On June 30, the Ministry of Economy held a briefing on the new challenges for the Azerbaijani economy, new support mechanisms for entrepreneurship and the presentation of the Electronic Credit Platform, which was created for entrepreneurs to apply for this support online.
At a briefing held with the participation of media representatives, the Minister of Economy Mikail Jabbarov spoke about stagnation in the global energy and stock markets, the impact of restrictions and new challenges caused by the coronavirus pandemic on the national economy. It was noted that as a result of the negative consequences of the pandemic and the instability of oil prices, economic activity in the country has declined, the economic balance was affected, and the restrictions introduced led to disruptions in the production-processing-consumption chain. However, despite the stagnation in the economy, there is no such situation that could lead to a decline in the national economy. The main reason for this is the consistent reforms carried out in the country in recent years, measures aimed at improving the business environment and making the economy more transparent. At the initiative and direction of President Ilham Aliyev, the government is trying to minimize damage to the national economy.
It was noted that programs covering a broad package of support for the economy provide immediate financial support, soften the regulatory framework for business activity in the medium term and increase the attractiveness of the business and investment climate. The Minister of Economy mentioned that financial support has already been provided to more than 129,000 entrepreneurs, and these programs cover more than 310,000 citizens, including hired employees. Most active taxpayers received support from the state, and more than 155 million manat has been transferred to the bank accounts of entrepreneurs so far.
Speaking about the package of tax incentives for business, the Minister of Economy said that the total financial value of the adopted package of taxes and social benefits is 130 million manat. The benefits cover micro, small and medium-sized businesses affected by the pandemic, and some of the changes cover every taxpayer as a whole. This package of benefits helps to reduce the tax and social burden of entrepreneurs in the medium term, allows them to restore their income and develop their businesses, and also creates the ground for the expansion of the private sector as a whole.
Mikayil Jabbarov noted that in order to increase the access of business entities to financial resources, to strengthen state support for areas affected by the pandemic, business financing tools have been expanded. Thus, the implementation of a program of support for a state credit guarantee in the amount of 1 billion manat for the existing loan portfolio of business entities, the issuance of a 60-percent state guarantee for new loans in the amount of 500 million manat, and the implementation of two important new programs on interest subsidies is being launched.
The new mechanisms also allow the simplification of business loans process and administrative procedures. The Entrepreneurship Development Fund of the Ministry of Economy acts as an intermediary for state credit guarantees. An Electronic Credit Platform (www.e-edf.gov.az) was created in order to facilitate entrepreneurs obtaining state loan guarantees. Thus, an entrepreneur wishing to get a business loan can submit an online application through this platform.
It was highlighted that the application of state support mechanism through the electronic platform with the participation of authorized credit organizations was implemented in Azerbaijan for the first time among the countries of the CIS. The Electronic Credit Platform allows entrepreneurs to obtain loans in a healthy competitive environment in a transparent, flexible and free from official interference way. At the same time, the loan application system is based on a digital solution that can be tracked by the entrepreneur. The e-credit platform has already been made available to entrepreneurs.
Touching upon medium-term development trends, Jabbarov stressed the importance of finding new ways to maintain economic growth in the face of global risks, noting that the formation of a diversified non-oil sector and export-oriented model of economic growth will be the main strategic line for long-term development. New approaches will be applied to the development of the non-oil sector and the completion of the domestic production chain, which does not depend on external factors.
Emphasizing the importance of attracting foreign direct investment in the non-oil sector, especially in the processing industry, to restore the pace of economic development, Jabbarov said that special attention will be paid to the development of industrial zones and agricultural parks. It was noted that, currently the possibility of implemention of new 150-200 million dollar worth projects in industrial zones is currently being considered. Negotiations on the projects are close to completion, and a number of projects may be launched in the Sumgayit Chemical-Industrial Park this year.
The Minister also stressed the importance of implementing a new investment and privatization strategy, increasing the efficiency of state-owned enterprises, and attracting the private sector to inefficient areas. At the same time, business support tools will expand, the quality and efficiency of economic management will increase.
Many multinational companies are now diversifying their operations and moving their businesses from a single location to diverse countries. This is a good opportunity for countries like Azerbaijan, and our country intends to take advantage of these opportunities. Considering the existing political, economic and macroeconomic stability, developed transport corridors, Azerbaijan looks like an attractive place for these businesses, and despite the competition in the region, our country will do its best to attract such investments.
The Minister noted that projects aimed at the fuller realization of the transit potential of our country will be implemented, and for this purpose, investments in the expansion of infrastructure will be increased.
At the same time, the interest of foreign investment funds in Azerbaijan is being observed. Negotiations on establishing funds operating in this direction at the expense of foreign capital sources are underway.
New economic conditions underline the importance of a number of areas of activity. This is, in particular, the development of digitalization, the innovation ecosystem. Noting that Azerbaijan accepts the challenges of the 4th industrial revolution, Mikail Jabbarov emphasized that the country has great potential to become a digital center of the region by means of technological breakthroughs and innovative solutions and expressed its intention to create a regional center in this field and achieve the development of a digital economy.
As for the current situation, both society and entrepreneurs must adapt to the new requirements.
It is unknown when the pandemic will end, so entrepreneurs must learn to work under new conditions, sanitary-quarantine and social-behavioral rules. The sooner businesses and service providers get used to the new rules, the better it will affect their businesses. We must not forget that we all live in the same country, and our behavior, especially the observance of rules by entrepreneurs, affects the economic activity of the country. With joint efforts, the businesses will gradually recover from economic losses.
Mikayil Jabbarov mentioned that the strategic line to reduce the "shadow economy" will be continued, and stressed the positive results of incentive tools implemented in this area so far. He noted that as a result of reforms aimed at concluding labor contracts, more than 210,000 new labor contracts have been signed in the last 18 months, which is an important step in the direction of the legalization of jobs. The online platform which is being used to refund part of the VAT on goods purchased from retail and service enterprises made the economic turnover more transparent and ensured public control over this process. It was noted that these types of promotional online platforms will be used more widely in the future.
At the end, the presentation on the Electronic Credit Platform was demonstrated during the event. Samir Humbatov, Acting Chairman of the Board of the Entrepreneurship Development Fund, provided information on the online application platform, loan application rules, loan terms and other issues, and commented on the terms of the two loan programs.
The questions of media representatives were answered at the event.