Study of Small and Medium Enterprises in Azerbaijan - IFC

3. Successful registration one-stop shop implementation
led to considerable savings
In 2008, the Azerbaijani government, with IFC support, introduced the “one-stop
shop” system for business registration, which significantly simplified the process
for entrepreneurs to register a business. This endeavor combined procedures with
several government institutions into a single registration step and therefore made
and extraordinary effort much to the convenience of the entrepreneur. Prior to introducing
the one-stop-shop, entrepreneurs needed to complete 13 procedures with a
number of government agencies, legally requiring 33-34 days to start up a business
as legal entity in Azerbaijan. According to 2009 Doing Business Report, Azerbaijan’s
ranking on starting a business increased significantly to the 13th global position:
only 6 procedures and 7-8 days are now required to start up a business, of which
the formal one-stop shop registration takes three days. In addition, client satisfaction
was recorded in the in-depth interviews with the private sector following the singlewindow
establishment. Business registration is now being carried out by the Ministry
of Taxes through a very advanced information system that connects 14 such offices
across the country.
While acknowledging the government’s success in carrying out the reforms, this study
also outlines further possible improvements. To bring business registration closer
to best international practices, the government may consider introducing several
advanced tools in a single related law: an improved register of businesses, on-line
application forms, automatic registration etc. The pre-registration process may benefit
from removing the requirement to obtain a confirmation of the legal address of the
company from the proposed landlord and notarization of the foundation and relevant
registration documents.
4. Business licensing and permits should be thoroughly
reviewed and modernized
A simplified licensing and permits system has a great impact on the development of
a sound business climate. With the adoption of the Presidential Decree No. 782 on
Licensing Rules license issuance procedure, validity period of a license, list of activities
subject to licensing, licensing fees etc. were closely defined, effectively reducing the
number of licensable activities from 240 to 56. This in turn led to a reduction of the
number of entrepreneurs requiring a license, as well as reduced financial and human
resources engaged in obtaining a license.
While licensing remains more coherent and consistent, there is no single legal act
that outlines a precise list of permits and authorizations and lays out a clear issuance
procedure. As a result, there is little control over the issuance of permits or authorizations
by various government institutions. The report finds that the scope of coverage
of most permits is not precise and their application in individual cases is subject to ad
hoc decisions of public officials that leave room for discretionary power. Addressing
these issues would significantly improve the business climate.
As a matter of priority, the government should start reforming the permit system
by undertaking an inventory of all permits and other documents currently issued in
Azerbaijan and then streamlining the issuance process by adopting an appropriate
legal act. At the same time, the government should also conduct an individual review
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St u d y o f Sma l l a n d Me d i u m Ent e r p r i s es in Az e r b a i j a n