Weekly actual topics in Azerbaijan (Oct. 19-23)

Shadow economy share in Azerbaijan's GDP exceeds 9%

The shadow economy share in Azerbaijan's GDP is 9.1 percent, Rauf Salimov, the deputy chairman of the State Statistics Committee, wrote in an article published in the Statistika xeberleri scientific journal.

"The share of the shadow economy in the industry is 1.1 percent of GDP, agriculture - 0.5 percent, construction - 1.3 percent, the vehicle repair and trade - 2.1 percent, transport and warehousing - 0.4 percent, tourist accommodation and catering - 0.4 percent, social and other services - 3.3 percent," he wrote.

For comparison, the share of shadow economy in the Czech Republic, Lithuania and Poland does not exceed one per cent of GDP.

He wrote that while submitting the statistics reports and declarations to the state agencies, the entrepreneurs distort the data in some cases.

"According to the observations, the distortion in the statistics reports and declarations, submitted by the enterprises and organizations, is often observed in the fields of construction, processing industry, trade, transport and storage facility, tourist accommodation and catering, social and other services," he wrote.

Salimov wrote that the data is usually distorted in six of ten reports submitted by the entrepreneurs to the tax, statistics and other state agencies.

Such situation often occurs in small enterprises in seven of ten cases (with up to 20 employees).

"On average, the companies' actual revenues are underestimated by 29.1 percent, the expenditure for salary - by 23.8 percent, the expenditure for raw materials are overestimated by 14.5 percent, payments for services - by 16.1 percent, other expenses - 6.3 percent," Salimov said.

According to the observations, the revenues in trade are mainly underestimated by 44.4 percent.

"The revenues in the manufacturing sector are by 25.8 percent less than the actual ones, transport and warehousing - by 33.8 percent, tourist accommodation and catering - 29.4 percent, social and other services - by 22.3 percent," he wrote.

Azerbaijan receives attractive investing opportunities from Hungary

Hungary has interest in Azerbaijani investments and stands ready to provide certain preferences for those investments to come to the country, Hungary's Ambassador to Azerbaijan Imre Laszloczki said.

"The government of Hungary provides certain benefits to foreign investors, creates a room for their work," said the ambassador.

The diplomat added that the preferences include the foreign investor's exemption from taxes for five years if new jobs are created, and provision of beneficial conditions for their work.

The ambassador said that one and a half years ago the Hungarian Investment Promotion Agency (HIPA) was transferred to Hungary's Foreign Ministry, and the implementation of 74 major economic projects with foreign capital started through the HIPA in Hungary over this period.
The ambassador said the Mercedes plant in Hungary, the largest car plant in Europe, is one of such large foreign projects.

More information on investment opportunities in Hungary can be found on the HIPA's website at: http://hipa.hu/en/our-services/hungarian-investment-projects/

Laszloczki said the promising areas of economic cooperation between Azerbaijan and Hungary include the agrarian sector, ICT and production of medical supplies intended, for example, for people with disabilities.

"There are already some agreements on cooperation in all three areas," the ambassador said.

He stressed the high level of the cooperation between the two countries in the political sphere.

"The political relations between the two countries are at a very good level," the diplomat said. "Now it is time when the economy is in the forefront in the countries' relations. As a new ambassador of Hungary to Azerbaijan, the promotion to the development of economic ties is a priority. I will exert every effort for their development."

"The Hungarian government is also interested in expanding the Hungarian business in Azerbaijan and considers Azerbaijan as a potential market for different Hungarian products," he said.

"A lot of Hungarian companies are ready to offer Azerbaijan its products of high quality and at low prices," he said. "I see tremendous opportunities for cooperation between the two countries in the ICT field. This is an area in which Hungary can offer Azerbaijan innovative solutions to different issues."

"In particular, Hungary is also considering the possibility of financing the project of the Regional DATA-center," the diplomat said. "There is another interesting project, namely, the establishment of a joint financial fund."

Regional DATA-center draft is implemented with the support of the UNDP. The data processing center is built on an area of 1,000 square meters. Initially, the number of server cabinets of the center will be 200, the volume of the array - 30 petabytes, and data transfer speed - 10-100 gigabits per second. As the needs grow, the capacity of the DATA-center will be increased.

DATA-center of Tier3 level will ensure stable operation in case of failure of any node of the system, as it will have an availability index of 99.985 percent.

The matter rests in a disaster-steady DATA-center, the customers of which can be confident that their data will be protected.

The DATA-center will become the first such data processing center that functions in the region. The center will also provide services to countries in the region and the world's largest companies such as Google, Facebook and others.

Agriculture is also one of the priority areas for cooperation between the two countries, the ambassador said.

"Hungary has already passed the period of transition from a planned to a market stage of development of the agricultural sector and can share its experience in this field, as well as in the issue of farming," Laszloczki said. "We also have high-quality technologies in the agricultural sector, which we can offer to Azerbaijani farmers at affordable prices."

The diplomat said that the Hungarian Trading House operating in Baku also assists businessmen from both countries in creating mutually beneficial cooperation.

The trade turnover between the two countries stood at around $79 million as of 2014, said the ambassador, adding that this figure is expected to exceed $80 million as of 2015.

The resumption of flights by Hungary's Wizz Air company on Baku-Budapest route can also contribute to the development of trade and economic relations between the two countries, Laszloczki said, adding that hopefully, the company will resume the flights soon.

Hungary and Azerbaijan can expand the cooperation in training various specialists, according to the diplomat.

"Azerbaijan and Hungary have good cooperation in the sphere of education," said the ambassador, adding that every year, Hungarian government allocates places for education of Azerbaijani students in the country's universities.
He noted that 200 places in Hungarian universities were allocated for Azerbaijani students in 2014.

Azerbaijani students can directly apply to Hungarian universities online and pass exams on Skype, according to Laszloczki.

"We are also interested in education of Hungarian students in Azerbaijani universities," he said. "Hungary needs specialists with knowledge of Azerbaijani language who are closely familiar with the region."

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