Azerbaijan's AFEZ To Announce Projects On Minting Large Enterprises (Exclusive Interview)

(MENAFN- Trend News Agency) BAKU, Azerbaijan, March 31. New projects on the establishment of large industrial enterprises will be announced in Azerbaijan's Alat Free Economic Zone (AFEZ), Chairman of the Board of the AFEZ Authority, Valeh Alasgarov, told Trend in an exclusive interview.

According to him, these projects will enhance the appeal of the free zone for investment and will provide a significant push for the growth of export-oriented production.

During his interview, the chairman touched on the allure of the AFEZ, the investors keen on the institution, upcoming projects, and various other pertinent matters.

He first talked about the history and attractiveness of the free zone and mentioned that all important aspects have been considered.

"If these factors had not been taken into account, it would not have been possible to create such a zone. In order to be more attractive, the experience of free economic zones operating not only in regional countries but in a wider geographical area has been studied, including their legislation, conditions, and reasons for success or failure. As of today, there are over 4,500 free economic zones globally, but not all of them can be deemed successful.

Based on this analysis, the AFEZ has been located in such an area that it is more attractive compared to other zones. The free zone is adjacent to the Baku International Sea Trade Port and is situated at the intersection of international transport corridors such as North-South and East-West. This provides investors with the opportunity to use sea, railway, and road transport.

Investors in our area know in advance that they can use sea routes, railways, and highways. Additionally, we must consider that companies producing high-tech products mostly send their goods not by rail or road, but by air transport. This allows them to save both time and costs. Therefore, we reached an agreement with the well-known Silk Way air carrier company, and the company has started the construction of a large airport in the territory of the AFEZ. A total of 750 hectares have been allocated for this airport because there, not only the airport itself, but also all the infrastructure must be created to ensure the transportation, storage, and distribution of goods for companies wishing to transport their goods through this airport.

The cargo and business aviation segments of the mentioned airport will be commissioned no later than the end of the first quarter of 2027. The initial annual cargo capacity will be 500,000 tons annually, and it is planned to increase this indicator to 1.5 to 2 million tons in the future. With the launch of the airport, our investors will be able to transport their goods by any type of transport in both export and import operations. This, in turn, increases the attractiveness of the Free Zone. Of course, other companies will also be able to send or receive their goods through the mentioned airport," he delineated.

Alasgarov pointed out that the AFEZ provides investors with industrial land plots with ready-to-use on-site and off-site infrastructure and facilities.

"That is, the investor shouldn't wait for years for the establishment of the relevant infrastructure. For this reason, the provision of ready-to-use industrial land plots in the AFEZ is a very important factor for investors. That is, the area presented to the investor is already provided with infrastructure such as water, natural gas, sewage, communications, electricity, etc. This is a huge advantage. When we look at other zones, we see that most of them do not have such conditions.

Another factor that increases the attractiveness of the AFEZ is the exemption of companies operating here from all taxes and customs duties. In addition, we should also emphasize the legislation of the AFEZ. As you know, the Alat Free Economic Zone was established by a special law of Azerbaijan, the law 'On the Alat Free Economic Zone.' The legislation of the AFEZ consists of this law and the internal rules approved by the AFEZ Authority. This is of great importance for investors. For example, to register in the AFEZ, it is enough to apply to the AFEZ Authority. If the authority considers the proposed project acceptable, the company will be registered. There is no need to apply to any state body of the economy here," he explained.

Investors interested in the Alat Free Economic Zone

Alasgarov emphasized that investors who want to establish export-oriented enterprises in the AFEZ are given more preference.

"Investors who establish their production facilities in the Alat Free Economic Zone and export 75% or more of their produced goods are given more attention. Of course, it's also important that the project complies with advanced European standards.

Sometimes, giving preference to export-oriented projects raises surprise. However, if this were not the case, small or medium-sized enterprises focused on producing products for the local market could arise in the AFEZ, which could create unfair competition for companies in the base economy that pay all taxes and customs duties. Therefore, export-oriented enterprises are given preference. If a company is export-oriented, then its products must meet international standards. Secondly, if a company exports 75% or more of its products, then it must be a sufficiently large enterprise. In this case, more jobs will be generated.

We also strive to ensure employment of Azerbaijani citizens by companies operating in the AFEZ. There are already companies operating in the AFEZ that have employed the citizens at their facilities and have offered these citizens training programs in enterprises located in other countries, giving them the opportunity to acquire new skills. After the training, the citizens return to the enterprise established in the free zone and apply the newly acquired knowledge.

In the first phase, when we started registering investors on the 60-hectare area where construction work was completed, we saw that the demand was extremely high. Therefore, we had to start the construction of the next 138-hectare area much earlier than planned. The construction work on these areas will be completed very soon. Although the construction work isn't fully completed, we have already registered some companies for these areas. Some of them are already ready to begin construction work. A very important point is that in 23 hectares of the mentioned 138-hectare area, China's Sunsync company will establish a solar panel production facility. Most of the products produced will be exported, as the production volume will be very large.

From the very beginning, the goal is to enter not just the Azerbaijani market but also the global market. Naturally, we recommend that investors use the solar panels produced by the Chinese company in the construction of the roofs of the facilities built in the free zone. This company will also participate in all tenders held in Azerbaijan for the sale of panels. After the Chinese company starts producing the mentioned products in the AFEZ, it will be more convenient and advantageous for companies building solar power plants to purchase panels from here. We have also informed Sunsync that we are ready to provide land for building a solar power plant. That is, using the solar panels produced by this Chinese company in the AFEZ, a solar power plant can be built, and the green energy obtained from it can be sold to companies operating in the AFEZ.

The chairman also indicated that they are currently engaged in an additional initiative.

"This concerns the production of wind power plants (WPPs). Negotiations are ongoing with several companies for the construction of a facility for the production of wind turbine blades and other necessary equipment for WPPs in the AFEZ. This will reduce production and construction costs, as well as eliminate transportation and logistics difficulties related to the movement of wind power plant equipment.

In parallel, we have already started construction work in the area allocated for heavy industry. We have completed land work on 364 hectares. This year, we also plan to start other infrastructure work. The work within the area allocated for heavy industry will be carried out by the AFEZ Authority. Outside the area, Azerenergy will soon begin the construction of a large substation. Additionally, other state institutions will carry out infrastructure work. It's already a very positive development that applications are coming in to operate in the area allocated for heavy industry. Soon, we will announce projects related to the establishment of large enterprises in the AFEZ

Overall, the work related to the activities of the companies registered in the AFEZ is ongoing at different stages. For example, some companies have already started production, others are about to start producing their initial products, while some are still at the construction or design phase. These companies are mainly from Türkiye, China, Israel, European countries, as well as local Azerbaijani companies," he said.

New opportunities created by transport corridors

Alasgarov also pointed out in the interview that Azerbaijan's geographical location has turned it into an international transport hub. He mentioned that there has been a steady rise in the flow of goods to the country, particularly in relation to the Middle Corridor. The chairman addressed the significance of the AFEZ in unlocking the freight potential of the North-South and East-West corridors.

"Previously, there was only access to the Poti port via railways or roads, but today we already have access to Türkiye through the Baku-Tbilisi-Kars railway and from there to the sea ports on the Mediterranean coast. However, once the Zangezur Corridor opens, it will naturally create new opportunities for the transportation of any type of cargo for us. The new route will shorten the distance for transport, accelerate the process, and reduce transportation costs. At the same time, the Zangezur Corridor will provide direct access to the sea ports of Türkiye on the Mediterranean coast. This is a very important issue.

We are in talks about creating an aluminum production facility in the AFEZ. If this facility produces a minimum of 250,000 tons of aluminum per year, it will require at least 550,000-600,000 tons of raw materials. The raw materials will be brought by ship from foreign countries such as Vietnam, Guinea, and others. Therefore, once the Zangezur Corridor opens, the raw materials will be delivered more quickly and easily to Azerbaijan through large ships to Turkish ports on the Mediterranean coast, and then by rail via the Zangezur Corridor. Thus, the opening of the Zangezur Corridor is of great importance," he underscored.

Participation in international events and exhibitions

In conclusion, Alasgarov noted that steps have been taken to promote the institution he leads to foreign investors through participation in international exhibitions.

"We participate in various events in European countries. In April this year, we'll participate in a major exhibition in Hannover, Germany. We also participated in the same exhibition last year and had a large booth. We provide extensive information to companies there about the AFEZ and promote the free zone. At the same time, we meet and negotiate with representatives of companies coming to Azerbaijan from European countries. Earlier this year, we held a meeting with a delegation from the European Union, led by David Cullen, Head of the Directorate for Enlargement and Eastern Neighbourhood at the EU.

We presented them with detailed information about the unique legislative framework of the free zone, industrial land plots equipped with ready-to-use internal and external infrastructure and modern engineering-communication systems, as well as a comprehensive package of financial and non-financial incentives for investors. Special attention was also given to the transport and logistics infrastructure and development potential of the free zone.

Thus, necessary measures are being taken to attract foreign investors to the Alat Free Economic Zone," he added.

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