TBY talks to Farid Asadov, Chairman of the Executive Board at AtaHolding, on the banking industry, changes to insurance laws, and the hospitality segment.
TBY How would you assess the overall strengths and challenges of Azerbaijan’s banking system?
FARID ASADOV In general, the Azerbaijani financial sector is steadily growing despite the global financial crisis, and we observe optimistic inflation indices in the country. Azerbaijan’s economy is constantly developing based on this economic trend, the foundation of which was established by the national leader Heydar Aliyev and is successfully continued nowadays by President Ilham Aliyev. The Central Bank of Azerbaijan (CBAR) tightly controlled money flows during the crisis and made strong efforts to maintain a stable currency, which significantly decreased the negative impact of the global crisis on Azerbaijan’s financial sector, ensuring stable growth over the last five years. The nationwide credit portfolio during the first 11 months of 2011 increased by 7.5%, bank assets by 10.78%, and client deposits by 26.4%. This economic policy has resulted in a tripling of GDP and kept inflation in the single digits. The country has attracted a significant amount of investment, and a serious improvement has been made in business compatibility legislation. The banking sector is developing well and has extremely positive future growth indices.
How will recent changes in insurance laws and the increase of compulsory lines impact Ata Insurance and the sector as a whole?
I am sure that changes in the insurance law and market will definitely lead to qualitative and quantitative changes. AtaSigorta, or “Ata Insurance,” is actively participating in the Compulsory Insurance Bureau, established in 2011 after changes in the insurance law. This empowers AtaSigorta to provide compulsory insurance in the areas of real estate and automobiles. As the culture of insurance practice is new for the Azerbaijani market, the population will need time to adapt to it. Our main goal is to become a leading company in the insurance market, while being a quality and reliable partner for our customers, working within the agreed timeframe. This, along with correct advertisement campaigns, means I am sure we will be guaranteed profitable results in the future. The insurance market is gradually improving, and it grew by 36% in 2011 alone, up from AZN156 million to AZN213 million.
You have made several investments in the hospitality industry, starting with the iconic Excelsior Hotel Baku. How would you assess demand for five-star rooms in Baku, and what does this signal about the broader economy?
Excelsior Hotel Baku is one of the most attractive and well-organized hotels in Azerbaijan’s capital city. It has gained popularity among guests, who leave our country broadly satisfied and wanting to come back to Baku. The increasing need for high-quality hotels in Azerbaijan, and the growth of foreign investment in the country, makes us very optimistic for the future potential of the tourism sector. We are proud that Excelsior Hotel Baku is the first five-star in Baku, positively contributing to the improvement of the business environment in the country. Our country is becoming an attractive tourist destination, hosting a number of international sporting competitions, conferences, and seminars, as well as the increasing arrival of foreign companies.
What motivated your recent creation of AtaTravel, and what are your plans for the new company?
Azerbaijan’s economy grows with each year, and tourism is developing accordingly for the government pays special attention to this sector. AtaTravel aims to serve foreign visitors, emphasizing client satisfaction and a versatile services offering. AtaTravel offers a wide range of service packages to meet a customer’s tourism and travel expectations, covering attractive sightseeing, and highlighting historical monuments and sites in Azerbaijan. We also envisage the development of the internal tourism market as well. We are currently holding negotiations with leading European tour operators in the light of our future cooperation. In this regard, we recently signed a cooperation agreement with the Legrand tourist company in Greece, which enables us to obtain attractive prices from Greek hotels and resorts.
What impact do you expect the Eurovision Song Contest will have on the tourism sector and the country as a whole?
It was a superb result for the nation and the result of much effort to promote Azerbaijani culture and music at conferences and events taking place in various European countries. Azerbaijan will attract the attention of not only European countries taking part in this event, but also countries outside of Europe, such as in Australia, which also holds the rights to broadcast the event. We anticipate a large inflow of tourists during the contest, significantly contributing to the development of the tourism sector.
What is your outlook for the Azerbaijani economy, and what does this signal for the future of AtaHolding’s growth and development?
Large-scale investments are being made into the country’s economy by both the government and the private sector. Investments in the non-oil sectors are prevailing over those of the oil sector. In 2011, the size of investment in Azerbaijan reached $20 billion. A well thought out economic strategy and market reforms will guarantee many years of sustainable development for Azerbaijan’s economy. There is major potential in all spheres of the economy, with the creation of huge industrial techno parks and the vast gas fields that have been discovered. As well, Azerbaijan is getting ready to become a major gas exporting country in the coming years. Further infrastructure upgrades are ongoing, and we are seeing some mega-projects being implemented. I also believe that in the future we will see significant growth in industry, especially in the metallurgical sector. Finally, the AtaHolding group of companies will continue to do our best for the future development of Azerbaijan. The main target defined by President Ilham Aliyev is to double GDP by 2020. Led by our corporate logo “Synergy for Azerbaijan…” we are firm in our efforts to invest in different spheres of the economy to support economic development, bring modern services and expertise to local markets, as well as successfully represent our country in the international marketplace.
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