Weekly economic review (July 18-22)

Analysis Materials 25 July 2016 16:16 (UTC +04:00)

Switzerland interested in Azerbaijan’s energy industry, tourism, pharmaceutics

Trend has had an interview with Ueli Maurer, head of the Swiss Federal Department of Finance, ex-president, during his visit to Baku.

First of all, we would like to welcome you in Azerbaijan. You have already had meetings with Azerbaijani President Ilham Aliyev, Finance Minister Samir Sharifov and head of the Central Bank Elman Rustamov.

What was the general purpose of your visit to Azerbaijan? What topics were discussed and what are the initial results of those discussions?

We had meetings with President Ilham Aliyev, finance minister and chairman of the Central Bank. Our dialogue focused on cooperation as part of our electoral group, cooperation in the banking sector and the further developments in connection with the fall in oil prices. During the dialogue, we noted that we equally evaluate the situation and we will take the necessary measures at all levels. As the situation is unstable, we have not made any concrete decision on any issue as further dialogue will be required in the future.

Secondly, we discussed our bilateral cooperation, as well as the issues related to trade turnover and investments. Azerbaijan is well-known in Switzerland. Azerbaijan’s state oil company SOCAR operates in Switzerland. There are 150 SOCAR filling stations all over the country.

For Swiss companies, Azerbaijan is a very important country for making investments. I think the private firms will also invest in Azerbaijan in the future. I would like to draw the conclusion that Azerbaijan is a very attractive country for Switzerland. All contacts established during the visit to Azerbaijan and all the dialogues were very constructive and took place in a very friendly manner. I am confident that we will further develop our cooperation.

I would like to note that Azerbaijan has a strategic importance, as it links the North and the South, as well as the East and the West. Due to its strategic location and abundant resources, Azerbaijan is a very interesting and important partner for Europe and Switzerland.

Currently, Azerbaijan is the main trade partner of Switzerland in the South Caucasus, as well as one of Switzerland’s main trade partners in CIS. Does the current trade turnover between Azerbaijan and Switzerland reflect the whole potential of the two countries?

What products are primarily traded between our countries and what prospective areas are there to expand this list?

Perhaps, and considering this matter on the timeline it is necessary to distinguish the terms in which we consider the trade turnover. If we consider this in the medium term, then there is a great potential to develop the trade relations. But in the short term, there is the issue of lower prices for energy resources, therefore, it is difficult to judge about the potential volume of trade turnover.

As for the areas that will help increase the trade turnover volume, I would mention tourism, chemical industry, pharmaceutics, as well as energy industry.

Azerbaijan, in particular, Baku is a very attractive tourist destination for Switzerland. We liked it a lot. In Switzerland, there are people who are interested in operating direct flights between our counties. Such sports events as European Games 2015, Formula 1 in Baku and the advertisement at the recent UEFA European Football Championships increase our people’s interest in Azerbaijan.

Switzerland actively invests in Azerbaijan’s non-oil sector. Many large Swiss companies operate in the country and one of them, SIKA, is the resident of Sumgait Chemical Industrial Park. Do other Swiss companies have interest in Azerbaijan’s industrial parks? What are the priority areas of investing in our country?

SIKA is a very good example of active investment by Swiss companies in Azerbaijan. I would like to note that Swiss entrepreneurs are ready to invest in such spheres as transportation and infrastructure in Azerbaijan. Stadler and Holcim can serve as a good example in this regard.

Moreover, Nestle actively invests in Azerbaijan’s food industry. Buhler, operating in machine and processing industry, is also investing in your country. Our companies are also interested in making investments in the chemical industry and all this requires time, so, these investments should be considered in the long term.

Azerbaijan is the most attractive country for Swiss investments in the Caucasus, provided that there is political and financial stability.

One of the units attached to the Swiss Federal Department of Finance is the Financial Market Supervisory Authority. In early 2016, Azerbaijan created a similar structure, the Financial Market Supervisory Body, which controls the insurance market and the securities market as well. How effective is the operation of such structures and how effective is it to put all financial markets of a country under the supervision of one structure? Which measures could be most effective for stabilizing the situation in Azerbaijan’s banking sector in the current instability in the world economy?

I would like to note from our experience that in Switzerland the supervision over financial markets is being exercised independently and separately from the Ministry of Finance and the National Bank, and I would recommend to Azerbaijan and other countries a similar approach.

But in Azerbaijan also, the Financial Market Supervisory Body operates independently from the Central Bank, which realizes the monetary policy.

Then, I would suggest, not only to Azerbaijan, but also to all countries to try to cut costs, invest correctly and enhance control over the banks in the current unstable situation in the world economy in order to prevent extraordinary events in this area.

This is my recipe, my approach, but do not forget that each state can have its own approach to address these issues.

Azerbaijan’s tax and customs bodies too have been recently subordinated to the Ministry of Finance. But later, they turned into separate structures. What is the advantage and possible difficulties of centralizing these structures?

I would like to note that both authorities – tax and customs – have no big differences in our country, as our customs service provides about 20 percent of all income, including VAT.

Maybe in other countries, these authorities are operating differently, but processes taking place in our customs and tax structures are virtually identical – they are all related to collection of funds and directing them to the budget. Therefore, it makes sense to merge these two structures under one ministry in our country.