Nakhchivan Industrial Park: Key driver for export-oriented economic growth Caliber.Az review

For the second consecutive year, the Nakhchivan Autonomous Republic (NAR) has been undertaking significant administrative and personnel reforms designed to optimize labour relations, enhance fiscal transparency, and create a more business-friendly environment. As outlined in the detailed action plan approved last September by the Azerbaijani Cabinet of Ministers under the "State Program for the Socio-Economic Development of NAR for 2023–2027," these efforts aim to attract investment, boost agro-industrial production, and increase exports. Advancing this agenda, Azerbaijani President Ilham Aliyev issued a decree on December 5 to establish the Nakhchivan Industrial Park, marking a pivotal step in the region’s economic transformation.

Since late 2022, the Nakhchivan Autonomous Republic (NAR) has embarked on sweeping reforms within its government institutions, focusing on personnel restructuring and organizational transformation. These administrative reforms, carried out under the directive of the head of state, aim to implement targeted economic changes and accelerate the region’s sustainable development.

A cornerstone of these efforts is the "State Program for the Socio-Economic Development of Nakhchivan AR for 2023–2027," approved by Azerbaijani President Ilham Aliyev in June last year. Among the program’s key priorities are the large-scale modernization of energy and transportation infrastructure, the establishment of new agro-industrial, processing, and extractive enterprises, and the execution of other strategic projects to attract both domestic and international investment to the region.

Ultimately, these initiatives are designed to maximize the utilization of Nakhchivan's workforce, which currently numbers around 470,000 residents.

Economic reforms in Nakhchivan are already delivering tangible results. As of October 1, 2024, the number of small and medium-sized enterprises (SMEs) in the Nakhchivan Autonomous Republic (NAR) increased by 57.3% compared to the beginning of the year. Local businesses are particularly active in the real economy and are effectively utilizing funds from the Entrepreneurship Development Fund. Over the first ten months of the year, 75.9% of loans issued were directed to the industrial sector, while 16.9% supported agricultural development.

Over the past two years, NAR has been building a robust power generation and transit infrastructure with significant export potential to supply electricity to Türkiye and Europe. This includes the modernization and construction of new substations and power transmission lines. Additionally, as part of the "green energy zones" initiative, hydroelectric and solar power plants are being developed. Plans are also in place for the construction of a high-capacity SCADA centre and the reconstruction of urban and rural distribution networks across the autonomous region.

An equally significant milestone under the State Program has been the construction of the 97.5-kilometer Igdir-Nakhchivan gas pipeline, launched in 2023. With a peak capacity of 730 million cubic meters per year, this pipeline will fully meet the natural gas needs of Nakhchivan's population and industries.

"The construction of the Igdir-Nakhchivan gas pipeline has been successfully completed on schedule, and natural gas will soon begin flowing from Türkiye to Nakhchivan. This will play a vital role in ensuring the energy security of the autonomous republic," stated Asip Kaya, Türkiye’s Consul General in Nakhchivan, on December 5.

In Nakhchivan, preparations are underway for a major modernization of the railway and highway infrastructure as part of the project to link transportation networks with the transboundary international railway and the Horadiz-Aghband highway. In the near future, "steel" routes are expected to connect Türkiye’s Kars to NAR, while Iran's railway system will become accessible via the Julfa border crossing.

To promote trade and tourism, plans are also in place to attract low-cost airlines and passenger carriers to establish regular flights and cargo services with regional international airports. Additionally, the expansion of the terminal at Nakhchivan International Airport is being considered.

The opening of these transportation links is set to significantly boost commercial and intermediary services, foster the development of export-oriented industries, and enhance the processing of agro-industrial products, driving economic growth in the region.

This objective represents a cornerstone of the State Program, which outlines a comprehensive strategy for rural development, fostering a favourable business environment, and advancing an export-oriented value chain. This will be achieved by attracting foreign investments, innovative technologies, and expertise.

Nakhchivan has already accumulated substantial experience in this area. Over the past decade, approximately 440 industrial and processing enterprises have been established in the region, producing more than 350 types of goods, primarily agricultural products. These include high-quality dried fruits, canned fruits and vegetables, wine products, and more, underscoring the region's growing agro-industrial potential.

The State Program envisions the establishment of several new agro-processing and packaging enterprises in Nakhchivan. These include meat and dairy processing plants, canning factories, workshops for processing fruits and vegetables, and facilities for producing dried fruits. Plans also involve developing beekeeping operations and organizing honey packaging.

Additionally, the localization of sugar and starch production, leather and wool processing, as well as the manufacture of containers and various types of packaging, is on the agenda. Expanding agricultural processing and packaging is a key priority of the program, along with the creation of agro-parks to drive large-scale commercial production.

To attract investors—both individuals and businesses—the program provides tax and social insurance incentives. Furthermore, plans are in place to establish a special customs zone and logistics centres in Nakhchivan to develop the region into a trade hub and boost exports to international markets. Key initiatives include the creation of a free economic zone (FEZ), an industrial park, and the development of the "Sharur" industrial district.

A significant step has recently been taken in the development of Nakhchivan's processing and food sectors: by decree of the head of state, the Nakhchivan Industrial Park will be established. The operation, management, and development of the park will be overseen by the Agency for Development of Economic Zones (ADEZ), under Azerbaijan’s Ministry of Economy.

According to the decree, the necessary infrastructure, administrative, management, and other structures required for entrepreneurial activities will be established within the park. It will focus on the production of competitive, export-oriented products and provide services using modern technologies to foster effective business operations and entrepreneurship.

For the design and organization of the park, including the development of external and internal infrastructure (electricity, heating, gas, water, sewage, communications, transportation, fire protection, and other industrial, administrative, social, and infrastructure facilities), ADEZ will receive 500,000 manats ($294,000) from the President’s Reserve Fund, allocated in the 2024 state budget. In addition, the Cabinet of Ministers of NAR is tasked with providing ADEZ with permanent use rights over 310 hectares of agricultural land in the southwestern part of the city of Nakhchivan, south of the Nakhchivan-Sadarak highway, within two months, with the right to lease the land.

The development of the mining industry and construction materials production are also among the promising areas for industrial growth in Nakhchivan, with significant potential in this sector. The region is home to 21 known mineral deposits, including molybdenum, polymetallic ores, arsenic, and gold. There are also deposits of high-quality rock salt, sources of table mineral waters such as "Badamli" and "Sirab," as well as hydrocarbon mineral waters like Nahajir and Dariadag.

In particular, AzerGold CJSC has begun exploration activities. Research using hyperspectral remote sensing technology has been conducted over an area of 2,566 square kilometres in the northeastern part of NAR. Since 2018, AzerGold has been carrying out exploration and research work on promising sites, including the "Ortakend" gold deposit, the first gold deposit in the autonomous republic to be prepared for exploitation. Future projects include exploration at the copper-gold deposit "Bashkend," the copper occurrence "Paradash," and the copper-molybdenum occurrence "Goydag," all located in the Julfa district of NAR.