses. We think of this issue. The thoughts voiced in both meetings require the entire licensing system be radically improved. There are many licenses issued by many bodies. Some here stated that licenses cannot be obtained without bribes in many cases. Thus, it must be stopped. I repeat that the licensing system should be entirely improved.

Different thoughts on bribery and corruption were also expressed here. In general, we are informed that they exist in business, economy and other spheres of life. We combat them and will further do. I think that anti-bribery combat should hold a special place in the measures we are going to implement as a result of our two meetings.

Many other problems were also touched upon. They all will be considered. The foreign companies have been related mainly to trade, services, catering and transport since the emergence of the private sector in Azerbaijan, if we put the oil sector aside. Foreign companies were either involved in or interested in these areas during the early years. They have done a lot separately or together with local firms. It produces results now. Our economic reforms and privatization program on the one hand and operation of foreign companies in the areas of trade, services, catering in Azerbaijan on the other hand have bettered the levels of those areas. Now the trade is almost entirely owned by the private sector in Azerbaijan. It is very pleasant that the private sector has developed trade well. Trade networks, shops and entities emerge in our country. Diverse goods are imported from many countries of the world. The market in Azerbaijan is absolutely packed and there is no problem about it.

You may have not mentioned that every businessman importing goods from abroad and running trade here faces great difficulties. Yet we are informed of it. But look, both our and foreign businessmen are so firm to operate in Azerbaijan that they have developed trade in our country even through bureaucratic obstacles and bribery. This is, in my opinion, one of our biggest achievements.

Business is developing also in the construction industry. Large-scale construction works are under way. In general, the construction works are rapidly developing in all the regions of our country, which means erection of private apartments. Private houses are built by people in different regions. I can claim that private houses are being built in accordance with modern requirements in rural areas. Now a lot of modern buildings and houses are constructed in Baku. This is a positive trend we support. I think that our businessmen will be more successful in this sphere.

Foreign and local companies have been operating effectively in other fields of services as well. Today we attended the exhibition. The products displayed at the exhibition are mainly produced by those companies. However, the Azerbaijani businesspeople are not at the level they used to be at 6-7 years ago. Working with overseas companies and using foreign experience, they can already operate at a modern level. Thus, local business has expanded. Perhaps this is the reason of the decrease of the number of foreign companies in the fields of construction, trade and catering. It is a natural process as the local entrepreneurship has developed.

We want to develop local business and entrepreneurship in Azerbaijan through the foreign investment and companies. When talking about the non-oil sector and its development by attracting foreign and local investment, we imply, first of all, production industry. We have to admit that the production is very low beyond the oil sector in Azerbaijan. Foreign companies have made small investment in, showed less activity and interest in this field. In addition, our local businessmen are engaged mostly in trade, construction, catering, service, and other spheres. The establishment of industrial enterprises, the development of the local industry, and the creating of new jobs are among our main tasks in our market economy and private sector. I would like the foreign companies interested in Azerbaijan to get involved in non-oil sector. Azerbaijan offers a lot of opportunities in this regard. As already mentioned here, many industrial enterprises will be privatized. A lot of machinery plants and capable industrial enterprises for processing of metallurgical, chemical and agricultural products can be established in Azerbaijan. I want more foreign companies and investment to show interest and be involved in this field.

Agriculture is fully privatized in Azerbaijan. It produces better results. Agricultural production increases year by year. Azerbaijan can provide itself with most of food. As you know, the market contains too much food produced in Azerbaijan. However, the processing of those products is still weak. I would like foreign investors to be involved also in this sector.

Flaws in our communication sector were also mentioned here. I completely agree with these criticisms. The job being done in other sectors is somehow at a proper level. But we have not, unfortunately, done any adequate job in the communication sector yet. I think that we should seriously deal with it in the nearest future.

In our next meeting we shall talk more about the responsibilities of the Azerbaijani authorities regarding the results of these meetings. But I want to assure you that I absolutely agree with your criticism. The majority of your proposals is important and will be considered. Better conditions will be created for the local entrepreneurship and business, in general, in Azerbaijan after these meetings.

Transition to the market economy is a hard and challanging process. We all have to understand its challanges as participants of this process.

Naturally, we want to develop all the spheres in Azerbaijan up to the standards of the advanced countries by establishing a democratic, legal, secular statehood. Believe me, we want it. We are moving towards this goal. All our activities are aimed at this goal. But both you and other businessmen from foreign countries should know that this is a difficult process.

This process is under way in all the ex-USSR countries. But the progress is slow. I do not want to exaggerate the achievements of Azerbaijan. However, according to the researches of the International Monetary Fund and the World Bank, the indicators of Azerbaijan in many spheres are superior to the indicators of other countries of the Commonwealth of Independent States. But they do not satisfy either us or you. We do and will try to speed up the progress in Azerbaijan in order to attain the level of the developed countries. But we should understand that it is impossible to do all the work within a short time. We need time, will and faith for it. Time does not depend on us, but will and faith do. Everyone should know that the Azerbaijani government owns this will and faith.

We do all our work with this will and faith. Sometimes our country is compared to the developed nations. Those nations also have so much corruption. First of all, I would like to say that no one knows how much corruption there is elsewhere. Corruption has two faces: visible and unvisible. There is no unit to measure the corruption. Naturally, the economically and democratically advanced countries have less corruption. I cannot say there is no corruption. However, the countries in transition suffer from corruption. Corruption cannot be denied but it should be fought. We combat corruption in Azerbaijan and will further do. No one should doubt it. Most of our economic reforms, if we can implement them effectively, can prevent corruption. Other methods will also be used. Everyone should be aware of it.

I think that the businessmen operating in Azerbaijan should promote achievements of Azerbaijan in their countries. Please, let us know our faults. But tell them here, not in your countries. Instead of it promote our achievements abroad. We don’t want the foreign businessmen working in Azerbaijan to reveal the flaws of our business conditions in their respective countries. We want you to attract investors to Azerbaijan instead. In our turn, we strive to liquidate all the drawbacks by our actions. We have to overcome these shortcomings together with you. These problems would not have existed, had you or the foreign businesses not operated in Azerbaijan. These problems are the result of our overall business. Thus, we ought to solve them together.

We need some time and to increase our efforts in order to solve the problems. For instance, you witness our activities in the oil sector. There are no major problems. I have not felt or witnessed corruption in that sector. There are less and almost no negative cases there. I express it in the example of the foreign oil companies or the cooperation with foreign companies involved in the implementation of the contracts. They are large, established corporations. They have brought their experience to Azerbaijan. We can see a positive picture in this field.

However, the other spheres have a different picture. In most cases, they differ due to their negative traits. They are our problems. We must and shall be able to solve them. We want every country with which we cooperate be accurately and objectively informed on the business environment and socio-political situation of Azerbaijan. Unfortunately, small facts are turned into general perceptions. We don’t need them. These two meetings have let me personally know a lot of things. Therefore, I am very pleased with these meetings.

We have to eliminate the existing shortcomings. We must make the business environment healthier and ensure transparency in Azerbaijan. We must remove all bureaucratic obstacles and together combat corruption strictly.

Of course, we have to do it as a government. Every organization and company cooperating with us should help us and combat together with us. Some struggles may take long time. Some people have gotten used to some negative behavior. Many of them cannot work the other way. Thus, we have still a lot to do to change this psychology of people. I believe that we are able to carry out this activity; we actually do and will keep doing.

As President of Azerbaijan, I see the development of business, as well as of foreign business in our country as one of the crucial factors for developing the Azerbaijani economy.

Business is now a leading force of economy. Therefore, I have always paid attention to this field; I do and will do it in future. Every businessman, foreign and Azerbaijani, should keep in mind that I, as President of Azerbaijan, am a patron of his or her business in Azerbaijan. Every businessman running legal business can always enjoy my protection and care. I consider the improvement of working conditions for every businessman one of my main duties.

You can be sure that my policy and practical work will continue. I foresee the future of Azerbaijan in development of democracy and market economy. We shall continue and speed up the activities we carry out in this direction.

I thank you all for this meeting once more. I wish you good luck.

Thank you.

“Azerbaycan”, May 15, 2002