Tax holidays can give impetus to e-commerce development in Azerbaijan

Azerbaijan Materials 18 January 2013 16:29 (UTC +04:00)

Azerbaijan, Baku, Jan. 17 / Trend H. Valiyev /

Tax holidays can give impetus to the e-commerce development in Azerbaijan, Goldenpay company director General Farid Ismayilzade said today.

He said that the legal regulation of e-commerce is an important component in the development now.

The Electronic Commerce Act effective from 2005 is out of date. These laws become irrelevant almost every year. This happens in the IT sector which is developing quite rapidly, he said.

"I think it necessary to apply tax holidays to revive electronic commerce, that is, to temporarily exempt entrepreneurs operating in the Internet sphere from tax fees," he said. "This contributes to the establishment and development of the e-commerce market."

Referring to the company's direct participation in e-commerce, he noticed that Goldenpay still cannot launch an 'e-wallet' project due to lack of legal regulation of payment systems.

"There are many advantages of e-commerce," he said. "First, this will reduce the scale of using cash which is essentially a big expense for the country. For example, up to 20 per cent falls to the cash flow in the U.S."

Another important aspect is that there is no need to rent office space and keep staff working when doing business over the Internet.

"Azerbaijan's e-commerce has a bright future," he said. "One can see significant changes after a couple of years. Previously, the main problem was the illegal conduct of business on the network, but today this issue has been resolved by using such credit cards as the World Card, Albalı, Bolkart and others. A seller realises that he gets access to a large customer base through these bank products. Moreover, he will earn more in the case of cooperation with the banks issuing these cards."

These cards can be integrated for example, through GoldenPay. This means that, for example an Albalı card holder can make a purchase with extra bonuses through an online store. On account of this many electronic stores prefer cashless payments.

"Accordingly if there is such a trend, then e-commerce will develop much more rapidly," he said.
Today, the customer base of advanced electronic stores in Azerbaijan reached 5000.

"Our system hesab.az has 36,000 users and the average monthly growth hit is 4000," he said. "This means that even with a small advertisement in the hesab.az network, we want to become like ebay.com, opening wide opportunities for online stores that can sell their products through our site."

Azerbaijan's Internet audience is rather progressive. However, venture financing is required for the further e-commerce development. Goldenpay's project is the result of venture capital.

"Unfortunately, very few people finance a long term project in Azerbaijan," he said. "It is difficult to explain to a domestic investor how one can earn money in a virtual sphere. Therefore you can say there is no process of venture financing, while there are a lot of projects, but they are virtually unnoticeable."

As for the technical component, that is a software component while doing business on the Internet, then the programme part of the online store must be developed directly by the owner.
"Unfortunately, many want to use the finished resources because they are cheap or even get them free of charge," he said. "Then after a while they are experiencing difficulties as there is no product code and it is impossible to make any changes to it."

Unfortunately, there are few programming specialists in Azerbaijan.

He said they can be divided into two categories - the specialists of a high and medium level. The first category is provided with highly paid jobs in large companies. Unfortunately, the level of mid-level specialists leaves much to be desired. Many companies in Azerbaijan often hire programmers from Russia and Belarus.

"Such universities as Caucasus, Azerbaijan State Oil Academy and Baku State University can be ranked among the programming schools in Azerbaijan," he said. "Unfortunately, the subject of programming is not taught at a high level."