Azerbaijan among top 10 countries for starting business

By: Aynur Karimova

Azerbaijan, an energy-rich South Caucasus country with favorable conditions for doing business, has entered the list of top 10 countries for starting a business.

According to the annual ranking from the Doing Business-2016 report prepared by the World Bank and the International Finance Corporation released on October 28, Azerbaijan took the 7th place among the 189 world countries.

“Azerbaijan made starting a business easier by abolishing the requirement to use a corporate seal,” the report said.

Compared with last year’s results, Azerbaijan achieved the greatest success in categories like dealing with construction permits (114th against 150th), getting electricity (110th against 159th), protecting minority investors (36th against 51st), trading across borders (94th against 166th) and resolving insolvency (84th against 94th).

“Azerbaijan is one economy that has taken serious steps to make its legislation more comprehensible—by adopting a new construction code that consolidates its previous building regulations into a single framework,” the report said.

The authors of the report believe that the country made dealing with construction permits easier by establishing a one-stop shop for issuing pre-approvals for project documentation.

“Azerbaijan strengthened minority investor protections by introducing requirements that related-party transactions undergo external review and be voted on by disinterested shareholders,” the report noted.

In general, Azerbaijan improved its position and was ranked 63rd in the Doing Business-2016 report titled “Doing Business 2016: Measuring Regulatory Quality and Efficiency,” published on October 28.

Last year Azerbaijan was ranked 80th in the Doing Business-2015 report.

Singapore is at the top of world ranking in creating the most favorable conditions for business. The top ten countries include New Zealand, Denmark, Korea, Hong Kong, United Kingdom, United States, Sweden, Norway and Finland.

The Baku office of the World Bank told Trend that a new method of calculation referred to as “the principle of distance to frontier score” (this measure shows how close each economy is to global best practices in business regulation) was used when compiling the rating.

“According to the new methodology, last year’s figure of Azerbaijan distance was 66.65 points, this year the figure is 67.8 points,” the authors of the report said.

Political and macroeconomic stability, the protection of investors’ rights, a favorable geographical location, rich natural resources, and a highly skilled workforce have turned Azerbaijan, the largest nation of the South Caucasus, into one of the fastest developing countries in the world.

The country’s all macroeconomic indicators favor the profitability of doing business in the country.

Due to an attractive and stable investment climate and a unique macroeconomic situation in an otherwise tumultuous financial crisis for the rest of the world, foreign investors are flocking to various sectors of the Azerbaijani economy. The amount of foreign capital inflow into Azerbaijan in the form of direct investments totaled roughly $8 billion in 2014.

Today, Azerbaijan is gradually turning from a strict investment importer into an exporter country. In 2012, in particular, Azerbaijan’s foreign investments amounted to $1.128 billion, exceeding 2011 figures by two times.

The tax regulations in Azerbaijan are more favorable for corporations than are in Europe. The highest income tax rate of the country is two times below the European average.

Today, Azerbaijan continues measures toward stimulating business development in the country by introducing new privileges for entrepreneurs. President Ilham Aliyev signed a decree simplifying licensing procedures for entrepreneurship and encouraging business transparency on October 19.

The decree stated that the development of entrepreneurship in Azerbaijan is a priority, but a large number of licenses required for business purposes and the existing procedures for their issuance have created additional obstacles for the development of entrepreneurship and rampant corruption.

At present, there are 56 types of such licenses in the country, and reduction will surely take great strides to simplify doing business.

Moreover, the decree envisages rendering services for issuing business licenses by ASAN service, which has already shown itself as the easiest way to acquire documents in Azerbaijan. The service successfully serves its primary aim – fighting corruption and bribery.

The long-awaited decree also reduces the number of inspections among entrepreneurs. For two years, entrepreneurs will be free of inspections from ministries supervising economy and economy-related fields.

This measure is expected to expand the basis for taxation and increase the total amount of taxes.