Study of Small and Medium Enterprises in Azerbaijan - IFC

Problems Sources of Problem Recommendations Expected Effect
Technical
regulation is
outdated and fails
to integrate with
the internationally
used standards
1. Technical regulation
system is not coherent;
2. Many standards are
outdated;
3. Excessive number of
products are subject to
mandatory certification;
4. Lack of testing facilities
that comply with the
international standards.
• Separate the standardization and certification functions by establishing
independent laboratories issuing certificates;
• Review the list of standards and abolish the ones not necessary on
the grounds of health and safety in a market economy;
• Consider adopting international standards to avoid the
“maintenance cost” of the system;
• Apply the risk-based approach by determining which goods and
services need to be certified in order to exclude non-risky categories
from mandatory certification and by abolishing the mandatory
certification requirement for services;
• Create internationally required laboratory facilities to certify
Azerbaijani commodities according to internationally adopted
standards in order to facilitate their export.
• New cost saving options for
entrepreneurs;
• Increased occurrence of
entrepreneurs marketing their
products as being in compliance with
international standards;
• Reduced running expenses for the
agencies responsible for elaboration
of standards;
• Faster and cheapers access to
international markets for Azerbaijani
exporters;
• Increased competitiveness of the
Azerbaijani economy (goods and
services), as verified by international
competitiveness ratings (e.g.
Competitiveness Index).
Variation of
customs tariffs
for similar types
of goods, raw
materials and
processed goods
discourages
import/export
1. Customs tariffs
significantly differ with
respect to similar type
of goods and raw
materials and fullyprocessed
goods;
2. VAT exemptions discourage
trade with non
VAT exempt goods.
• Approximate customs tariffs for similar type of goods, raw
materials and fully-processed goods in order to encourage import/
export;
• Introduce uniform tariff rates for similar types of goods;
• Eliminate VAT exemptions to avoid distortions.
• Distortions caused by unreasonable
tariffs lowered or eliminated;
• Incentives for customs officials to
trade between classes of goods or
apply ‘preferential treatment’ in
exchange for unofficial payments
regulated and reduced;
• More simple and less costly
calculation of customs payments
increasing certainty and compliance.
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 21