Sahil Babayev: "Azerbaijan plans to increase export to Russian markets"

Deputy Economy Minister of Azerbaijan Sahil Babayev discussed the current state and prospects of Russian-Azerbaijani trade relations, as well as plans to develop economic cooperation with the EU and other countries of the region in an interview with Vestnik Kavkaza.

- How would you describe Russian-Azerbaijani economic cooperation?

- The cooperation between our countries since Russia and Azerbaijan became independent states. Russia has always been one of Azerbaijan's main markets for both export and import. Today, Russia remains the main exporter to Azerbaijan, its share in our import reaches 20%. At the same time, it's also the main export market for our non-oil sphere: in the first three months of this year, we exported $72 million worth non-oil products to Russia, or 27% of all non-oil export of Azerbaijan. Russian-Azerbaijani trade agreements contribute to it. 

Traditionally, we pay a lot of attention to the Russian market. Azerbaijan's first trade representative was appointed to Russia by the order of President Ilham Aliyev. Now he actively cooperates with Russian authorities, protects the interests of Azerbaijani companies and works to help the growth of Azerbaijan's export to the Russian market. At the moment we are working on the creation of Azerbaijani Trading House in Moscow. This additional mechanism will also help to increase Azerbaijan's export. We are considering the option of creating a logistics center in Russia, by analogy with Azerbaijan's first logistics center in Kazakhstan's Aktau. There are several options, particularly Yekaterinburg, where we can create logistics center for the export of Azerbaijani products to Russia. 

Our products have great quality and can compete with other products in their niche, despite the Russian market's size, due to the absence of custom duties. We invest in the production of agricultural products in Azerbaijan, and over the past several years the number of greenhouses have grown threefold - from 1,500 to 4,500 hectares. About a hundred projects have been funded by the state over the past two years, most of them - in the agricultural sector. I think that the accumulated potential will allow us to increase the export of Azerbaijani products to the Russian markets more and more.

- Does this mean that Azerbaijan is planning to increase the export of agricultural products to Russia?

- Absolutely. But it's not just about agriculture - it's our main niche in addition to the non-oil industry, which we actively develop. We have created industrial parks and invest considerable funds to build up industrial capacities. Russia will be one of the main markets in this sphere.

- What can you tell about Azerbaijan's economic interest in the North Caucasus?

- Our interest in the nearest Russian region - the Caucasus - is great. Azerbaijan's investments in the Russian economy are significant. For example, there is a factory of Azersun in Krasnodar, there are hotel complexes in Stavropol Territory, we are currently building factories. We always had interest in the Caucasian market, and Azerbaijan will increase its economic presence in the North Caucasus, especially considering the fact that we are pretty close and traditionally, Azerbaijanis actively visit the North Caucasus republics. We already build up potential for cooperation: about 10 different infrastructure facilities are already under construction, there are working and functioning.

- What is the difference between structure of Azerbaijan's export to the Russian Federation and the EU?

- It depends on the market rules. Russia is the main market for our vegetables, fruits and agricultural products as a whole. As for the EU, we mainly export oil products and some non-oil products. Last year, the total export of hazelnut from Azerbaijan amounted to over $100 million. Today we are at the fourth place by production and export of hazelnuts. It is mostly bought by Italy, Austria and Germany. Of course, both Russia and Ukraine also import it.

- Does Azerbaijan plan to open trade missions in Europe?

- Of course, we have a plan of the development of trade missions. After Russia, we consider opening them in Arab countries, especially the UAE, as well as in China. After that we will analyze markets and, depending on the results, will determine the possibility of opening trade missions in other countries, including in Europe. We must expand trade network and protect the interests of Azerbaijani companies using it, as well as look for opportunities to increase the export of Azerbaijani products.

- Does Azerbaijan plan to focus on the development of its logistics potential in the future?

- Our country is at the crossroads of two large corridors - north-south and west-east, so Azerbaijan has a huge logistical potential. In order to fully use it, we must finish the construction of the Baku International Sea Trade Port in Alat. Right now we work on the creation of large free economic zone there, so that those who use port could gain tax benefits and so on. The total area of this zone is big enough and will help us to position Azerbaijan as the main transport hub in the region, taking into account those investments that we have invested in the republic's transport infrastructure in recent years.

Cargo turnover between Europe and China reaches approximately 100 million tons per year, more than 80% of which is transited through the sea routes, which takes about 45-50 days. This is the reason why Azerbaijan, Georgia, Kazakhstan and Turkey are actively working to create a high-speed transport corridor from China to Europe. We have already carried out several tests, it is planned that goods from China will reach Europe in 14-16 days through our route. 

On the other hand, cargo turnover between India and the northern regions of Russia and Europe reaches 30 million tons per year. It takes 50-60 days to deliver Indian goods via sea routes. The "North-South" international transport corridor will allow to speed up their delivery. We actively invest money in our railways to achive this: the railway bridge across Araks between Iran and Azerbaijan has already been built, and we are ready to invest in the construction of the remaining section of the route in Iran. I mean 162 km section Rasht-Astara to our border. Upon completion, we will be able to reduce the transportation time of Indian goods to 16 days. This will allow us to transport up to 10 million tons of cargo via "North-South", and at least 30 million tons of cargo via "East-West" through Azerbaijan every year.

We already have certain achievements: with the creation of coordination council for transit transport, the upper limit of tariffs was set, which ensured full transparency in this sector. The number of transit trucks passing through Azerbaijan increased 2.5 times in one year. By increasing efficiency and creating the appropriate infrastructure, we have increased the flow of goods through Azerbaijan, which really helps to increase country's revenues.