Study of Small and Medium Enterprises in Azerbaijan - IFC

9.3.1 Transportation of imported goods is the number one
problem in importing
As the IFC survey shows, one of the main difficulties faced by entrepreneurs in
importing is associated with the transportation of goods. While transporting, entrepreneurs
pass through a score of controls by border officials.
One of the major issues in import operations is high transportation cost. In Azerbaijan,
railways are often used to transport the imported/exported goods (see Chart 9.4),
yet 45 percent of the respondents indicated railway control as a major problem
in importing (see Chart 9.3). In light of this fact, it appears that the costs incurred
by entrepreneurs during railway transportation are one of the largest contributors
to the overall costs of transportation of their goods. As seen in Table 9.2 above,
an entrepreneur spends on average 4,392 Azerbaijani manats ($5,422) for official
payments and 334 Azerbaijani manats ($412) for related costs, including unofficial
payments, which make up 8 percent of the overall import value. However, as the
Azerbaijani railway service is not yet meeting international standards, delays and
improper handling of goods may result in additional costs.
Chart 9.4
After pipelines,
railways are the
main means of
transportation used
in foreign trade
Share of the Transportation Means Used in Exports (in tonnes) as per the
State Customs Committee Statistics
Water, 402
Pipelines, 53683
Railway, 13129
Automobile , 447
Air, 2.4
9.3.2 High costs associated with foreign trade is the second
most serious problem in importing
The highest official expenses incurred by entrepreneurs for imports arise due to VAT
payments, import tariffs, fees for customs clearance and transportation costs, followed
by considerably lower costs associated with obtaining import permits, certificates,
passing sanitary control, and fees for storage of goods in customs warehouses (for
customs payments see Box 9.5).
During the imports of goods, entrepreneurs also have to make other additional
payments, which, in certain cases, may significantly add to the costs (see Table 9.2
above). Such additional expenses also arise in connection with obtaining import
approvals, in customs clearance, in dealing with standardization bodies, in paying fees
for storage of goods in customs warehouses, in regard to VAT and transfer of money
for the payment of customs duties, transportation costs, and other costs.
152
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