Simplification of Licensing System in Azerbaijan to Reduce Expenditures by One Third

Business Materials 20 August 2008 19:08 (UTC +04:00)

Azerbaijan, Baku, 20 August / Trend corr. I.Khalilova / Simplification of licensing system in Azerbaijan will enable to reduce expenditures by one third, said Lars Tunel, the general executive secretary of the International Finance Cooperation (IFC) and executive vice president of the World Bank group on private sector.

"Improving of licensing system does not mean removal of control, but improvement of procedure on issuing license, which will be fully changed within a year," Tunel said.

" IFC is prepared to support reforms in improvement of administrative procedures and removal of main regulating obstacles for the beginning of entrepreneurial activity. Particularly, the corporation will assist government in use of (after improvement) legislation, which regulates licensing system and granting of permissions.

According to Heydar Babayev, the Azerbaijani Economic Development Minister, this issue requires complex examination - from cost of licensing, terms of permission granting to number of licensed kind of activities. The leading countries use in practice unlimited licensing, he said. At present Azerbaijan uses one, two, three and five-year term of permission. The IFC officials consider five-year term licensing to be a good practice.

However, in accordance with the Law on Insurance, which came into force in March 2008, for the first time, unlimited licensing was introduced for insurance activities.

Payment scale on getting of licensing changes depending on kinds of activity. The Minister said that the payment would be high on profitable kinds of activity, such as telecommunication. Currently, the Economic Development Ministry is realizing work with the relevant economic departments and intends to coordinate measures with the IFC.

Work is also conducted to delimitate areas, which can be granted urgent permissions.

In accordance with the Azerbaijani President Ilham Aliyev's decree, dated 29 December 2006, on Kinds of Commercial Activities Requiring Special Permission (License), the list, size of tariffs and organizations, which issue licenses, was specified. The list includes 50 kinds of commercial activities. Earlier this list included 37 kinds, more earlier - 204 kinds.

In 2007, one more kind of activity - from sale to manufacturing of gold products was included in this list.

The amount of the state tariff for getting of licensing differs depending on kinds of activities and varies within the limit from AZN 220 to AZN 25,000.

Work on improvement of licensing system was included in action plan within the framework of the State program on Development of Entrepreneurship for 2008-2013. The draft of the state program was submitted for consideration of the President's Administration.

The Government is also prepared to simplify the registration system for construction companies, to improve systems of single window, tax system and to liberalize foreign trade. All these measures will positively influence on improvement of the country's rating on Doing Business, joint report of the IFC and the WB.

The exchange rate for US dollar is AZN 0.81381 on 20 August.

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