GETTING AHEAD

The speech by the president of Azerbaijan at the meeting of the Cabinet of Ministers dedicated to the socioeconomic results of the first nine months of this year can rightly be described as an anti-crisis declaration. The head of state quite clearly outlined the development of the economy during the tangible decline in oil revenues and gave significant instructions for new major reforms in the management and regulation of both government agencies and the private sector.

As a rule, any crises emphasize challenges and gaps even more. And against the backdrop of falling oil prices on world markets and the decline in production in Azerbaijan, any obstacles to the development of the non-oil sector in the country are naturally perceived more acutely and should be dealt with more rapidly. Monopolies, corruption, endless checks of businesses - all this existed before too and affected the volume of production in the private sector.

The result was that, amid growing statistical data on the volume of state subsidies, tax privileges and preferences to entrepreneurs, efficiency was not up to par.

Yes, the non-oil sector of Azerbaijan's economy is growing - in nine months it has increased by 6 per cent with a 3.7-per-cent growth in the GDP of the whole country, that is, in fact, it is the non-oil sector that helped to maintain economic stability. At the same time, industrial production grew by 2.1 per cent, while the non-oil industry - by more than 10 per cent.

"We have chosen the model of a liberal economy, a market economy, and we go along this path. Look at what great success we have achieved. If there were no obstacles in the country, we could achieve even greater success. Look at how our budget could have increased, if there was no bribery, corruption, checks, licences and extortions. How long can you tolerate this?! Enough, our patience has run out. Let everyone draw conclusions. If they don't, they will be punished." This quote from the speech of President Ilham Aliyev clearly dots the i's and crosses the t's and succinctly exposes the main obstacles to the full development of the non-oil sector and its transformation into the main engine of the economy.

This is not the first time that the fight against corruption has been highlighted by the president as one of the priorities of the government. It was on his initiative that the ASAN Service was created, and in a short time, it was able to prove that it is possible to eradicate corruption and bribery in many areas of public services. Hence, this can be achieved in others too. "Measures of a systemic nature should be taken and institutional reforms should be carried out, as we see that very often administrative measures and penalties are not effective and have a temporary nature, and sometimes the replacement of people is not so effective," President Aliyev said.

Returning to the problems of business. According to the report submitted by the Minister of Economy and Industry Sahin Mustafayev, systemic measures to promote entrepreneurship and further improve the business environment continue and a more progressive regulatory framework is taking shape based on the best international practices. In continuation of the reforms in the field of electronic business registration, foreign trade operations and registration of immovable property, the necessary changes have been made to the law for the issuance of building permits, improvement of corporate governance, protection of the interests of investors and bankruptcy.

However, even this is not enough to improve the business environment and give impetus to the development of business. And here's why.

Countless and sometimes incessant checks of businesses by various government agencies at first sight have quite a reasonable desire to protect consumers from low-quality goods and services. But in reality, it is another reason to grab a share from the businessman. The result is that the quality of goods is not always high, which we cannot say about the prices - apparently, while setting the prices, entrepreneurs also include "undocumented" costs. There is another important negative outcome, which was also announced by the head of state. "Entrepreneurs are strangled, fleeced and tormented. It's unbearable. Look, 67,000 permanent jobs were created but 30,000 closed. Here's what you need to analyze. I should be informed as to why those jobs have closed. It is necessary to invite the leaders of these enterprises and question them. This must end. Of course, there are objective reasons. But there are also subjective reasons. They come and put forward unreasonable demands, as if someone owed them. No one owes anyone. Those who commit such acts will be severely punished," President Ilham Aliyev warned.

Another problem that discourages businessmen from opening businesses in Azerbaijan is the inordinate number of licences. Today, they have as many as 59 names. "What is a licence? A source of money. A method of illicit enrichment. What is it for? It is necessary to seriously consider this issue. The government should suggest which licences are issued. Whether they are substantiated or not substantiated, the number of licences should be drastically reduced," the president said.

We must say that this time the Ministry of Economy and Industry started to carry out the last two instructions of Aliyev within a couple of days. For example, at the extended meeting of the ministry board it was decided to suspend all inspections of businesses conducted by the State Service for Antimonopoly Policy and Consumer Protection with the exception of the checks related to the protection of the life and health of the population of Azerbaijan. It was also proposed to cancel the licensing of the production, processing and sale of non-ferrous metals, as well as industrial and production waste, which include precious metals and stones, and the work of the commodity exchange. In addition, it was decided to revise the list of activities that require a licence and reduce their number.

Also, the board sent to the Tariff (Price) Council of Azerbaijan a proposal to reduce by 30 per cent examination tariffs with the aim of issuing certificates on the origin of non-oil products and decided to prepare a package of proposals to boost exports.

The latter, incidentally, was also instructed by President Ilham Aliyev, who singled out monopolies as one of the major problems of the economy in his speech. "Without competition, there will be no development, there will be no quality products," the president said. "Grow and make products we can sell abroad. The main area that will ensure the future development of our economy will be export. And here if someone makes something, they make it impossible for others to make it or involve patrons in this business in a variety of ways. That should not be allowed."

Monopolies are a worm that devours not only the country's export potential, but also harms the qualitative composition of imports, which affects the interests of consumers who are deprived of the opportunity to have a wider choice of products. "I repeat, we are pursuing a policy of open market economy. This is our policy, a public policy, the policy of the president. Therefore, all agencies must pursue this policy, that's all!" the head of state warned.

Thus, with the growing role of the non-oil economy in the formation of the country's state revenues, the problems of entrepreneurs should be addressed at a doubly accelerated pace. The goal is to achieve the formation of the running costs at the expense of the non-oil sector, customs and taxes and redirect the transfers from the State Oil Fund into investment projects.

To do this, according to President Ilham Aliyev, it is also necessary to review the current system of benefits and tax exemptions. "The development of the non-oil export-oriented sector should be encouraged, including through tax mechanisms," the head of state said. In addition, it is necessary to intensify the process of attracting foreign investments in the non-oil sector, conduct presentations and business forums both within the country and abroad more often and implement measures to improve the business environment and investment climate. Indeed, in the current difficult conditions in the global economy it is very difficult to compete.

In short, we can say that President Aliyev proclaimed the strengthening of the private sector and the development of domestic production as the main factors of economic growth in Azerbaijan in the period of the crisis. In addition, the president called for a review of the structure of budget spending, for economical use of budgetary funds and complete transparency in the financial and economic spheres. "Tax and customs authorities should also work transparently and effectively. They can collect more money in the budget. They have these capabilities and resources," the president said.

Also, he said, in some cases, government agencies urgently appeal to the Finance Ministry for additional funds, which is also unacceptable in the current circumstances. "Everyone, including countries, should spend as much as they can afford, and it is precisely this policy that saved us from all possible economic risks," President Aliyev said.

Given all the instructions and rather rigid warnings from the head of state, we can expect that in the near future many areas of economic and social life will see another stage of reform, which should result in the preservation of economic and social stability in the country.