Window in ten
This year Azerbaijan can considerably strengthen its position in the annual report of the World Bank and International Finance Corporation (IFC) on business dealing - Doing Business 2009. As known, since 1 January 2008 the simplified method of business dealing for entrepreneurs through the principle of "single window" has been operating in Azerbaijan. Procedure of establishing new business in Azerbaijan has been much more simplified, introducing a single agency for business registration, of which duties have been assigned to the Ministry of Taxes of Azerbaijan.
Introduction of a new system has allowed to reduce number of procedures for registration of entrepreneurs by three times, the period of registration - by 20 times. Up to now, to begin a new business it was required to pass 15 procedures of gathering documents in the Ministry of Taxes, Ministry of Agriculture, Ministry of Labor and Social Protection, State Statistics Committee, Social Protection Fund, to submit 33 documents, and the period of registration made up 72 days. After the beginning of registration through single agency three days are enough for full preparation of all documents which totally makes up five.
In a word, the businessman gets representation in bodies of registration by submitting five documents, also via online system. As a result the businessman should come to the Ministry of Taxes for only once to receive legal documents.
Thus, an end was put to bureaucratic obstacles in the system of registration of new business in Azerbaijan. Transition of Azerbaijan to registration of enterprise activity through principle of "single window" promotes improvement of the investment environment, decrease dependence of business on State agencies and liquidate long-term registration.
The Ministry of Taxes has already started ensuring on-line relations with businessmen. Actually, it speaks that there is an opportunity of providing license for the beginning of activity in the on-line form. Registration of business is carried out not only in Baku, but also through regional departments of the Ministry of Taxes in the cities of Ganja and Sumgait and Nakhchivan Autonomous Republic. Thus, the system established on the basis of up-to-date information technologies has been fully-automated and will provide full security and confidentiality of information exchange.
A general virtual base, in which all data with introduction of the system of codification will be incorporated, has been established. If today the enterprise possess various codes for different kinds of activity (codes for the tax purposes, statistics, social payments), introduction of new system provides application of the unified code. Due to introduction of the system, changes and additions were made to 12 documents, amendments to 10 acts
According to the Ministry of Taxes, the number of businessmen receiving state registration in January 2008 after introduction of system 'single window' in Azerbaijan made up 1886. Whereas over three months of 2007, 1270 new legal persons were registered only. It means that businessmen were not interested in establishing legal entity due to bureaucratic delays.
Convenience from introduction of the principle of "single window" during registration of business promoted that facilitating procedures of activity were solved in various other structures of the country as well.
Principle of "single window" is also supposed to be applied in building sector introduction. The new system includes measures on simplification of land regulations and reception of permission for construction. If earlier the businessman himself had to receive and submit all necessary documents to authorized body, now it is supposed that the agency itself will collect documents. As a result, the number of documents necessary for receiving permission for construction will be reduced from 28 up to 12. "We wish to create conditions for transition to a new system within 1-2 months," a source at the Ministry of Economic Development said.
The new rules envisages reducing time necessary for receiving license for construction, permission for the construction work and allocation of land for construction. Yet these procedures take 220 days in Azerbaijan. The rules envisage serious reduction of periods, but all will depend on a final wording of actions.
In its turn, after the decree on liberalization of construction activity in Azerbaijan, the International Finance Corporation (IFC) is ready to begin providing assistance to system of licensing and permitting in order to achieve simplification in procedures and reduction of expenses of business people. The Corporation initially began to work with the Ministry of Economic Development and Ministry of Emergency Situations of Azerbaijan. The question of simplification of permission system in a context of the general reduction of administrative barriers is being discussed with the Ministry of Emergency Situations. The Ministry of Emergency Situations has been having the right to provide license for construction activities already for couple of years.
According to the report by the OSCE Baku office and non-governmental organization League of Protection of Labor Rights of Citizens, as a result of monitoring of the situation of the real estate market in Azerbaijan, now it is necessary to receive permission for construction of housing or non-housing fund in Azerbaijan in almost 42 various instances. "So, at the best, more than 130 days is required for receiving permission for construction and it becomes a reason for reduction in investments into the market of real estate, monopoly of the construction sector and sharp increase of the prices for the land and housing," the report says. In view of these processes it is offered to make changes to the legislation concerning terms of receiving registration in each instance and to lower relations of the officials with consumers of service of the state agency. "The most optimum decision of problem will be introduction of a principle "single window" in this sphere," the report says.
The real estate
State Service for Register of Real Estate of Azerbaijan started process of introducing principle of "single window" to lower the term of registration of real estate to three days. Process of introduction of a principle "single window" started and is used in 20 territorial and 53 regional departments of Service. The Head of Service, Arif Garashov, said that the principle is used for construction. However, firstly legal and technical examination is held, and later the construction is realized. But the principle is impossible for population, because before service, inhabitants appeal to municipalities, local agencies, etc.
Within the framework of the project with the World Bank, the State Service has already started transition to the automated system of the register of real estate and introduction of system of single cadastre of the real estate. Now already 13 from working 20 district departments of the State Service accept the automated documents for registration of property. Information systems which are introduced within the framework of the joint project will be graphic and text in a single form. Single communication will enable to reduce time and the work for registration of real estate. "All these conditions will create an opportunity for introduction of system 'single window' for registration of real estate. Registration of the real estate will be carried out for three days," Garashov said.
Full transition to system 'single window' in Azerbaijan in the field of the real estate will take place in 2011 after full realization of the first basic component of the joint project with the WB.
In the near future, the State Customs Committee plans to widely use the principle of "single window", especially the State Committee has developed a project of introduction of this system on customs - checkpoints. The project providing simplification of procedure of registration has already been submitted to the Government. For simplification of trade on border of Azerbaijan, the Government has appealed to the World Trade Organization (WTO) and to the UN Special Programme for the Economies of Central Asia (SPECA) with a request to assist in establishing system 'single window'. Amongst countries of SPECA (the countries of Asia, Afghanistan and Azerbaijan), Azerbaijan firstly initiated realization of this project. United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and Organisation for European Economic Co-operation will assist Azerbaijan inrealizing the project on simplification of registration of business on border of Azerbaijan.
Today during passage through border, the cargoes are exposed to supervision from the State Customs Committee and the State Border Service, as well as State Sanitary Service, State Veterinary Service, Sanitary Department of Ministry of Health, Ministry of Transport and the Interior Ministry.
The key goal of the project is to put one State structure into charge of coordinating clean-up of cargoes which will involve interested parties as required. In practice of Turkey, the coordinator is the Customs Service, but its system imperfectly acts, and therefore, currently its modernization is going on. In the European countries, only several countries apply system 'single window' on border, but the Balkan countries have started to implement similar project.
Now the State Customs Committee carries out on boundary timing to check up activity of customs bodies, and also monitoring of passage of cargoes to reveal problems.
The system 'single window' is supposed to be introduced in Azerbaijan for registration of targeted social aid. The representative of the Ministry of Labour and Social Protection of the Population of Azerbaijan, Babek Huseynov, told that recently not 21, but 14 documents are required for registration of targeted social aid, but after expiration of six-month period, during second registration, only three documents are required.
Pluses for country
"After estimation reforms by the Government of Azerbaijan, as compared to other countries, we can assess, its improvement," said the representative of the IFC in Azerbaijan, Aida Azimova. Azimova has noted that work now is carried out in the field of construction permission, protection of the rights of investors, liberalization of the labor legislation and in the field of tax administration (introduction of system of on-line declaration). Further, there are plans to take measures in the field of closing business (bankruptcy), simplification of procedures (according to the current legislation, nearly two years are required) of trans-border trade.
Predictably, besides increase of economic freedom in the country, introduction of principle of 'single window' will have positive influence on external estimations of the country. Especially Azerbaijan's rating is expected to increase in traditional research of the World Bank and International Finance Corporation (IFC) on business dealing - Doing Business. The rating of Azerbaijan will improve by several times, and the country will receive the right to join the club of the states successfully reforming the sphere of private business. In current review Doing Business for 2008 Azerbaijan occupies 96th place against 99th place last year.
But introduction of a principle 'single window' for opening business and further in other structures will lead to the issue that in the nearest year Azerbaijan can achieve increase of place in ranking on ten of steps, especially improvement of tax policy and measures on registration of real estate. The author of the report Doing Business 2008, Semion Jankov, said that from next year Azerbaijan can join top-ten of reformer-countries if it continues works on support and protection of investments, preparation of passports for construction, allocation of lands, simplification of procedures for examination of constructions and other reforms.
According to the forecasts of the government, the number of small enterprises in 2010 will increase at least by 20% as compared to 2007. It is expected that the number of the registered legal entities annually will grow up to 10-15,000 whereas up to now, their number did not exceed 4-5,000, and at 20-30,000 fell on physical entities. In the USA of the 25mln business people registered annually, 17mln fall on legal entities. Along with the economic and the social importance, introduction of system will be an effective mechanism of reducing unemployment, of which level makes up 7.7% currently.