Study of Small and Medium Enterprises in Azerbaijan - IFC

Problems Sources of Problem Recommendations Expected Effect
Coverage of
licenses and their
issuance process
insufficiently
defined and
unclear
1. Lack of clear regulatory framework
specifying the circumstances
in which a new activity can be
licensed.
• Introduce clear grounds for introduction of new licenses,
provided that the new licenses:
– Require government control for protection of public
health and safety, as well as environmental protection;
– Relate to allocation of scarce resources;
– Do not foresee additional or specific requirements.
• Fewer licenses that do not comply
with the principles of market
economy and free trade;
• Lower expenses for
entrepreneurs dealing with
licensing procedure;
• Faster development of priority
sectors in the country.
Preferred treatment
provided to stateowned
companies
vs. private
enterprises
1. Presidential Decree gives a clear
competitive edge to state-owned
companies entering into licensable
activities.
• Eliminate preferred treatment of state-owned companies by
leveling the playfield and applying same rules to all business
entities.
• Transparent management
and allocation of scarce
resources between state
owned companies and private
enterprises based on bona fide
competition encouraged.
Duration of licenses
inappropriate
and unnecessarily
overregulated
process
1. Administrative barriers within license
issuing authorities;
2. Certain licenses are subject to
periodic renewal.
• Ensure that all licenses are issued for a fixed period of time
as provided for by the Licensing Rules;
• Consider lifelong licenses, and allow specific short-term
activities through permits instead.
• Lower licensing costs for
enterprises and fewer number
of licenses;
• Less frequent and less demanding
re-application for licenses;
• Lower total costs to business
and issuing authorities in the
licensing process;
• Increased tax collection in the
state budget from greater
number of operating entities.
Lack of knowledge
of entrepreneurs
hindering their
rights and
obligations
1. Lack of access to appropriate
and timely information for
entrepreneurs.
• Increase the legal awareness of entrepreneurs through:
– Simple brochures distributed to entrepreneurs;
– Clear procedural maps, available in license issuing agencies;
– Improved dialogue between the private sector and
government by stimulating seminars, training, and informational
round-tables;
– Public service announcements run in media and focused
any procedural changes.
• Reduced time spent by
entrepreneurs in dealing with
licensing procedures;
• Reduced financial and human
resources of SMEs for dealing
with licensing procedures;
• Higher profits for
entrepreneurs;
• Increased tax revenues for the
government.
Aze r b a i j a n Bu s i n e s s En a b l i n g En v i r o n m e n t Pr o j e c t 13