Business

First int'l investment conference
The first three-day international conference, Investing in Azerbaijan - Gateway to the Newly Independent States, was held at the Hyatt Regency Hotel, Baku last week.
Representatives of 35 international organisations, foreign embassies, and about 300 businesses from over 30 nations, as well as Azerbaijani officials, attended the event organised by the Ministry of Economic Development through the support of the Swiss government and the International Finance Corporation (IFC).
Opening the conference Minister for Economic Development Farhad Aliyev informed participants in detail about the current economic situation in the country. He said inflation has stopped as a result of economic reforms and stability of the national currency has been achieved. Since 1996, $9.6bn has been invested in Azerbaijan thanks to the opportunities created for business, with $10bn more likely to come from various sources over the next three years.
He added that Azerbaijan has built trading relations with 128 countries. Moreover, the International Monetary Fund (IMF) and the World Bank (WB) has provided about $990m in assistance to Azerbaijan while more than 400 foreign companies have been involved in the oil sector. Furthermore, the minister invited foreign companies to build partnership with Azerbaijan in privatisation process, bank system, agriculture, food and light industries, metallurgy, and other fields of economy. "The Azerbaijani government has taken important steps aimed at protecting investor rights, as well as the inviolability of property, and has set up favourable conditions for local and foreign entrepreneurs," Aliyev said.
In his speech, Swiss government's State Secretary for Economic Affairs David Syz said his country intends to assist Azerbaijan, a nation with great economic potential. According to him, for this purpose, there should be a plenty of projects, investing environment in the country should be analysed with transparency in legislation to be secured. He believes that alongside large companies, small ones also must be encouraged to come to Azerbaijan.
Addressing the conference, World Bank Vice President for Europe and Central Asia Region Johannes Linn said that the World Bank is ready to invest a total of $235m in Azerbaijan in 2003-2005. Of the total, $160m might come from the International Development Agency, while the International Bank for Reconstruction and Development is ready to loan $75m.
For his part, IFC Executive Vice-President and WB Managing Director Peter Woicke stressed the necessity of adopting new legislative acts in Azerbaijan, especially those dealing with judiciary and law enforcement systems. He stressed that the principal requirement is to ensure strict observance of  laws. In addition, he urged the Azerbaijani authorities to toughen their stance on corruption and streamline the structure of government.
Oliver Descamps, business team leader at the EBRD’s Department on southern and eastern Europe, revealed some paradoxes in the development of the Azerbaijani economy. Referring to the high quality of laws on business development and investment climate in Azerbaijan, he, pointed out that nevertheless some ministries and other governmental bodies choose to ignore them [acts].
On the last day, May 9, the conference participants made business tours to become acquainted with the activity of  foreign-owned Siyazan Broiler, Coca-Cola, Qaradag Cement, Baku Steel Company and other businesses, which have been enjoying the healthy investment climate created in the country over the past few years.
It has been decided to make the investment conference an annual event, with one of the regions of the country to be set as venue for the next gathering in turn in 2004.

Turkish business to invest  $15m in Sumqayit
The Turkish company Design Group held on Saturday the ground-breaking ceremony of a tube-producing mill in Sumqayit, designed to produce polyethylene and polypropylene tubes of various types and sizes.
The event was a part of a large-scale project implemented in Azerbaijan by Design Group.
Delivering the opening address, Design Group President Ibrahim Mirmahmudoglulari said that the company is planning to invest $15m in the plant for the coming three years, with the total funding of $5m to be provided to the end of the year. On the company's business experience in Azerbaijan, he made an emphasis on a project to supply natural gas to three residential areas of Ganca, a city some 350km west away from Baku.
The mill will run at the initial operating capacity of 50,000 tons of produce a year, and will employ the staff of 400 men, with up to 90 per cent to be enlisted as local staff.
Design Group is about to realise the output to be produced on the Georgian, Iranian, Kazakh, Russian and Turkmen markets.
Minister for Fuel and Energy Macid Karimov, Azariqaz President Alixan Malikov, Head of the Executive Power of Sumqayit Vaqif Aliyev and other officials attended the ceremony.

Azeri-Swiss joint commission holds first meeting
The joint Azerbaijan-Switzerland intergovernmental commission for commercial and economic cooperation  held its first meeting at the Hyatt Regency Hotel in Baku on Thursday.
The Swiss State Secretary for Economic Issues, David Syz, and Azerbaijani Minister for Economic Development Farhad Aliyev co-presided over the meeting, focused on  bilateral co-operation in the fields of commerce, economics, environment and transportation, as well as banking development, manufacture of agricultural equipment, production and packing of medicines and foodstuffs, etc. As a result of the discussions, the commission co-chairmen signed a protocol on the first meeting.
A day before, a $7.9-m project on boosting pumps' station (water supply to Baku) was presented within the framework of bilateral cooperation.
Besides, the sides signed a cadastre agreement, envisaging a $2-m Swiss grant for the purchase of required equipment and setting up training courses under a $100-m land cadastre project, now underway in Azerbaijan.
Grant
Shortly after the meeting, Mr David Syz and Mr Peter Woicke presented a new project to give impetus to financial leasing operations in Azerbaijan, at the Hyatt Regency Hotel on Thursday.
Addressing the ceremony, Mr Woicke said that the IFC will train the Azerbaijani government on working out a legal framework for leasing operations.
Describing the basic mission and objectives of the program, Mr Syz said that it [project] will be carried out by the IFC, with financial support from the Swiss government.
The State Secretariat for Economic Affairs of Switzerland (seco) will provide a total of $1.3m in grant funding for the project by the end of 2005.

Azerbaijani-French commission meets
The Azerbaijani-French intergovernmental commission on economic co-operation has started its third meeting at the Hyatt Regency Hotel on Tuesday. Since the Azerbaijani co-chairman of the commission, Artur Rasizada, was absent, Minister for Economic Development Farhad Aliyev (deputy chairman) opened the meeting naming co-operation with European Union member France as a priority for Azerbaijan. Noting thus far 13 versatile agreements have been signed between the two nations, he said that currently over 30 companies with French investment are operating in Azerbaijan in various spheres. Moreover, Farhad Aliyev said exports of oil and associated products have increased in trade transactions with France last year, pointing out that negotiations over the purchase of six helicopters from France's Eurocopter are nearing completion.
The French co-chairman, Foreign Trade Minister Fransua Loos said France is the fifth supplier to Azerbaijan in foreign trade and second oil purchaser, adding French companies are interested in the spheres of oil, agriculture, and vehicle manufacturing. Signing of a 35-m-euro loan covenant is to conclude the commission's meeting on Wednesday.
35m euro loan
An agreement will be signed to receive a loan worth 35m euros from France. Azerbaijani Minister for Economic Development Farhad Aliyev said the loan covenant will be divided into two sections concerning allocation and repayment of the loan. Currently, works are ongoing with both parts.
‘Slow to invest’
Regarding Azerbaijan as the most stable and developed country with the greatest potential in South Caucasus, French companies are interested in investing in the country.
Following the announcement, Azerbaijani Ambassador to France Eleonora Huseynova has told AssA-Irada that she is aware of possible delay in this co-operation.
The ambassador went on to say that strengthening of foreign relations is not among the current priorities for France, suffering national strike in the wake of economic and social problems.

Arab funds, IDB discuss investment opportunities
A roundtable involving the Azerbaijani government, the Islamic Development Bank, Kuwait Arab Economic Fund, OPEC Fund, Saudi Fund for Development and Abu Dhabi Fund for Development started at the Gulustan Palace on Tuesday.
The event, lasting three days, is considering outlooks for providing funds for the projects presented by the Azerbaijani side.
A Protocol of Intent is to be signed at the conclusion of the roundtable.
On the last day, the meeting participants will visit the Old City, Maiden Tower, Sirvansahlar Sarayi [palace of Sirvan rulers] and Carpet Museum.
Gov't proposals
The Azerbaijani government has presented projects in various spheres for discussion at a roundtable conference.
Deputy Prime Minister Abid Sarifov has told AssA-Irada that they are projects on the improvement of highways (Baku-Qazax), irrigation systems of the State Committee on Amelioration and Water Economy, and sewage and water supply systems of the Azarenerji joint-stock company, State Construction Committee and Naxcivan city. According to him, some sections of the Baku-Qazax highway need funding and operating projects on them will be offered to Arab funds.
Abid Sarifov said that President Heydar Aliyev also praised a project on the construction of five schools in Baku by the Saudi Fund, noting that it is likely to be signed shortly. Furthermore, he said funds are expected to be allocated for financing  repair of 42 secondary schools in Baku, addressing consequences of an earthquake jolted the capital in 1999, and other purposes.
Priority in utilisation of loans to be allotted will be given reconstruction of a crash-hazardous bridge on the Samur River, response to a landslide threat on the left side of the Mingacevir water reservoir, repair of gas pipelines. The deputy prime minister said the amount of loans for concrete projects will be specified during the discussions.
Energy projects
The Azerbaijani side submitted five projects on modernizing existing power engineering facilities of the country to the meeting for discussion.
In his interview with AssA-Irada, President of the Azarenerji joint-stock company Etibar Pirverdiyev said that the submitted projects relate to connecting of the 4th Ali-Bayramli line to the 500-kWt Abseron power substation, construction of a 330-Wt substation in Xacmaz, installation of the second 330-kWt line between Russia and Azerbaijan(the Russian section of the line is ready), construction of a 220-kWt substation in Salyan and a 220-kWt Ali-Bayramli-Salyan feedback line and a 220-kWt at the Saki substation.
According to him, funding of projects designed for northern regions of the country, might be beneficial for Azerbaijan in terms of strengthening relations with Russia, and setting conditions for electricity transmission to Iran and other Near East countries via Azerbaijan.
Financing of projects designed for southern and western regions would better energy provision in those regions, as well as reduce technical losses.
Noting that the above-mentioned projects each worth $7 to $24m, with the sum total close to $100m, the Azarenerji boss said that the projects to be selected by the lending institutions will be disclosed only by the end of the meeting.

Tax Ministry examines Bakcell operations
Relations between the Azerbaijani government and the foreign (Israeli) co-founder of Bakcell, a cellular network operator, seem to have been soured, instead of the anticipated thaw.
Minister for Taxes Fazil Mammadov told AssA-Irada on Saturday that the body he runs is investigating Bakcell operations. A special commission set up by the ministry checks up on the activity of the joint venture since its [Bakcell] establishment in the country. The main task to be accomplished is to clear up the question on the total volume of profits made, as well as the total volume of  remittances transferred to the state budget by Bakcell. "Upon having the investigation finished up, the Ministries of Taxes and Finance will hold one more inquiry into other disputed issues with Bakcell," the minister said.
A month ago Minister for Economic Development Farhad Aliyev revealed some negative facts, including profits deceit detected in the activity of the joint venture, as well as the reluctance of head of Bakcell Shai Avigal, an Israeli national, to submit the material required for the assessment of the state-owned share in the joint venture, to the ministry's privatisation department. The minister warned that the Azerbaijani government would react appropriately to such disobedience. For his part, Shai Avigal, has disseminated an impromptu press release to clear his name and the company's reputation, following media reports.
The two-day February visit to Baku by Mr Nir, president of Bakcell's foreign co-founder, the GTIB-96 company, and Mr Sputolnik, vice-president of the US-based Motorola company, a GTIB-96 shareholder, has failed to relax strained relations between the sides, though the visiting officials had held talks with Ministers Farhad Aliyev for Economic Development and Nadir Ahmadov for Communications.
The subject of the dispute is the foreign co-founder's failure to meet commitments under an agreement reached in November 1999. In accordance with the provisions of the agreement, GTIB-96 has undertaken to raise Bakcell's charter capital by $5m in exchange for a 25-per-cent stake acquired form the Azerbaijani side (under the statutory agreement in 1993, Azerbaijan's share was 51 per cent and GTIB - 49 per cent), and invest $30m. However, ever since GTIB-96 has failed to meet its commitments to the Azerbaijani side.
Meanwhile, in the same timeframe, the joint venture has exploited communications channels without paying any fees to the Azerbaijani side. Thereby, at one of the recent  meeting of the co-founders, the share-holding issue was revised in disfavour of GTIB-96, as the foreign partner had to return the 25-per-cent stake. In addition, due to the foreign partner's failure to perform its obligations over the past three years, it [co-founder] was demanded to report on the issue to the Azerbaijani government.
While setting up the joint venture in 1993, its charter capital was $2.4m.

IFC signs covenants with two Azeri banks
The International Finance Corporation (IFC) signed loan covenants totaling $2.4m with two private Azerbaijani banks - Rabitabank and Azariqazbank, and an agreement on allocation of a $500,000 grant to the Azerbaijani Bank Training Center.
Speaking at the signing ceremony, IFC Executive Vice President Peter Woicke said they [IFC] would implement a $1.2-m project jointly with each bank within the strategy of developing financial market and supporting small enterprises in the region. Then, Peter Woicke, Rabitabank President Zakir Nuriyev and Azariqazbank President Cavansir Abdullayev signed the document.
The project is the second implemented by the IFC with the above-mentioned banks. Under the first project, Rabitabank and Azariqazbank received loans of $400,000 each for Small and Medium Enterprise support.

Agriculture Ministry's tasting commission is illegal, presidential adviser says
Azerbaijani President Heydar Aliyev issued over August-September last year a series of decrees in an effort to remove red-tape impeding development of private business in the republic, as well as groundless audits. However, the Central Tasting Commission under the Agriculture Ministry was established on an order issued by Agricultural Minister Irsad Aliyev. In compliance with the decree, all the wine products are to be presented to the commission for certification. The decree states that the products without such a document will be considered as fake and their realisation will be stopped, while definite measures will be taken in regard to the enterprises committing such acts. Regarding the issue president's adviser for economic issues, Vahid Axundov, told AssA-Irada that it is an illegal step. Furthermore, he said: "The state's policy is to assist in development of private business. The Ministry of Agriculture must function in this direction. The presidential decree clearly indicates in case of such a problem the Ministry of Economic Development must be immediately informed about the fact in order to enable it to take relevant measures. So, it is an illegal structure and I will clear up this question."

AEC president satisfied with Entrepreneurs Council
Azeri President Heydar Aliyev decreed on May 2 to approve the charter and staff of the Entrepreneurs Council under the President. Despite predictions by some experts alleging that the president of the council will be head of the Azerbaijani Entrepreneurs Confederation (AEC) Alakbar Mammadov, but his name was not to be found as chairman, nor member.
Expressing attitude to the question, Alakbarov Mammadov told AssA-Irada he is satisfied with the decree. Out of 45 members of the Council, 18 are ECA members, with eight presidium members," he said, describing it as ECA's success. Noting the significance of the newly established structure for country's economy Mammadov said the Council will significantly contribute to economical progress, as well as remove obstacles to entrepreneurial development.

GUUAM states to discuss trade
The Council of Heads of Trade and Commerce Chambers (CHTCC) of GUUAM  (Georgia, the Ukraine, Uzbekistan, Azerbaijan and Moldova) states is to meet in next gathering scheduled for mid-May in Kiev. The meeting will focus on expansion of co-operation among the chambers of GUUAM member states, as well as holding regional exhibitions.
President of the Azerbaijani Chamber of Trade and Commerce Suleyman Tatliyev told AssA-Irada that some technical issues have earlier caused the postponement of the meeting, originally scheduled for March.
He said that during a visit to Turkey last week, he discussed the issue with his Georgian counterpart, and assured that the meeting will without fail take place next month.ЁGeorgia presently presides over the CHTCC, with Azerbaijan to assume chairmanship next year.