Business

AZERI TOBACCO TO REACH WORLD MARKETS

"European Tobacco Inc.", which has invested $58 million in the modernization of the Baku Tobacco Factory, intends not only to utilize local raw materials, but also to bring it into conformity with international standards.

In 8 months of the factory's work, the company has spent $12 million to purchase tobacco abroad, but was also using local resources.

With the factory's financial assistance, high-quality tobacco is grown on the area of 800 hectares in Gabala, Gakh, Zagatala, Balakan, etc. and processed at the Gabala and Gakh fermentation factories.

The company is going to sell Azeri tobacco to "European Tobacco Inc." factories worldwide and then to market it internationally.

According to preliminary estimates, implementation of the project envisions employment of 200,000 people.

According to "European Tobacco Inc.", several million dollars will be invested in Azerbaijan's tobacco industry in 2001.

SILK ROUTE TO GEORGIA TO TAKE 5-6 YEARS

By Saba Aghayeva

Azernews Staff Writer

As part of the Silk Route program, a 503-km motorway from Baku to the Georgian border will be repaired and commissioned within 5 or 6 years. The WB has agreed to finance the operations, acting president of "AzerAvtoYol" state company Yusif Novruzov told Azernews Saturday.

Only after the refurbishment of the highway will the Baku-Astara and Baku-Yalama motorways be reconstructed.

Roads under-funded

State budget allocations for the "AzerAvtoYol" state company to repair roads are considerably below the requirement.

According to Mr. Novruzov, at least 800 billion manats a year is needed to upkeep 22,000 kilometers of roads in operating condition.

Mr. Novruzov indicated that 75 billion would be allotted to the company from the state budget this year, including 14 billion earmarked for Baku, 6 million for NAR, 11 billion to clear a WB credit, and 20 billion for the social security fund. Only 24 billion will be left for the company, which is not enough.

Alat-Gazimahammad road to open in February

The 44-km Alat-Gazimahammad motorway, being reconstruction by Turkish "Tures" with a WB credit, is expected to open in February, Mr. Novruzov said.

He added that reconstruction of the 4-way road started two years ago. The state company exercises control over the quality of work.

Mr. Novruzov also indicated that implementation of another project, reconstruction of the Azneft-Alat-Gazimahammad motorway, would start shortly. WB is expected to fund the project valued at some $28.5 million.

Project operator will be selected through a tender.

Customs Committee to blame

The State Customs Committee is to blame for the dilapidation of roads, as the cargoes it allows to proceed to Azerbaijan weigh a lot more than our roads can withstand, president of "AzerAvtoYol" says.

Mr. Norvuzov added that motorways and bridges in Azerbaijan are designed for 13-ton consignments, while those passing through customs often weigh 80 tons.

He indicated that the cargoes arriving in the republic must be reloaded in 10-13-ton trucks, which requires the presence of customs substations. He said in Iran, for example, transportation of cargoes weighing over 20-30 tons is forbidden.

COURT VOIDS MAYOR's DECISION

The Environment Protection Society, in conjunction with an ecological organization "Ecolex-Azerbaijan", has for the first time succeeded in repealing the mayor's decision to confiscate a land plot previously owned by the society at the Economic Court, chairman of "Ecolex-Azerbaijan" Samir Isayev told Azernews Friday.

The 12-hectare plot, together with an adjacent arboretum, is not only the Society's property, but also a restricted area.

After hearing arguments in favor of the arboretum, the court ruled to void mayor's decision. Mr. Isayev does not believe the defeated party will appeal against the ruling, because immediately after the hearings a mayor's office lawyer admitted that the plaintiff's claims were quite logical.

TRADE, FINANCIAL TIES EXPANDING

Azerbaijan has established trade relations with almost 100 countries. Some 3,600 foreign and joint companies and enterprises operate in Azerbaijan, including 1,750 Turkish, 1,035 Iranian, 240 American, 235 Russian, 77 Saudi Arabian, 70 from CIS (excluding Russia), while the rest British, Swiss, Canadian, German, etc., according to a Cabinet source.

Azerbaijan has also set up close contact with 30 international financial institutions. 12 credit agreements worth $356 million have been signed with the World Bank, of which 55% has already been used. $149 million worth of credit agreements have been signed with the EBRD, $463 million worth of deals with the IMF, and $54 million worth of agreements with the Islamic Development Bank.

The credits target economic restructuring, private sector reform and social infrastructure.

CUSTOMS COMMITTEE TO SET UP INFORMATION NETWORK

Work is underway on setting up the State Customs Committee information network. The project is intended to improve collection of data on trade transactions to ensure tax and customs revenues to the state budget.

The project is valued at $575,000, of which $325,000 will be allotted by the Committee itself.

UNDP and the Customs Committee organized a seminar in Baku Thursday focusing on the qualitative changes in the work of customs bodies following the introduction of the network.

The conference discussed the advantages of the data transmission network and the possibility of its utilization not only by Customs, but also other state and private organizations.

The one-day conference was opened by the senior management of the SCC and the UNDP office in Azerbaijan and attended by the relevant state bodies, including law-enforcement authorities and private sector (oil companies, small and medium-size enterprises) involved in the realization of the project.

UNDP and the Government of Azerbaijan signed the project document on capacity-building of the SCC and Data Transmission Network Implementation on January 22, 1999.

ASPI CONSULTING & ENGINEERING WINS TENDER

Azerbaijan’s ASPI Consulting & Engineering has won a tender for the provision of consulting services in view of privatization of the "AzerBoru" joint stock company, according to the Ministry of State Property.

In accordance with international requirements, the firm is to prepare recommendations concerning the evaluation of the investment package, other documents for the competition, to disseminate a memorandum for potential foreign investors through international media outlets, to determine a minimal investment volume necessary to revitalize the company's work, and to prepare a draft agreement with the winner of the investment tender.

VISUAL AIDS FOR ENTREPRENEURS ISSUED

Presentation of a book, "Road to Business", published as part of the "Assistance to small and medium enterprise in Azerbaijan" program by UNDP in cooperation with the state committee on anti-monopoly policy, was held at the Entrepreneurship Support Center in Baku.

The edition dwells on key business aspects, description of the business situation in Azerbaijan, including legal and structural forms of business organization characteristic of this stage, issues of financial and credit policy, information on tax and taxation regulations, marketing and business plan systems. The actuality of the book has been confirmed by the chairman of the state committee on anti-monopoly policy R. Guliyev, US Resident Coordinator E. Murat and president of the Confederation of Entreprenurs A. Mammadov.

ARAB INVESTORS KEEN ON CO-OP WITH AZERBAIJAN

The first meeting of the Azeri-Saudi inter-governmental commission on economic cooperation will be held in February 2001. The Azerbaijan government has included 15 issues into the meeting agenda. Arab investors will also be provided with detailed information on enterprises slated for privatization and goods exported from and imported in Azerbaijan. The parties will focus on cooperation prospects with Saudi "Sabik" company in the petrochemical sector and financial contacts between SOCAR and "Saudi Aramko". Besides, Saudi investors are interested in small and medium enterprise, tourism, agriculture, air communication, and construction of automobile roads.

SOCAR STARTS PRIVATIZATION

SOCAR has handed a decision to the Ministry for State Property to privatize around 300 of the company-owned enterprises. According to the decision, some 100 leased entities will be the first to be privatized. Meanwhile, SOCAR thinks it wrong to denationalize social enterprises this year.

A special privatization commission under SOCAR intends to announce privatization of recreation centers, hostels and health centers later on.

3-YEAR CO-OP PROGRAM WITH IMF ON AGENDA

The International Monetary Fund will continue consultations in Azerbaijan on a 3-year cooperation program. In this connection, an IMF mission led by the regional director J. Lynn is expected to visit Baku in mid-January.

Azerbaijan has already fulfilled some of the IMF requirements pertaining to the tax code, a new version of which has been adopted, and privatization, the second stage of which is to commence shortly.

The IMF mission will scrutinize the documents from the standpoint of their conformity with international standards. At the same time, IMF keeps insisting on stepping up anti-corruption combat in the republic.

TAX MINISTRY TOUGHENING MEASURES

The Department for Investigating Tax Evasions under the Ministry of Tax has embarked on tough measures regarding physical and legal entities evading tax, according to the Ministry.

Criminal cases have already been started on such major firms as "Palma", "Inecotech", "Memar S.S.", "Service-XXI".

Among the insolvent are also the still foundry (119 million manats) and the ABA television company (616 million manats). The ministry has said if the debts are not cleared in the near future, the enterprises will be sold through an auction, while the administration arraigned.

CABINET DEFINES ORDER OF ESTABLISHING JOINT-STOCK COMPANIES

The Cabinet of Ministers has resolved that no more than 50 physical and legal entities can act as founders of closed joint stock companies, deputy minister for economics Ogtay Haqverdiyev told Azernews Tuesday.

According to him, the decision was made after the Civil Code had become effective. A minimal charter fund requirement for closed joint stock companies has been set at 10 million manats, while for open ones at 20 million.

ADVERTISING REVENUES DECLINING BY THE YEAR

Beginning from 1997, revenues from advertising - street, media (on television, radio, newspapers and magazines) and transport vehicles - have been steadily declining. As where in 1997, total advertising revenues constituted $12 million, in 1998 - $6 million, in 1999 - $4 million, and under $1.5 million in 2000, according to the president of the Union of Advertisers of Azerbaijan Hajiami Atakishiyev.

According to the head of the advertising section under the Mayor's office of Baku Ilgar Valizadeh, a similar tendency is observed regarding revenues from street advertisements: $1.2 million in 1997, $1.25 in 1998, $0.65 million in 1999, and less than $0.5 in 2000.

The structure of advertisements has also changed over the mentioned period. For instance, in 1995-1997 80% of ads were commercial and 20% political, in 1998-1999 - fifty-fifty, while in 2000 commercial ads constituted just 15% and political 85%.

For comparison, yearly revenues from all types of advertising in Estonia is $43 million, in Latvia $76 million and in Hungary $167 million. In Azerbaijan, the biggest yearly revenues, in 1997, made up only $12 million.