Colors of Our Business

No country in the world has a single color of business. The percentage of white and black colors determines the color scheme of the business. On a global scale, there are centers that determine the business climate of the whole world. Investors are more interested in their criteria and ratings. When a large financial institution, such as the World Bank, announces its ratings for all countries, the interests of investors are concentrated in these ratings.

Whenever Azerbaijan is compared with the developed countries of the West and the European Union (27 countries), this comparison is considered incorrect, as it is based on differences in development levels. In this rating, Azerbaijan is compared with the post-Soviet republics, and not with the EU and Western countries. Let's calmly look at the color of the branches of the business tree next year.

Azerbaijan’s small progress in the ranking was mainly due to the indicator “registration procedure for starting a business”. Those who note positive changes in our business environment mostly refer to one indicator. We will try to explain the change in this indicator in a more detailed and understandable form. Take a look at a few examples in the criteria “registration procedure for starting a business”:

• Earlier, Azerbaijan demanded that "electronic signatures be obtained for online registration." This requirement was canceled in 2019 due to an unfavorable result of the application of this procedure. No ASAN signature is now required for online registration.

• While last year in Azerbaijan it was required to register workers in the Ministry of Labor and Social Protection, now it has been canceled.

• In previous years, the number of registration procedures was 3, and now it is 1.

• While the average number of days was 3.5, now it has been reduced to half-day (0.5).

• If a businessman previously spent 90 manats on these procedures, he now does not spend even one manat.

This means that the number of registration procedures for legal entities was reduced from 3 to 1, the duration of the procedure decreased from 3.5 days to 0.5 days, and the initial registration costs of 90 manats were canceled, and it was established that the procedure is absolutely free. This change was called a “success story” to overcome the main obstacles to starting a business. Nevertheless, the main problem of business entities is not a symbolic day and registration facilitation necessary for starting a business, but rather a lack of access to real business support programs and a lack of a favorable investment climate.

The main problem of business is, for example, the lack of access to credit resources for business entities. Or lack of transparency in procurement tenders and qualitatively new changes in procurement rules. It is very interesting that the government, instead of essentially dealing with the serious procurement problem, justified its resultant activity: “The contract between the Purchasing Organization and the Supplier is concluded in electronic form on a single Internet portal.” If the quotation and procedure were not implemented transparently, then what is the point in the contract concluded by the parties? Or comment on the following justification for the result of previous activities: “Securing the tender offer has been reduced from 1-5% to 1%”. Although the level of security of tender offers cannot be a criterion for selling goods and services at the best prices and conditions. Or look at another government attempt to justify itself: “Increased transparency and efficiency of public procurement. The time for handling complaints was reduced from 20 banking days to 10 banking days, and the time for issuing a decision in electronic form was reduced from 3 banking days to 1 banking day. ” And again, the government should understand that shortening the time for filing a complaint does not necessarily lead to a qualitative change in the nature of the procurement process.

The indicators I have listed are called economic institutions of the state by “successful reforms”. Although fundamental and real business reform can be effective when there are improvements in several indicators. These include: building permits, connection to an electricity supply network, property registration, obtaining loans, protecting the interests of small investors, paying taxes, free foreign trade, high level of contract execution, bankruptcy resolution, public procurement steps, sustainable implementation of antitrust measures and measures to promote competition are of utmost importance. Consequently, Doing Business report estimates require a qualitatively new approach to 10 indicators.