Ilham Aliyev chaired meeting of Cabinet of Ministers on results of socio-economic development in first half of 2016 and future objectives

President Ilham Aliyev has chaired the meeting of the Cabinet of Ministers dedicated to results of socio-economic development in the first half of 2016 and objectives for the future.

The head of state made an opening speech at the event.

Opening speech of President Ilham Aliyev

- Six months of the year are now in the past. Today we will discuss the results of six months and talk about the work to be done in the future. I can say that military clashes and wars are still observed in various regions around the world in 2016, new pockets of conflicts are emerging and threats are increasing. At the same time, the economic crisis has deepened further since the beginning of the year and earlier, and we can say that all countries are affected by this crisis in one way or another.

The successful development of Azerbaijan is being ensured. Our country has maintained security at a high level and strengthened the public and political stability. All the objectives facing the country are being successfully met. Azerbaijan has developed steadily in 2016 as well, even though oil prices are still at a very low level. This development is underpinned by our carefully thought-out policies, the reforms and programs related to the future of our country. Azerbaijan is developing successfully. I am confident that we will successfully finish this year too.

In 2016, the yet another Armenian provocation led to very serious consequences for the settlement of Armenian-Azerbaijani Nagorno-Karabakh conflict. Armenia’s intentions are well known. They are trying to disrupt the negotiations in different ways, and when they see that the pressure on them from international mediators is mounting, they resort to further provocations. One of them was the armed provocation committed at the beginning of April, when an armed attack against our positions was carried out. But the Azerbaijani army gave a fitting rebuff to the enemy and, after a counteroffensive operation, liberated part of the occupied territories – 2,000 hectares of land, to be more exact. Now we have complete control of a much larger area.

This conflict should be resolved soon. Otherwise, no-one can guarantee that provocations will not be repeated. After all, Armenia's intention is to maintain the conflict in a frozen state. They thought that a provocation against us would end in their victory. But they suffered a bitter defeat. The Azerbaijani state won a major military victory.

The April fighting showed once again the need for a speediest change of the status quo. This has repeatedly been stated by mediators dealing with the matter. Changing the status quo would mean liberation of the occupied lands. I am confident that the results of the April fighting will serve as a lesson for Armenia, that it will draw proper conclusions and act constructively in the negotiations. There are such hopes, because, I want to say once again, the negotiations have been very active in the last few months.

The settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict is a priority for us. The soonest resolution of this issue on the basis of norms and principles of international law and within the territorial integrity of Azerbaijan is our main goal. There is no other option to resolve the conflict. The territorial integrity of Azerbaijan must be restored, the status quo must be changed and the occupation must end. Our position is supported not only by the UN, but also by all other organizations. The final document adopted by the NATO summit yesterday also reflects some very serious aspects related to the sovereignty and territorial integrity of Azerbaijan. The sovereignty, independence and territorial integrity of Azerbaijan are recognized, and the conflict must be resolved on the basis of these principles.

In 2016, our foreign policy was very active. In the first half of the year, more than 10 heads of state and government visited Azerbaijan. My numerous foreign visits have further strengthened our international relations. Since the beginning of this year, I have attended several international events. The Davos World Economic Forum is the world’s top international event. Both economic and political issues are on the agenda there. Then, the Munich Security Conference, which is also a global international event of the same proportions as the Davos Forum. There, too, we voiced the position of Azerbaijan, in particular regarding the Armenian-Azerbaijani Nagorno-Karabakh conflict. My participation in the London conference on Syria demonstrated the position and opportunities of Azerbaijan once again. Azerbaijan took an active part in the nuclear summit in Washington. The fact that we were invited to this summit is evidence of the authority of our country because Azerbaijan is not a nuclear state and it is possible to say that no nuclear research is conducted in Azerbaijan. Despite this, Azerbaijan was among the countries invited to the summit. At the same time, within the framework of the summit, I had very fruitful meetings with senior US leaders – President and Secretary of State.

The settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict is a priority for us. The soonest resolution of this issue on the basis of norms and principles of international law and within the territorial integrity of Azerbaijan is our main goal. There is no other option to resolve the conflict. The territorial integrity of Azerbaijan must be restored, the status quo must be changed and the occupation must end. Our position is supported not only by the UN, but also by all other organizations. The final document adopted by the NATO summit yesterday also reflects some very serious aspects related to the sovereignty and territorial integrity of Azerbaijan. The sovereignty, independence and territorial integrity of Azerbaijan are recognized, and the conflict must be resolved on the basis of these principles.

In 2016, our foreign policy was very active. In the first half of the year, more than 10 heads of state and government visited Azerbaijan. My numerous foreign visits have further strengthened our international relations. Since the beginning of this year, I have attended several international events. The Davos World Economic Forum is the world’s top international event. Both economic and political issues are on the agenda there. Then, the Munich Security Conference, which is also a global international event of the same proportions as the Davos Forum. There, too, we voiced the position of Azerbaijan, in particular regarding the Armenian-Azerbaijani Nagorno-Karabakh conflict. My participation in the London conference on Syria demonstrated the position and opportunities of Azerbaijan once again. Azerbaijan took an active part in the nuclear summit in Washington. The fact that we were invited to this summit is evidence of the authority of our country because Azerbaijan is not a nuclear state and it is possible to say that no nuclear research is conducted in Azerbaijan. Despite this, Azerbaijan was among the countries invited to the summit. At the same time, within the framework of the summit, I had very fruitful meetings with senior US leaders – President and Secretary of State.

I have also attended two international events in Turkey. A summit of the Organization of Islamic Cooperation was held there. It fully supported the position of Azerbaijan in connection with the April fighting. The final declaration reflected issues of the territorial integrity of Azerbaijan and pointed to the settlement of the conflict based on these principles. In addition, a contact group was set up within the framework of the Organization of Islamic Cooperation in connection with the conflict. It is also a huge diplomatic success for us.

Azerbaijan took an active part in another prestigious international event held in Turkey – the World Humanitarian Summit. In addition to these visits, there have been a number of visits on a bilateral basis – to the United Arab Emirates, the Islamic Republic of Iran, Turkey and Germany. There have been two meetings related to the Armenian-Azerbaijani Nagorno-Karabakh conflict: in Vienna in May and in St. Petersburg in June.

In other words, all these international events and Azerbaijan's active participation in them both show the importance of our country and usher new opportunities for us. At every international event we express the position of Azerbaijan, in particular regarding the Armenian-Azerbaijani Nagorno-Karabakh conflict. I dedicated almost half of my speech at the NATO Summit in Warsaw yesterday to this topic, and the attending heads of state and government heard the truth once again. Armenian lies do not impress anyone any longer. Using the capabilities of their Diaspora and the fact that we did not have much access to the international world, they spread false information about the conflict. Today, those days are over. The truth is that Azerbaijan is right, and the norms of international law must fully apply in connection with the conflict.

Touching upon the settlement of the conflict, I want to note that the negotiations are experiencing the so far unprecedented activity this year, especially in the last three to four months. After the April events, in May, on the initiative of the United States, a meeting was held in Vienna. The Armenian side put forward several conditions for the meeting to take place. By putting forward these conditions, they put themselves in a ridiculous situation once again, because they knew that Azerbaijan would not agree to any conditions. The negotiations are necessary for both parties. The April events showed that once again. If the negotiations are disrupted and Armenia continues its provocative activities, the situation may change.

Thus, Azerbaijan participated in the meeting held in May without accepting any conditions, and set out its own position. At the May meeting, Azerbaijan did not sign documents and did not make any statements. Co-chair countries issued a statement, but it is their internal affair. In June, at the initiative of the Russian side and at the invitation of President Putin, a meeting was held in St. Petersburg. This meeting was also very positive and reassuring. This is why a joint statement was made after the meeting. It was published in the media. I think that Azerbaijan's position is sufficiently reflected in this statement.

I met with the President of France Mr. Hollande yesterday. France as a co-chair country is also making effort to resolve the conflict. We do observe activity of the Minsk Group lately. America, Russia and now the French president are very seriously engaged in this issue. The talks should enter an active phase and Armenia should demonstrate a constructive position now. A phased solution of the issue is already accepted by all co-chair states and the OSCE. We have always said and are saying again that there is no other option. The issue must be resolved in stages. The territorial integrity of Azerbaijan must be ensured. A second Armenian state can’t be created. Nagorno-Karabakh can never be granted independence. The international community is already accepting that. In the old days, we used to hear other opinions. Unfortunately, international law and UN resolutions were sometimes ignored in the past and various untrue proposals related to the future of Nagorno-Karabakh, including those contradicting the historical truth, were made. All this is now in the past. A phased solution of the conflict is the only option. If this option is implemented, our lands will be freed from occupiers. At the same time, the Armenian population of Nagorno-Karabakh and the Azerbaijanis who will definitely return there will live in peace and security. There is no other way to resolve this issue.

I should note that the talks have been very active in the last three to four months. Of course, Armenia will bend over backwards to undermine the negotiating process again. It will try to gain time again. It is not ruled out that by resorting to yet another provocation on the contact line, it will try to disrupt the talks – as it did in 2014. Less than a week after very positive talks were held at the initiative of President Hollande in Paris, they staged large-scale military exercises in Agdam District. It was pure provocation, and everyone knows it now. This is also clear to the international community. They know it, even though they are not openly declaring that. During that provocation, they deliberately attacked our positions, provoking us to shoot down their helicopter in order to accuse us of aggression and disruption of negotiations afterwards. And disrupted they were! 2015 was a lost year for the negotiations. The Minsk Group held a formal meeting in Switzerland in December. After that meeting, the Armenian side apparently saw that the process can get active and resorted to another provocation in April. Therefore, the large states involved in the matter should be aware of all these realities. In fact, they know this. At the bilateral level, I have explained the position of Azerbaijan, the actual history of the problem and the causes of the conflict. Therefore, I believe that there are good opportunities at this stage. I do hope that this process will lead to positive results.

Along with this, of course, we are strengthening and enhancing our military capability. The April fighting showed once again that we have carried out correct policies. Today, everyone can see that the Azerbaijani army is among the strongest armies of the world in terms of technical equipment and combat capability. The Azerbaijani army today can complete any military task. We simply hope that the conflict can still be resolved peacefully, and our expectations have slightly grown of late. The main task now is as follows: co-chair countries of the OSCE should exert serious pressure on Armenia to give a positive answer in relation to the proposed issue.

Strengthening our military capability will remain a priority. Further measures were taken after the April events. Our combat capability has greatly increased and will increase even more. We are purchasing the most sophisticated hardware, weaponry and ammunition. Of course, this multiplies our strength and strengthens our positions in the negotiations. Therefore, the policy we have pursued for many years has proved efficient. From now on, the strengthening of our military potential and the process of army building should go even faster. We should and will further increase local production. Azerbaijan already has a powerful military industry. At the same time, we are purchasing and will continue to purchase the most technologically advanced weaponry.

Of course, we should have strong economic potential to address all these issues. Despite the fact that the price of oil has fallen three- to fourfold over the course of the year, Azerbaijan is still developing. The gross domestic product has slightly decreased. It has different reasons. But it is gratifying that the main sectors of the economy, the industry and agriculture, have grown further. In other words, the real sector has increased. Industrial production has increased by 0.6 per cent. This is not a huge increase, but I think that for a crisis year it is a positive fact. The country’s non-oil industry has increased by 2.4 per cent. This is a very serious growth, and I think that it is very encouraging. In the future, it will increase even more, because I will tell you about the future plans later, including those related to the development of industrial potential. Of course, Azerbaijan will create a powerful industrial complex.

Agriculture has increased by more than 3 per cent. This is also a positive fact, but the potential is much greater. As a result of the word carried out this year, as well as the work to be done in the rest of the year and next year, a great progress will be achieved in agriculture. Information about that will be provided here.

The country's economy has received investments in the amount of $6.3 billion. This is also a very positive fact. Azerbaijan is an attractive country for investment. More foreign investment has been made this year. I view this as a positive development too, because domestic investment is reducing due to the reduction of our investment program. And this is also natural. But for foreign investors Azerbaijan is still a very attractive country, and I am sure that this process will be continued in the future.

A total of 78,000 permanent jobs have been created in the first six months of the year. In general, about 90,000 jobs have been created, but 78,000 of them are permanent. This is a very positive fact, because at the beginning of the year there was some concern about the fact that some jobs were being closed. Indeed, 26,000 jobs were closed, but 78,000 ones were opened. Therefore, as a result of the measures taken, including the jobs opened through state-owned companies – in fact, this work is also under way in the private sector – we are seeing a positive trend here. State bodies strongly recommended that the private sector should not cut jobs, perhaps slightly reduce people’s pay, but not sack people. Therefore, it should be acknowledged that the private sector also acted very responsibly. This is natural, because the private sector has for many years received great support from the government – both political and financial. The volume of loans granted on preferential terms exceeds $1 billion. Therefore, of course, the private sector must also bear social responsibility. Please note that 78,000 jobs have been created and 26,000 jobs have been closed. This means that more than 50,000 jobs have been created, and this is a very positive fact.

Serious steps have been taken in addressing social issues. In general, over the course of 2016 some countries have cut salaries and pensions. In Azerbaijan, salaries and pensions have been increased by 10 per cent, which is a very serious social initiative.

This year, we intend to proceed with the construction of social housing. The State Housing Agency, SHA, has been set up. Its main goal is to provide low-income families with housing on very favorable terms. At the same time, after this process adopts a massive scale, it will have a positive impact on the sectors of construction and production of building materials, eventually contributing to our overall industrial potential. At present, preparations are under way. I do hope that practical steps are taken this year, and this new social initiative gains momentum.

2016 will be remembered as a year of deep economic reforms. It is true that we have been conducting these reforms for many years. But the situation was different earlier. Oil production was growing. The price of oil exceeded $100. So our main objective was to implement infrastructure projects - both social and other infrastructure projects. We allocated tremendous funds. In a short time, we implemented major infrastructure projects related to electricity, gasification and construction of rural roads. Work in this direction is still under way, but the vast majority of infrastructure projects are over.

Now the situation is completely different. I have repeatedly said that we live in a post-oil period. After several years, Azerbaijan will be exporting large volumes of natural gas to world markets, and the inflow of foreign currency will increase again. But we have to live as if in a post-oil period. Under such circumstances, of course, it was necessary to carry out serious and profound economic reforms. And they are being carried out. We are conducting serious reforms both in the financial and banking sector, and in connection with the development of agriculture and industrial potential. We are applying major incentives to boost exports and attract investment. At the same time, major reforms are carried out in the sphere of taxation, particularly in the customs sector. This year, proceeds from customs authorities exceed the target level by 17 per cent. This is a very positive result. Tax authorities have achieve a collection rate exceeding the plan by 2 per cent. But there are still great resources there. I believe that the ongoing reforms in the tax system will lead to transparency of this whole situation before the end of the year. Just as in customs bodies, all issues are resolved transparently. Of course, this is seen by everyone, including business people. At the same time, the budget receives more money. In other words, we should deepen reforms in all areas, ensure transparency and public oversight. The financial discipline should be further invigorated. Under such circumstances, we will completely eliminate dependence on oil. This is exactly what our goal is. Within a few years, our state budget should be made up largely of the non-oil sector. After this, the fluctuations of the oil price will not of any value.

As I have already noted, in the social sphere we have increased salaries and pensions. Other reforms are also carried out. We need to create more opportunities for people to ensure their self-employment. To this end, funds have been allocated from the Contingency Fund of the President. In the near future, we will probably see the results of the first experiment. I think that the self-employment approach should prevail.

For many years, we have been providing people with targeted social assistance. This is also a very serious social initiative. More than 100,000 families are provided with targeted social assistance by the state. We do this because the material support of these people is not up to standard. But we should gradually create conditions for these low-income families to earn money themselves and to do business. In some cases, people are not particularly interested in the jobs created to the public sector. Some people say: I am getting aid from the state, why should I work? This is not good. This creates dependency. Dependency may grow into a very big problem in the future. Therefore, people should be more responsible. Government institutions should create conditions for the people receiving targeted social assistance to gradually establish their business. The government will help. Initially, 6 million manats has been allocated from the Contingency Fund of the President for this purpose. If necessary, even more will be allocated. People in every district will be provided with jobs. They will not be dependent on the state. They will earn honest money and support their families.

In other words, we have really done a great job in the first half of 2016. In the coming years, we will see the results of this work. Along with this, there are good results on two strategically important areas for our country. The implementation of both the Southern Gas Corridor and the international transport corridor North-South will significantly enhance the importance of our country. These projects are of great strategic importance for Azerbaijan and our partners. After all, our geographic location dictates: Azerbaijan should become one of the transport hubs not only of regional, but also of global proportions. The necessary measures are being taken to achieve that. Both the port and the North-South and East-West corridors are under construction. Serious negotiations are currently ongoing with all partner countries and potential partners. We need to try to attract cargo to order to increase the volume of transit through the territory of Azerbaijan. This will meet the political interests of our country and bring great profits.

Of course, a lot of work has been done so far in 2016. It is impossible to mention all of it, as it would take several hours. I have only pointed out to some key issues. More information will be provided during the discussions. I will share my views related to further instructions in my closing remarks.

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Other speakers at the meeting included Minister of Defense Industry Yavar Jamalov, Minister of Agriculture Heydar Asadov and Chairman of Azerbaijan Melioration and Water Management Company Ahmad Ahmadzade.

President Ilham Aliyev delivered a closing speech.

Closing speech of President Ilham Aliyev

- We have to work hard until the end of the year to meet all our objectives. I want to note once again: the results of the past six months show that Azerbaijan will successfully complete 2016. Of course, we should further improve our work on key priority areas. The speeches made today have also provided information on the work already done, the work ahead of us and the main priority areas. In essence, the ideas expressed in the speeches today identify the directions of our future work. In other words, they show once again that the industrial potential and agriculture will play a major role in our future development. The economic performance of the first half of 2016 is also very encouraging. I want to note again that our non-oil industry has grown by 2.4 per cent and agriculture by 3.1 per cent. But I am also sure that agricultural production will further increase before the end of the year.

With regard to industrial production, major projects are being realized. At the same time, the development of small and medium-sized businesses will further strengthen our industrial potential. Among the major projects, of course, I want to mention the projects being implemented by the Sumgayit Chemical Industry Park. A special place among them is occupied by the construction of the SOCAR Polymer complex. Large investments are being made there - about $700 million. Two years later, this enterprise will already be producing finished products. Dependence on imports will be completely eliminated and a large export potential will emerge. This should be the main direction and a priority for our future activities. We should also work hard to eliminate our dependence on imports and increase our export capacity. In parallel with this, we should explore and identify new export markets. Of course, for products sold on stock exchanges there is no need for seeking markets, but for other products we have to be competitive. There is a lot of competition for export markets in today's world. Major states and companies have largely divided the markets. Therefore, we need to make great effort to access these markets with our products.

In addition, we plan to put into operation a plant of nitrogen fertilizer in 2018. It will fully meet our demand for fertilizer, eliminate the need for imports and create a major export potential. The advantage here lies in the fact that there will be no problems with selling this product. With regard to the activity of the polymer plant, this should be the first step. After that, and maybe even now, the private sector may join the process, so that we could start the production of finished products. After all, the production of these raw materials will open up great opportunities. Using the opportunities of this plant, the private sector should carry out operational activities and pursue a flexible policy. If need be, numerous small and medium-sized enterprises could be set up with the support of the state in the near future, so that they could produce finished products in Azerbaijan.

Other large industrial enterprises are being created, and this process will be continued. But if we pay attention to the experience of developed countries, we can see that the economic potential there is determined by medium-sized and small businesses. We should also go this way, and additional measures will be taken for the development of entrepreneurship.

In Azerbaijan, there is an industry that has practically not developed at all. The private sector showed no interest in it and the state left it somewhat out of the spotlight. I am talking about the production of drugs. We are dependent on imports practically by 100 per cent. In recent years though, as a result of the measures taken in this area, the state has been playing a regulatory role. The Ministry of Economy together with the Ministry of Health have been dealing with this issue for over a year. As a result, the prices of medicines have dropped significantly. At the same time, there is already strict control over quality. Despite the fact that the rate of manat has fallen and we are completely dependent on imports, as a result of measures taken and state intervention in the positive sense of the word, prices have now stabilized. Prices of many drugs have reduced. But the time has come for Azerbaijan to begin the production of medicines. Appropriate instructions have been issued and negotiations with several foreign companies are under way. There is a lot of interest, because the Azerbaijani market is quite big. The population of Azerbaijan is approaching 10 million people, and there is a positive trend. Therefore, foreign companies are showing great interest. We must take advantage of that. At present, a serious program for the production of drugs is being designed. A cluster must be created. Thus, we will develop industrial potential in this area too and reduce dependence on imports. At the same time, we will be able to provide our citizens with high-quality medicines. I believe that before the end of the year all the negotiations and organizational matters should be resolved. This year we should start the construction of pharmaceutical factories.

I have repeatedly stated that there should be several industrial centers in Azerbaijan. Of course, Baku is the largest industrial city of the South Caucasus. In Ganja, Sumgayit and Mingachevir, there is a huge industrial potential and well-trained human resources. This year, we expect to lay the foundation of a light industry estate in Mingachevir. This will have a very positive impact on the solution to the problem of unemployment in Mingachevir. We will create a large industrial center. In Mingachevir, there are plans to build several major industrial enterprises. We will also develop the light industry there. Thousands of jobs will be created in the near future. Thousands of people are expected to work first in the construction of enterprises and then in their operation. Thus, we will create a new industrial center and provide people with work. Before the end of this year, we intend to lay the foundation of the first enterprise, and I am sure that this will be achieved.

As you know, we have been working for some time to establish industrial zones in every district. The first pilot project is being implemented in Neftchala District. Eight projects are ready for implementation in Neftchala. Investments in the amount of 40 million manats will be made them. A second industrial zone will be established in the town of Masalli. For doing business in the Masalli industrial area, entrepreneurs have been provided with 33 projects. The investment volume of these projects amounts to 31 million manats. This is a very positive development as it testifies to the fact that our decisions are being executed. I am sure that similar processes will be accelerated in other cities and districts of Azerbaijan because every district has ample opportunities for industrial development. First of all, we should provide ourselves with the whole range of industrial products. At the same time, we have to create a significant export potential and access foreign markets. This will have a very positive impact on employment.

The Joint Stock Company "AzerKhalcha" has recently been established. The art of carpet-weaving is our national heritage. Azerbaijan has developed carpet-weaving over the centuries. The Carpet Museum opened in the center of Baku, on the boulevard, two years ago is an architectural masterpiece. At the same time, it demonstrates our ancient art to the world. Unfortunately, carpet-weaving as an industry is not very developed in Azerbaijan. Carpets are woven only by those engaged in this business on an individual basis and capable of selling them both in the country and abroad. Considering the fact that we have great traditions in this area, that the art of carpet-weaving is a great heritage of the Azerbaijani people and we are at the forefront on a global scale, the decision has been made to regulate these issues in a consistent manner. For this ancient craft to continue to live, we have trained a large number of qualified professionals, thereby creating a carpet industry. By producing export-oriented merchandise, it will bring our country currency on a large scale.

All structural issues have already been resolved. At the same time, the Presidential Administration has been told to allocate space in various regions where people engaged in carpet-weaving could work. The instruction is being executed. The state provides and will continue to provide all the necessary equipment and machines. At the first stage, we will create a thousand and then 5,000 jobs. Employment will be provided. When we consider that it is mainly women who are engaged in carpet-weaving, we will succeed in providing women with jobs. In addition, we will export products. Thus, several objectives will be achieved here.

In short, the development of industrial capacity is one of the top priority issues. This year and in the coming years, great attention will be paid to this area.

In Azerbaijan, there is an industry that has practically not developed at all. The private sector showed no interest in it and the state left it somewhat out of the spotlight. I am talking about the production of drugs. We are dependent on imports practically by 100 per cent. In recent years though, as a result of the measures taken in this area, the state has been playing a regulatory role. The Ministry of Economy together with the Ministry of Health have been dealing with this issue for over a year. As a result, the prices of medicines have dropped significantly. At the same time, there is already strict control over quality. Despite the fact that the rate of manat has fallen and we are completely dependent on imports, as a result of measures taken and state intervention in the positive sense of the word, prices have now stabilized. Prices of many drugs have reduced. But the time has come for Azerbaijan to begin the production of medicines. Appropriate instructions have been issued and negotiations with several foreign companies are under way. There is a lot of interest, because the Azerbaijani market is quite big. The population of Azerbaijan is approaching 10 million people, and there is a positive trend. Therefore, foreign companies are showing great interest. We must take advantage of that. At present, a serious program for the production of drugs is being designed. A cluster must be created. Thus, we will develop industrial potential in this area too and reduce dependence on imports. At the same time, we will be able to provide our citizens with high-quality medicines. I believe that before the end of the year all the negotiations and organizational matters should be resolved. This year we should start the construction of pharmaceutical factories.

I have repeatedly stated that there should be several industrial centers in Azerbaijan. Of course, Baku is the largest industrial city of the South Caucasus. In Ganja, Sumgayit and Mingachevir, there is a huge industrial potential and well-trained human resources. This year, we expect to lay the foundation of a light industry estate in Mingachevir. This will have a very positive impact on the solution to the problem of unemployment in Mingachevir. We will create a large industrial center. In Mingachevir, there are plans to build several major industrial enterprises. We will also develop the light industry there. Thousands of jobs will be created in the near future. Thousands of people are expected to work first in the construction of enterprises and then in their operation. Thus, we will create a new industrial center and provide people with work. Before the end of this year, we intend to lay the foundation of the first enterprise, and I am sure that this will be achieved.

All structural issues have already been resolved. At the same time, the Presidential Administration has been told to allocate space in various regions where people engaged in carpet-weaving could work. The instruction is being executed. The state provides and will continue to provide all the necessary equipment and machines. At the first stage, we will create a thousand and then 5,000 jobs. Employment will be provided. When we consider that it is mainly women who are engaged in carpet-weaving, we will succeed in providing women with jobs. In addition, we will export products. Thus, several objectives will be achieved here.

Reports have been made today regarding the development of agriculture. Speeches have been made by the minister of agriculture and the chairman of the Open Joint Stock Company "Irrigation and Water Management", as these issues are closely related to each other. In agriculture, we expect to achieve major development. Firstly, reforms are now under way. Measures are being taken. In addition, there is a very serious scientific approach. I am sure that we will see even more impressive results in the near future. As I have already noted, this year there is already growth of 3.1 per cent. But we expect even greater growth. Of course, we need to use the land more rationally. Some proposals have been made here. I support these proposals, in particular those, related to animal husbandry. Today, livestock breeding is developing in enclosed areas. Therefore, there is no particular need for grazing land. It is necessary to make rational use of these lands in order to fully ensure food security and create great export potential.

In the old days, we, of course, focused primarily on food security issues because we were faced with major problems a few years ago. You may remember that even the signed contracts were not being executed, because we were importing grain and wheat. But then there was a drought in some countries, there were difficulties and our contracts were canceled.

It was a very serious signal for us. After that, we decided on the rapid development of grain production. Large farms were established and productivity increased from 23 to 30 quintals. Yield in large farms is 50-60 quintals. In other words, food security issues were in the foreground. Now we provide ourselves with meat. We fully provide ourselves with poultry as well. So those were food security issues. At the same time, it is time to pay serious attention to technical plants, especially when we consider that oil revenues have declined. We must, in a sense, compensate for that with exports of agricultural products.

Therefore, rational use of lands is the key task. In some cases, lands have been seized. Thousands of land plots are fenced. There is no activity on them. I have given the instruction, a statement has been prepared and submitted indicating the names of government officials. Some of the seized land is theirs. It is unacceptable. Land should be used rationally. If it are not used efficiently, it is necessary to take it away from entrepreneurs or other persons and pass it on to those who will cultivate it. Therefore, the Presidential Administration was instructed to make sure that there is no idle arable land. Local executive authorities are also dealing with this issue. Wealthy people should invest in agriculture in order to benefit the country and themselves.

Concerning crop production. As I have already said, we can’t fully provide ourselves with grain yet. However, I believe that we need to develop grain production by raising yields in the future. We see on the example of large farms that the yield can doubled. If the average yield of grain production in Azerbaijan reaches 50 quintals per hectare, we will not need new lands. We can focus our reclamation measures on the cultivation of other products, thereby creating new opportunities for export.

This year we have taken very serious steps related to the production of industrial plants. I want to emphasize the work of the Presidential Administration in this regard. The heads of local executive authorities have also worked very effectively. Of course, the Ministry of Agriculture and the Ministry of Economy are actively involved in this process. In a short period of time, we managed to create a major breakthrough in this sphere. Some figures have been voiced here. I want to touch upon these issues more broadly. For example, sericulture was widespread in Azerbaijan in Soviet times. But then we saw this sector almost completely collapse. As has already been mentioned here, whereas a little more than 200 kilograms of silkworm cocoons were produced in one district of Shaki last year, a total of 70 tons of cocoons have been produced in 25 districts in a short time this year. In other words, in a matter of 45 days people earned honest money with the support of the state. Thousands of people have earned 560 manats for their families over 45 days.

Today we have even more ambitious plans. It is possible to say that we have tripled the amount paid per kilogram of silkworm cocoons. Earlier only 3 manats were paid per kilogram, but today this amount is 8 manat. The process of planting mulberry saplings should go faster. I have enquired about this and have been informed that there are 354,000 mulberry trees in Azerbaijan. According to our plans, 1.6 million mulberry saplings should be planted in the fall. Ultimately, this will increase the production of silkworm cocoons from 232 kilograms last year to 1,300 tons in 2019. If people earned 560,000 manats in 45 days this year, in 2019 they will make 10 million manats. This is what the government is and will be doing. But let me appeal to the people living in the countryside: you should join this work too. It will be a great source of income for the state and the people. Thus, we can access world markets with our silk. This is also necessary for the promotion of Azerbaijan, for silk factory to work at full capacity and for employment. At the same time, people will make money and the state will earn currency. Azerbaijan will receive foreign currency.

There is a huge interest in the development of tobacco growing. A lot has been done in this area in a matter of one year. In 2015, tobacco was planted on an area of 1,400 hectares and on a further 2,500 hectares this year. This should gain even more momentum. Tobacco-growing is also a very profitable sphere. Unfortunately, this sector was overlooked for many years. Now we will restore tobacco as well. People engaged in tobacco growing in traditional regions should be prepared for that. The government provides and will continue to provide necessary support. At the same time, the state should and will provide support in purchasing tobacco.

Serious steps have been taken in connection with cotton growing. We are restoring and reviving cotton production, trying to return its former glory. Unfortunately, this industry also went through a recession in recent years. Last year, only 30,000 tons of cotton were picked from 18,000 hectares. As a result of the measures taken in just a few months, we sowed cotton on 52,000 hectares. This is why we expect to harvest 100,000 tons this year. Next year we should sow 120,000 hectares. We will apply new technologies and new irrigation systems. Therefore, the yield per hectare should increase from the current 20 quintals to at least 30. In this case, next year we should pick at least 300,000 tons of cotton. This will bring our country currency and provide employment. People who lived in the Soviet era will remember that at least two people worked on a hectare at the time. If there are two people working on a hectare, it means that 100,000 people will be employed this year and 250,000 people next year. I think that we need to fully restore cotton growing. The 300,000 tons expected next year are not the limit. We have to improve this figure. There is a great interest in this area. Currently, cotton is grown in 24 districts. People are very satisfied and express their gratitude. I want to say again that this sphere will remain a priority and we should apply the most advanced technologies there. A particularly important role will be played by the measures related to irrigation and land reclamation. Along with this, the Ministry of Finance was instructed to allocate large funds to purchase equipment this year.

A total of $360 million will be spent on equipment over the course of two years, including $170 million this year. Although we should save currency, it is necessary to invest in this industry in order to increase employment. In addition, this will pay off because the produce sold will bring currency and the debts will be repaid. Of course, the money spent on the purchase of equipment will also be returned to the state.

When one enquires about the production of other agricultural produce, an interesting picture comes up. It is known that the products that bring the most currency include hazelnuts. However, I should point out that the state has not provided sufficient support for the cultivation of hazelnuts. Last year, Azerbaijan received $90 million from hazelnut exports. After hazelnuts, the most currency is fetched by persimmons. We need to know this. These areas should receive serious government support. So I am instructing the Presidential Administration, the Ministry of Agriculture, the Ministry of Economy and other relevant bodies: these areas should be given serious government support, so that we could increase the volume of collected products. Azerbaijan is in 3rd or 4th place in the world for the production of hazelnuts. Our products are in great demand. Hazelnut production is possible not only in the north-western zone, but also in many other districts. Therefore it is necessary to conduct a research in all our districts where there are favorable climatic conditions. The state should provide strong support for the production of hazelnuts to develop rapidly and for people to earn more.

Currently, the construction of greenhouses has become widespread in Azerbaijan. It is also very gratifying. Businessmen invest heavily in this sphere. The state also provides support, which has a very positive impact on our export potential. The minister of agriculture has said here that prices are going down. At the same time, exports of agricultural produce have increased by 27 per cent. This is a very good indicator. Imports have reduced.

I believe that importation should not even exist as a concept. We should probably allow imports for the sake of diversity now. Some people are accustomed to foreign goods and give preference to them. Therefore, we can’t stop imports. But customs duties should be applied appropriately, so that people could prefer local products. First, the money fetched by local products stay in Azerbaijan. Secondly, local products are of high quality. They have no chemicals or substances hazardous to health. Unfortunately, some foreign products do contain such substances. In order to speed up and increase local production, we should, of course, adopt some regulatory measures. In general, imports of agricultural products in a country such as Azerbaijan do seem a little strange. Therefore, we should grow quality products, become self-sufficient and of course, protect our domestic market.

The minister of agriculture mentioned here that the development of animal husbandry is also entering a new phase. A new approach is being applied. In previous years, we purchased and distributed purebred cattle to farmers. This had a positive impact, because the productivity of pedigree cattle is, of course, higher. Also quite positive was the delivery of cattle of dairy and beef breeds. Today, we are moving on to the next new stage. We will try to improve the breed of cattle through artificial insemination. This will take several years. All necessary measures have been taken and, as already mentioned, funds have been allocated the Contingency Fund of the President for this area and for seed growing. I am sure that there will be serious progress here too. We pursue several goals. First of all, we will continue to fully provide ourselves with meat, milk and dairy products. The second objective is that we are about to develop an export potential. Third, we will use the pastures for growing other plants. Every inch of land is valuable for us. Let me reiterate that we can’t afford wasteful use of land. Therefore, the modern animal husbandry techniques will have a very positive effect on crop growing. Of course, it will also be necessary to take ameliorative measures on the lands intended for crop production. This year, funds have been allocated from the Contingency Fund of the President for the drilling of artesian wells. On the one hand, it provides the villagers with drinking water. On the other, it is good for arable land. The artesian wells to be drilled this year will provide irrigation to 3,000 hectares of land. We have to go this way, and the State Investment Program should continue to envisage funds for land reclamation measures. If need be, we can consider this issue in the current year. We have funds in the budget. Manats are also available in the State Oil Fund. The State Oil Fund sells dollars in the market. There is now a stock of manats. The government should submit a proposal on how we can use these funds, make the necessary arrangements and not waste any time.

Azerbaijan has started creating agro-parks - in Yalama and Shamkir. This is a good phenomenon, but it is not enough. We should create several agro-parks in all our regions. It is very important and beneficial. I think that the Ministry of Economy should pay attention to this matter when issuing loans. The Ministry of Agriculture and entrepreneurs should also join this process. The establishment of agro-parks requires large funds, but entrepreneurs can cooperate and set up a consortium. This is a more progressive approach. The establishment of an agro-park in Yalama is drawing to a close. Work in Shamkir is also progressing on schedule.

The state will continue to support the development of entrepreneurship. This year, entrepreneurs have received concessional loans worth 73 million manats. 77 per cent of these funds were issued after the previously granted loans had been repaid. This is also a very positive fact. The state budget is not overburdened and 80 per cent of the loans are granted to the agricultural sector. This reflects our policy. 74 per cent of the loans are issued to the regions. The implementation of the regional development programs is well under way.

We are creating a strong non-oil export potential today. At the same time, we are taking and will continue to take institutional measures to boost exports, so that entrepreneurs were keen to sell more products abroad. A rewards mechanism is already in place. I am sure that this will have a very positive impact and entrepreneurs will take advantage of that. In other words, the government provides subsidies for acreage, fuel and fertilizer, provides entrepreneurs with low-interest loans amounting to more than 1 billion manats. The government gives businesses advice and provides guidance documents so that they could build their business. The state acquires agricultural machinery and hands it over to farmers through leasing, builds a fertilizer plant. We now plan to build a pesticide plant. We carry out irrigation work, create large reservoirs of Shamkirchay and Takhtakorpu worth hundreds of millions and billions of manats. We ensure the flow of mountain rivers through canals into these reservoirs. At the same time, the state is prepared, as a matter of assistance, to purchase products from farmers for shipment abroad.

In other words, the state is doing everything. Where else are farmers provided with so much support?! Farmers pay only land tax. They are exempt from all other taxes. In other words, it is hard to find another country where the government would provide such support. Of course, we expect a result. And the result is the benefit of farmers. Let them live even better, earn even more, work, invest and increase our export potential. I am sure that we can thus assert Azerbaijan in the world as a country exporting modern agricultural produce. Of course, we need to expand into new markets. There are very good traditional markets. We should try to access the markets of developed countries. And to achieve this, quality and standardization should, of course, be at the highest level.

One of the areas bringing currency is tourism. Here, too, we expect very good results, especially when we consider that a lot of work has been done in recent years to promote Azerbaijan in the world. Azerbaijan hosts international events that attract attention around the world. For example, the Seventh Global Forum of the UN Alliance of Civilizations has been held this year. This is a global event. Several years ago, a great interest was aroused by the "Eurovision" song contest. Last year there were European Games. So Azerbaijan is already known. Of course, a special place in the promotion of our country belongs to Formula 1, because this competition has an audience of 500 million people. In terms of its popularity, Formula 1 is comparable to the World Cup in football and Olympic Games. It is not inferior to them. Whereas a World Cup and Olympic Games are held in the same city once or twice in 50 years, the Formula 1 competition will be held in Azerbaijan for at least four more years. Our advantage lies in the fact that it is a city competition, and the beauty of Baku has already been demonstrated to 500 million people.

This should and will give a huge impetus to the development of tourism. And we must be ready for that. We conduct these activities ourselves. Measures are being taken to promote our country in the world. We have recently eliminated problems with visas. The service “ASAN viza” is being set up. Anyone interested in coming to Baku as a tourist will be able to get a visa in three days and come here without any problems and any other requirements.

The main issue is to create the tourism industry, both for domestic tourism and for foreign visitors. We have a wonderful climate. There is Caspian coast in the summer and mountain ski resorts in the winter. We have a lot of historical monuments not only in Baku, but also in all regions. We have a modern infrastructure, hotels and roads. So a lot still remains to be done in this direction.

I have mentioned “ASAN viza”. I should also say that over these years the centers of “ASAN xidmət” have processed 10 million applications. These 10 million applications are an indicator in itself. I do not want to comment on that. We all know that service at “ASAN xidmət” is at the highest level. There is no bureaucracy, red tape or bribery. There is clear, transparent and cultured service. It has been a kind of a revolution in the field of public services. There are already nine centers - five in Baku and four in the regions: Sumgayit, Ganja, Barda and Sabirabad. This year we will create two new centers in Masalli and Gabala. There are 10 mobile buses. A new project will start operating soon: a system called “ASAN Qatar”, i.e. the services will be provided on trains.

In general, the reforms in this area are paying off. The fight against corruption and bribery is yielding fruit. We will take administrative measures, sanctions and structural measures.

I want to bring another figure to your attention. As you know, I have issued serious instructions regarding inspections. People were fed up with these inspections, as they did not allow entrepreneurs to breathe freely. Very serious instructions and were given. In six months of this year, there have been only 56 inspections, excluding tax audits. For comparison, let me say that there were 40,000 inspections last year. Just compare: 40,000 and 56. No comment is needed. This is the way it should be. What is behind these 40,000 inspections?! People subjected to such inspections will know it too well. We have saved them from that.

So this should be the case in every area. Transparency and honesty should be the norm. Honestly, I am saying this with a sense of pride. But this should be the norm. This should be the norm, not the 40,000 inspections.

Another serious social initiative has been put forward this year. The process of building low-cost housing for low-income families is kicking off. The State Housing Agency, SHA, has been set up. Organizational matters are being addressed now. Lands are allocated and the SHA should start the construction of housing soon. This housing will be provided to low-income people on long-term concessional terms. This is a very serious social initiative. It should receive strong momentum. There is a need for that in every region and district. At the same time, this initiative and this project will have a significant impact on the construction sector, because it is seriously lagging behind. It is in the construction sector that jobs were lost.

Large-scale construction projects are therefore expected. This will have a great positive impact, increase employment and revitalize the building materials sector. So entrepreneurs should also be prepared for that. It is a long-term project. The activities of the State Housing Agency will start this year and will be continued. Therefore, all construction materials must be produced in Azerbaijan. A considerable part of them is already produced in Azerbaijan. But now the volume and the demand will increase. The private sector must also be ready. It should build its work so that we could implement our development plans. Otherwise we will have to buy building materials abroad. Of course, we do not want to do that.

Since the beginning of this year, we have been implementing infrastructure projects. I must say that work is under way on trunk roads. The Ganja-Georgian border road is being turned into a four-lane highway. Expansion work is under way. A lot remains to be done this year on main road to the Russian border. Our agencies should try to complete this highway too. The process of transforming the Baku-Shamakhi road into a four-lane freeway is ongoing. Work on the Baku-Iranian border is also under way.

In addition, the construction of rural roads is also progressing fast. Funds amounting to 200 million manats have been allocated from the state budget for that. In the suburban settlements of Baku, we are implementing approximately 60-70 road projects. This will also have a huge impact. We are creating both the infrastructure and jobs. Tens of thousands of people are provided with jobs in these projects. This process will be continued next year too. After a few months perhaps, I should be provided with projects for the next year.

Projects of drinking water are implemented throughout our country. In many districts, they have already been realized. A drinking water and sanitation project should be implemented in each district center.

These are the objectives ahead of us. I want to say again: I am pleased with the results of the first half of 2016. We are developing despite the crisis. The important thing is that we have very clear programs for each area. There are many other areas I do not have time to talk about. But there are specific programs for every area. However, the main thing for us is industrial production and agriculture. I am sure that all of my orders will be fulfilled and we will successfully complete the current year. Thank you.