2024-02-12 10:11:03
Currently, in light of the interest in post-conflict reconstruction, the presence of a Free Economic Zone (FEZ) should become an important factor for the expansion of existing government programs that are designed to accelerate economic growth in Azerbaijan.
Doctor of Philosophy in Economics, leading researcher at the Institute of Economics under the Ministry of Science and Education of the Republic of Azerbaijan Emin Mammadzade said this in an interview with Day.Az.
The concept of a special economic zone or free economic zone (SEZ or SEZ) is a limited area in the regions with a special legal status, providing preferential economic conditions for national or foreign entrepreneurs. The main goal of creating such zones is to solve strategic problems of the development of a state or a separate territory, including foreign trade, general economic, social, regional and scientific and technical aspects. Free economic zones are considered as a factor contributing to accelerated economic growth through the activation of international trade turnover, attraction of investments and deepening of economic integration processes. Free economic zones (FEZ) have several advantages for the economy of Azerbaijan. I consider it necessary to list them.
The first is to attract foreign investment. SEZs provide benefits and special conditions for foreign entrepreneurs, which helps attract foreign investment to the country. This may include tax exemptions, simplified registration and licensing procedures, and access to infrastructure and resources.
Changes have been made to the order on the Alyat free economic zone
The second is export promotion. SEZs typically provide opportunities for free trade and simplified export procedures. This allows companies in the SEZ to more easily export their products to international markets, which contributes to the development of the export sector and an increase in export volumes.
Third is infrastructure development. The creation of a SEZ is often accompanied by the development of infrastructure such as roads, ports, airports and communications. This contributes to the development of the region and attracting new investments in infrastructure projects.
Fourth is the creation of new jobs. The development of SEZs helps create new jobs and reduce unemployment. Companies operating in SEZs usually offer jobs with good wages and social benefits, which helps improve the lives of the local population.
Fifth – technological progress. SEZs often stimulate innovation and technological progress. Companies in SEZs can gain access to advanced technologies and knowledge, which contributes to the development of the country’s scientific and technological potential.
If specific tax benefits similar to financial offshores are introduced within the SEZ, this can also contribute to the influx of foreign investment, focused solely on the official registration of a company without the obligation to engage in commercial and production activities. Thus, the SEZ, in addition to its main functions, can become a starting point for the creation of an international and regional financial center in Azerbaijan. At the same time, there are prospects for creating a large industrial center in the region on the basis of the SEZ. Because, following financial flows, both foreign production capital (advanced equipment, machinery and technologies) and cheap labor, which can ensure the production of competitive goods and services for the market of the countries of the region, can flow into the Alyat SEZ. Moreover, this workforce can be attracted, at the request of investors, from countries located outside the region.
Alyat SEZ: the right policy and geography guarantee success – OUR ANALYTICS
Despite this, the main goal of the Alyat SEZ, in my opinion, today is to strengthen ties in the logistics system of the Caspian region. In other words, the SEZ will contribute to the processes of Caspian integration. A very advantageous location was chosen – location to the nearest container terminals of the Baku International Sea Trade Port and the network infrastructure of the Sangachal power plant with a capacity of 300 MW. If we consider it more broadly, the SEZ will strengthen the potential of transcontinental communications along the Caspian route and the western direction of the North-South transport corridor.
Back on June 13, 2023, during a press statement after a meeting with the President of Turkey Recep Tayyip Erdogan, President Ilham Aliyev stated that “in modern geopolitical conditions, the importance of the Middle Corridor (official name Trans-Caspian International Transport Route) is increasing even more. The volume of cargo passing through Azerbaijan, that is, along the Caspian Sea, is increasing every year and will continue to increase “. I will add that the strategic and geopolitical importance of the Middle Corridor (which is part of the East-West project) increased even more after problems with shipping began in the Red Sea, after well-known events in the Middle East. Many supply chains were either interrupted or began to experience problems in their smooth functioning. Thus, the Alyat SEZ, being located directly next to the transport communications of the Middle Corridor, originating in China and bequeathed in Europe, will be an important help in supporting the commercial relevance and profitability of this route, taking into account the fact that many participants in this corridor have already shown interest in the implementation Alyat SEZ project. There is no doubt that with the implementation of the Middle Corridor project, the investment attractiveness of the Alyat SEZ itself will increase.
Leila Tariverdieva