The Government of Azerbaijan has initiated a long-term diversification plan focused on non-oil industry development. The plan anticipated the introduction of second-generation regulatory reforms and economic incentives aimed at developing non-oil sectors, such as ICT. A strong ICT infrastructure base is a prerequisite for a country's diversification, as it creates opportunities for a leap forward by strengthening a country's physical capital, spurring faster growth, and reducing income inequality. ICTs contribute to increased productivity, economic growth, and profitability of organizations across all sectors. Although oil and gas reserves are limited, and their production and transportation are largely influenced by external factors, the Azerbaijani government has recently focused its policy on economic diversification, which, among other things, prioritizes public investment for the development of information and communication technologies (ICT) sector. The ICT sector includes a broad range of manufacturing and service industries including the telecommunications industry. It enables companies and customers to connect with one another while promoting a culture of information sharing. Indeed, ICT is a core enabler of economy, society, and government.
Liberalization of telecommunications, modernization, and expansion of the national telecommunications infrastructure, implementation of e-government and other sectoral policies have helped stimulate the growth of the local ICT sector, which has grown by an average of 25-30% since 2005. The telecommunications industry, specifically its mobile communications segment, has made a big impact on the overall development of the ICT sector. Compared to Central Asian countries, Azerbaijan has the lowest prices for fixed and mobile broadband access in relation to average disposable monthly income.
The Azerbaijani government aims to develop the country's IT market by launching education and e-government programs, expanding digital resources available to schools and universities outside of Baku, and expanding e-services. The government has also set up several technology parks across the country that offer tax benefits and incentives for companies.
E-governance has become a prosperous area of cooperation between businesses and the government of Azerbaijan. The Ministry of Taxes has enabled the payment of taxes online, the Customs Committee has introduced electronic applications and payment services, and the “Asan İmza” mobile electronic signature technology authorizes the use of mobile phones as an electronic identity card and a means of signing documents.
Additionally, the main targets of the “Long term Strategy on Management of Oil and Gas Revenues” confirmed by the government cover the period up to 2025, and foresee redirecting profits from the oil sector towards the nonoil sectors, thereby also completely resulting in stimulating future growth of the ICT sector.
In general, the “open door” policy pursued by the government to reach the development of the country's economy through clusters and increase investment attractiveness has led Azerbaijan to achieve new progress in an international environment which is integrating faster than ever. This also visibly appears in the sound competition available in the ICT sector and the investment engagement of the companies operating in the business environment. Accordingly, the favorable conditions created in the sector as a result of the targeted state policy augment the interest and trust of the foreign investors in this sphere annually.