IFC suggests introducing single window system while granting permissions for Azerbaijani construction sector

Business Materials 27 June 2009 16:40 (UTC +04:00)

Azerbaijan, Baku, June 27 / Trend I. Khalilova /

The International Finance Corporation announced results of monitoring on business. Monitoring was conducted among small and medium entrepreneurship of Azerbaijan. According to monitoring, 63 percent of respondents consider licensing procedures as difficult, report of Azerbaijani project on business improvement (AzBEE) said.  

IFC project launched research of Azerbaijani business sphere late 2007. Poll was conducted among 1,766 respondents, 873 - individual entrepreneurs, 893 - legal entities.

Poll demonstrated that expenses for individual entrepreneurs hit 276 manat ($340) to get license in Azerbaijan. But expenses for small and medium enterprises hit 564 manat ($696). These calculations were made given official and unofficial payments on the basis of poll conducted among local companies. Unofficial payments create certain problems for entrepreneurs launching activity.    

Other factor of licensing raising price is that certain kinds of license are given for short term. According to licensing procedures, licensees are given for 5 years, for production of strong drinks and ethyl alcohol - 3 years but for their import - 1 year.    

Individual entrepreneurs, small and medium enterprises lose 1 percent of annual profit while getting license, IFC said.

Moreover, an entrepreneur must get three permissions to launch business. Individual entrepreneurs waste 136 manat ($167) but small and medium enterprises - 250 manat ($308) to get permission.  

According to calculations conducted as a result of poll, private sector wastes 35 million manat ($43.2) for direct, indirect and alternative expenses to get necessary permissions.

"Reduction of permissions and expenses for one/third will allow private sector economizing 11.6 million manat ($14.3 million), the report said. The government will economize 5 million manat ($6.17 million) by reducing man power connected with granting of license. 

IFC recommends the government to reduce number of permissions and limit coverage sphere within improvement of permissions and licensing system. It is possible by the governmental forming full list of permissions; simplifying process of permission granting (it is suggested adopting legislative act, introducing principle of self-certification); prolongation of term (reduce expenses). The corporation also suggested introducing single window system to give certain kinds of permissions. It is acceptable for construction sector requiring getting of several permissions.

United register of permissions is planned to draw up by late 2009.

Project is implemented together with BP Company and Switzerland's state secretariat for economic affairs (Seco). Seco granted the government grant in the amount of $4.3 million but BP - $0.456 million to improve business in Azerbaijan.

Program covers 5 years. It envisages reduction of regulating obstacles in entrepreneurs' activity, conducting of monitoring on business, increase of legal knowledge by enlightenment.

IFC assisted to change and adopt 11 major laws/regulations within project of business improvement. It allowed economizing $93 million for small and medium enterprises.

On June 27, the official exchange rate is 0.8041 manat to $1.

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