Weekly actual topics in Azerbaijan (Oct.22-26)

Azerbaijan in Doing Business-2013: reforms are yielding results

The reforms that have been implemented in Azerbaijan over the past few years in the field of registration of assets now give concrete results.

Thus, in Azerbaijan real estate registration system is considered the most advanced among the ten indicators according to which the authors of the report Doing Business - 2013 estimated the business climate in the world. According to this index, our country has retained its place in the top ten, becoming the ninth among 185 countries.

Facilitating of the procedures in the area played the main role in it. This in turn contributed to the change in the Azerbaijani legislation - the introduction of new tariffs for expedited review and issuance of documents confirming the right to own property. The fixed amount of state duty for registration of property rights established in 2009 amounts to an average of 0.5 percent of the property value, whereas in other countries this figure is 3 - 5 percent of the property value.

Structural reforms in the public authorities responsible for the sector were carried out for effective approach to the activity and to avoid duplication of work. As a result, the State Property Committee was established in 2009 on the basis of the Azerbaijani State Committee on State Property Management. In addition the State Real Estate Register Service of Azerbaijan was abolished and Estate Register Service of the State Committee for Property Affairs was created on its basis.

Creation of a single registry of real estate transactions has reduced the number of procedures to register property from seven to four. Two out of these four procedures are transferred to an accelerated mode, which allows to make the registration of the property within 11 days. For comparison the procedure is twice as long in the countries of Central Asia and Europe.

The effectiveness of these reforms was immediately reflected in the statistics of property registration. Thus, according to Azerbaijani State Committee on Property Issues, more than 147,000 properties were registered in 2011,which is 56 per cent than in 2010.

Work on electronic registration of real estate in Azerbaijan is currently carried out to improve registration system of property rights. Work is underway on creation of a digital map of a unified real estate cadastre across the country, the database is transferred to electronic form. This allows citizens to receive comprehensive services in on-line mode, without having to visit the relevant authorities, which will further reduce the time and number of procedures in this area.

In the future, following the creation of ASAN centers, registration on real estate transactions in Azerbaijan will be available through a system of 'single window', which will significantly increase the level of provided services.

The recognition of Azerbaijan's leadership in this sector by international institutions is essential. This report is an important document for many of the major investors in the world in identification of new areas for their investments. In many ways, it is used while making decisions on investment in a country, in particular in non oil sector, which is very important for Azerbaijan.

Coupon system in Iran - relic of past?

The use of the coupon system for food in Iran, which is currently discussed - a premature move.

There are controversial discussions between officials for a long time on the introduction of the coupon system for food. It should be noted that an ardent supporter of the system is a member of parliament Ahmed Tefekyul, who was against it during the period of the coupon system in Iran in the post-revolutionary period. Tefekyul calls a difficult social situation in the country due to the unstable economic situation as a reason for the revision of views.

Indeed, the situation in Iran isn't very good due to the toughening sanctions of the EU and the U.S.. It isn't Iran that used a coupon system as a country importing most of essential goods 30 years ago. Today, Iran, according to official data of the country, is able to provide own production of food needed for the country, and the surplus is exported. A comprehensive program prepared by the Ministry of Agriculture is carried out here to achieve self-sufficiency in the production of such a strategically important product as wheat, and a plan to import and storage of strategically important products of first necessity is being carried out since 2010.

According to FAO, Iran today is among the 12 largest world producers of wheat, and the consumption of wheat in the country per capita is around 8.7 kg per month, which is the best indicator in the calculation of food security. Therefore, there is no sign of food shortages in Iran at present.

Hasty introduction of the coupon system is fraught with mass problem. So, first, there can be problems with a fair distribution of coupons, leading to the corruption in all its forms, and second, it can lead to problems of pricing in the markets, in particular the chaotic growth of commodity prices with coupons for free market and in the social sphere - it is endless queues and frustration.

Review of the state administration system, the solution of such serious problems as inflation, devaluation of rial at a high level will be more effective solution to regulate economic situation in the country.

Iranian Parliament Speaker Ali Larijani said the sanctions take effect on the country at 20 percent and 80 percent of the problems come from improper management.

Iran's crisis solution: Tax vs oil revenues

Seyed Shamseddin Hosseini, Irani Minister of Economic Affairs and Finance announced that Iran is planning to fight against sanctions, imposed on Iranian oil incomes by the Western countries. He said oil revenues cut could be compensated by tax, IRIB reported.

Two days before Hosseini's statement, Oil Minister Rostam Qasemi said within his recent trip to the United Arab Emirates on Oct 23 that if the West intensifies sanctions against the Islamic Republic, the country will shut down its oil exports.

Iranian Supreme Leader has called several times the government on planning a "resistance economy" in sanction conditions due to Iran's nuclear program. Hosseini says that for launching resistance economy, Iranian government incomes structure should be redefined.

Oil and oil production revenues make up about a half of Iranian yearly budget, which is $5.660 trillion rials (about $449 billion based on official USD rate in Iran). According to Hosseini's statement, the share of tax incomes in government's revenue is 43 per cent.

The industry sector brings a huge amount of paid tax, but during current year, this sector faced significant problems because of sanctions and lacking liquidity.

For instance, in August, the Association of Iranian Carmakers announced that car output fell by 36 per cent during the first quarter of the current calendar year (began on March 20) compared to the same period last year.

In other industry sectors, the situation is similar. Reportedly, thousands of workers have been fired, because firms, fabricates and companies work with half capacity or are shut down. On the other hand, increasing unemployment means decreasing taxes. This is why, replacing more than 110 billion petroleum incomes with tax seems very difficult.

The deputy director of the State Tax Affairs Organization Mohammad-Qasem Panahi stated on September 26 that Iran's direct and indirect tax incomes totalled 141 trillion rials (only some $11.5 billion) during the first five months of the current Iranian calendar year.

On August 10, the State Tax Affairs Organisation's director Ali Askari said that the current year's budget law has envisaged earning 340 trillion rials (some $27.7 billion) as tax income.

According to the latest report of the International Energy Agency, which was published on October 12, Iran's crude oil exports and output stood at respectively 860, 000 barrels and 2.63 million barrels per day in September, compared to 2.4 million barrels of oil exports and 3.68 million barrels per day last year. This means, Iran lost about two third of oil export revenues during current year, which was $114.76 billion in 2011. Last year, Iran's total exports were 130.54 billion, this means the bulk of Iran's export income relies on petroleum and oil production revenues.

According to OPEC statistics, in 2011, Iran's daily oil refinery capacity was only 1.772 million barrels, and in case Iran cuts oil crude export, it will reduce oil output to 858,000 barrels per day. This means Iran should shut down some of its oil fields and close the wells. Regarding the fact that almost 80 percent of Iran's oil fields are in their second half-life, cutting oil extraction may lead to their inactivation and revival of shut down wells would be very difficult. This decision would seriously damage Iran's oil industry.