azerbaijan’s ict sector: dynamic and...

AZERBAIJAN’s ICT Sector:Dynamic and Growing

Ministry of Communications and Information Technologies of the Republic of Azerbaijan, 2007, USA

Prof. Dr. Ali M. ABBASOVMinister of Communications and Information Technologies of the Republic of Azerbaijan

ICT Sector: Turning Black Gold into Human Gold

Network, Regulatory and Legal Overview

National Priorities and Projects, and Areas for Investment and Collaboration

AZERBAIJAN’s ICT Sector

Azerbaijan: One of the World’s Fastest Growing Economies


World

Azerbaijan

0%

10%

20%

30%

40%

'00 ’01 ’02 ’03 ’04 '05 '06Source: Economist Intelligence Unit (2005)

26% growth in 2005

Incoming State Revenues: Oil Projects are Booming


Azerbaijan’s revenues from these four projects were estimated at $107B over a ten year cycle – assuming oil prices were $30 per barrel.

At the current level of $50 per barrel, the ten year revenue stream increases to an unprecedented $178 B.

The ICT Sector: Over the Long Term –

Even more Opportunities than Oil!

0

5000

10000

15000

20000

25000

30000

35000

40000

2000 2005 2010 2015 2020 2025

OIL Telecom

$M


New Ministry leadership in 2004 with vision, resources and an action plan to build a modern ICT sector – and a merger of communications and ITOngoing participation in major global ICT events, including:

GAID, Davos 2007, Tunis 2005, Geneva 2003, BakuTel, othersVisits to and with numerous stakeholders for partnership and investment dialogues including USA, Russia, Dubai, Iran, South Korea, Japan; over 30 in total

Established new partnerships, 33 inter-governmental agreements and MOUs, and received ICT sector-related grants from:

US Trade and Development Agency and UNDPICT MOU with US Department of StateWorld Bank - $30M project loanSouth Korea e-government loanOther private agreements

Commitments to sector reform, including investment, collaboration, and better use of national technology resources (human and capital) to improve domestic development and capabilities, and to boost regional and global trade and investment.

The New Ministry: Catalyzing Sector Change

Azerbaijan’s Government: Supporting the ICT Sector’s Growth


•tate support for developing non-oil sectors; profits from oil &gas allocated to the next priority sector: ICT

•trategy in place to reshape the economy towards high-tech & knowledge

•lans in place to leverage Azerbaijan’s strategic location as a crossroad of international transport corridors

•tate policy to develop the national transportation network

•

State Priorities in ICT


Source: The world Economic Forum, 2005

4.69

5.155.28

5.55.57

5.13

5.65

4.45

4.91

4.46

5.015.09

3.973.5 4.0 4.5 5.0 5.5 6.0

Italy 85China 56

Germany 53Austria 43

Azerbaijan 29Great Britain 27

France 25Hongkong 24

Jordan 12USA 19

Japan 13India 9

Republic of Korea 7

Opportunities Await!Azerbaijan is

heading up the scale…

Source: The Global Information Technology Report 2005


Rating of Use of IT

77

6655

44

33

22

11

USAUSA

ChinaChina

FranceFrance

JapanJapan

CаnadaCаnada

ItalyItaly

Great-BritainGreat-Britain

RussianRussian

EgyptEgyptAzerbaijan

now…Azerbaijan

now…

-3 -2 -1 0 1 2 3

Azerbaijan in the near future…

Quality of Azerbaijan’s Scientific Education


Source: The World Economic Forum, 2005

4.24

5.055.32

5.71

4.79

5.97

3.49

4.38

4

4.414.55

3.0 3.5 4.0 4.5 5.0 5.5

Azerbaijan 82Italy 64

China 51Great Britain 47

Germany 46USA 39

Austria 33Republic of Korea 25

Japan 19Hong Kong 10

India 5France 4

6.0

5.57

3.46

2.65 2.53

1.251.02 0.9

0.75 0.69 0.67 0.62 0.58 0.58 0.49 0.42 0.38 0.3 0.29 0.25 0.22 0.2

1.16

0

0.5

1

1.5

2

2.5

3

3.5

4

Finlan

dUSA

German

yRuss

ia Ukra

ine

Hungary

Moldova

Estonia

Mala

ysia

Lithu

aniaBela

rusSlov

akia

Poland

Bulgari

aLa

tvia

Romania

Azerba

ijan

Georgi

aArm

enia

Kazakh

stan

Kyrgyz

stan

R&D Expenditures in AzerbaijanWe would like to collaborate to improve this percentage…

R&D expenditures as a share of GDP (2002, in %)

Source: UNESCO Institute of Statistics, 2007

Subscriber Growth: Double Digit in Key Areas!


Source: Pyramid Research; Economist Intelligence Unit.

PSTN subscribers

20012001 20022002 20032003 20042004

10.7

20052005 20062006

11.4 11.5 12.4 13.3 14.1

Mobile subscribers 7.9 9.7 12.8 18.03 27.0 38.7

Internet users4 5 6 7 8 10

(per 100 citizens)

Investments in PSTN and Mobile Networks (1997-2006)


101,5

32,441,2 40,5

79,2

122,82

138,5

13,53,2

25,1

10,1 12,58,116,4 18,1

34,2329,4

40,1 45,740,4

10,72,22,3 3 2,2 4,642,9

0

20

40

60

80

100

120

140

160

1998 1999 2000 2001 2002 2003 2004 2005 2006

mln

US

D

PSTN Mobile Other

Azerbaijan’s ICT Imports: Export Opportunities!


46,268Other ICT goods

12,323Audio and video equipments

7,806Electronic equipments

35,047Computer and computer equipments

136,155Telecommunications equipments

In US $000, 2005

Telecom Sector Revenue(1997/2006)


0,0

100,0

200,0

300,0

400,0

500,0

1997 2006

mln

USD

Private sector Government Sector

116,7

32,0%

68,0%

72,3

mobile sector

26,0

27,7%

mobile sector

90,4

657,5

Main Reform Directions in the ICT sector

Privatization of state owned enterprisesLiberalization of marketCreate an independent Regulator and well functioning regulatory processesImprove legislation to modern standards

Our goal is to provide and sustain a fair, transparent and competitive marketplace.


Legal Base and RegulatoryFramework: Accomplishments


E-signature and e-documentPostal servicesCommunicationsTelecommunicationE-commerce

The following laws have been adopted:

Planned Commitments by Azerbaijan to the WTO for the

Telecommunications Sector

Market liberalizationPrivatization of state-owned communication enterprisesCreation of the sound competitive environment; Prevention of anti-competitive practicesEstablishment of the independent regulatory body3 years after admittance to the WTO, allowing other operators into the international communication service marketTransparency of interconnection arrangementsPublic availability of the procedures for interconnection negotiationsPublic availability of licensing criteria

We are working towards meeting the following WTO requirements:


Azerbaijan’s ICT Sector:Ten Key Features


1.he Azerbaijan market is small -- but quickly evolving and serves as a vital link to regional ICT opportunities

2.he IT market for telecom equipment is growing fast

3.obile telephony is growing rapidly; introduction of third cellular operator has been initiated

4.rowing demand for systems and software application

5.rowth potential for main wholesalers and distributors

6.pportunities for application development – e.g, registry, I-cards, customs automation, election

systems, student enrollments, tax administration and e-banking.

7.ong-expected privatization of the monopoly service provider is taking place – leading to related telecom sector development and overall market growth

Azerbaijan’s ICT Sector:Key Opportunities and Trends


•oftware companies are rapidly developing…

• Azerbaijan is seeking collaborations and investors to supplementthe software capabilities that exist

• Azeri language software – opportunities for growth

•omputers are being assembled based on imported sub-assemblies

•elecom manufacturing focusing towards specialized segments

•arket Potential:

• Content creation and IT enabled services• Replication of Azeri computer systems, applications and IT

t i t ti f th C

Current ICT State Programs

“National ICT Strategy for development of the Republic of Azerbaijan” (2003-2012)“State Program on development of communication and information technologies of the Republic of Azerbaijan in accordance with modern requirements” (2005 – 2008) (E-Azerbaijan)“State Program on Socio-Economic Development of the Republic of Azerbaijan” (2004-2008)“State Program on provision of secondary and primary schools with the information and communications technologies” (2005-2007)“State Program on poverty reduction and development”


“National E-Governance Network Initiative” Project


The July 2004 initiation of this Project is the outcome of the Republic ofAzerbaijan’s commitment e-government development combined with strong support from the United Nations Development Programme.

• National Backbone Network – AzDATACOM: The network is a crucial pieceof the country’s infrastructure; when completed, the network will provide high-speed interconnectivity for the regions and the capital city, Baku.

• Support development of national e-governance, serving as an agent for change, coordinating relevant activities, developing central e-government infrastructure, supporting policy development, and initiating new projects in the areas of G2G, G2B, with the special focus on G2C.

Project Activities include:

Regional Innovation Zone (RIZ) in Azerbaijan

There are fundamental motivations – and opportunities -- for developing a RIZ in Azerbaijan

The region has a big gap in the ICT industry;During Soviet times, and through today, Azerbaijan possesses distinctive intellectual/scientific human capacities;The BTC pipeline – and its secure and proven international contracting methodologies - is only the start!

Azerbaijan is now working to create and sustain a technology platform, business development environment, physical and information infrastructure, and related regulatory, legal and tax planning other initiatives that will provide an attractive, consistent and secure investment and operating environment; MCIT General Advisor and Booz Allen Hamilton Study Team at work with recommendations forthcoming in the Spring

The Azerbaijan government is ready to share the investment risk.


Ministry Opportunities: Regional Innovation Zone

Currently in the evaluation and planning stage, with assistance from a major global technology consulting firm, the RIZ has five core objectives:

S: Stimulate technology innovation via small and middle scale entrepreneurs;

H: Develop human resources, particularly in IT and high technology areas;

I: Create an international data transit center;

N: Provide a hospitable, innovative and collaborative environment for new and established domestic, regional and global technology organizations to invest and expand operations in Azerbaijan;

E: Establish an innovative environment that supports and enhances production and regional exports of electronic equipment and software products and services.


Visit www.mincom.gov.az for updates about this important project.

World Population StatisticsInformation Market


80%E-content

20% E-content

Azerbaijan22,2

7,8 1,7

35,61,8

28,5

2,6

Azerbaijan is a strategic location for Caspian investment and

regional operations…


And thank you for joining us -- and look forward to working

together.

We welcome you to Azerbaijan…

33, Azerbaijan ave., Baku AzerbaijanE-mail: [email protected]; [email protected]

www.mincom.gov.azPhone: +994 12 493 00 04


azerbaijan’s ict sector: dynamic and...

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