NON-STOP OPERATION

Azerbaijan is actively involved in the development of physical infrastructure for the digital trading hub (DTH) along the Silk Road route. This also involves the private sector supported by the state. Also, Azerbaijan is making initiatives on digital solutions for this project. All these initiatives contribute both to the improvement of business opportunities of the residents of Azerbaijan and to unhindered participation of foreign entrepreneurs in the country's business life. In turn, this makes it possible to achieve significant progress in world ratings, which are important factors in terms of investment attractiveness.

Improving ratings

In 2019, Azerbaijan became the 58th among 141 countries in the ranking on the Global Competitiveness Index annually made by the World Economic Forum (WEF), improving its position by almost 11. This improvement was mainly based on such indices as "business dynamism" (23rd place), "labour market" (21), "product market" (23), "infrastructure" (38), and "skills" (48), "public institutions" (49), "market size" (67), "ICT potential" (69), "innovative potential" (68).

According to the report, the slowdown of inflation rate in Azerbaijan last year played a positive role in improving macroeconomic indicators of the country. As to the "development of the financial market", WEF notes the improvement of financing for small and medium-sized businesses, the growth of capitalization, as well as premiums of the insurance market. Although some negative factors, such as the low level of lending to the private sector, remain in the sector.

According to the "business dynamism" indicator, WEF notes a decrease in the cost of opening business in Azerbaijan and less number of days required for registration a business.

By the way, thanks to new reforms in facilitating the opening and doing business in Azerbaijan, the country entered the top 20 reformer countries of the Doing Business 2020 rating, which was reported in a preliminary blog published on the World Bank website (WB). According to WB experts, it has become easier in Azerbaijan to do business in four areas, namely real estate registration, obtaining loans, protecting minority investors, and contract discipline. Bank analysts believe that in case of commercial disputes, the parties can now submit subpoenas online and receive financial incentives for mediation efforts.

"We are happy to see our rating improved but we also understand that it will be more difficult to keep the bar high every year. Reforms have been touched almost all levels of entrepreneurship. We now need to ensure their implementation," Vusal Gasimli, executive director of the Centre for Analysis of Economic Reforms and Communications said.

At the same time, taking into account the rapid development of market conditions and new challenges in the global economy, the next step for transforming the business environment in Azerbaijan should be the maximum digitalization of the processes of opening and doing business, not only for local entrepreneurs, but also for foreign investors. Apparently, this will happen in the near future.

New features of the digital hub

Three years ago, Azerbaijan launched a digital trading hub (DTH). Since then the country has ensured its leading position in the digitalisation of commercial relations in the region. This process is almost finished in the public sector, as both the government and executive branch operation have been transferred to the electronic domain. "As for the private sector, we continue the implementation of measures to switch from the 'single window' system of providing electronic commerce services to the 'non-stop' principle of doing business online. The goal is to improve the quality of services and to satisfy the consumers," Gasimli explained at the third digital trade forum Digitalization of the Silk Road.

DTH is a multifunctional platform that serves as an electronic "single window" for export operations. Any Azerbaijani exporter can use a computer or mobile device to go through all the necessary procedures related to documentation and registration of export products without leaving the office. In addition, DTH enables non-residents of Azerbaijan to carry out operations to open limited liability companies, bank accounts, recruit employees, and receive electronic signatures from ASAN Imza.

DTH technology is neutral and supports unlimited speed and volume of traffic. This is not a cloud solution, i.e. each country that owns the system can download it and install it in its own environment. Governments have full control over their own data and its use. They can easily carry out a secure exchange of data through the DHC from any other country.

In essence, the hub is the first and very successful model of cooperation between the state and private sectors in the post-Soviet space, is a new stage in the integration of Azerbaijan into international trade.

Thanks to this initiative, Azerbaijan is the first post-Soviet country to provide mobile signature services to non-residents and the second country providing electronic signatures. It is also possible to open and manage accounts virtually without a physical visit to the bank. According to the acting Chairman of the Board of the Chamber for Supervision of Financial Markets Ibrahim Alyshev, in June 2019, the government approved the Rules for Opening, Maintaining and Closing Bank Accounts, hence making the service available to both residents and non-residents of the country. "One of the most important challenges in the banking sector of Azerbaijan is the development and implementation of new digital solutions. We have an individual plan for each bank, and we believe that they should actively participate in our electronic and mobile residency program," I. Alyshev said.

ASAN means easy business

In 2019, as part of the e-Government project, Azerbaijan also launched a new ASAN Finans information system, which is designed to simplify the receipt of financial information by both citizens and institutions that provide services in the banking sector, insurance and lending. In fact, this is a single platform through which financial institutions can both access public information systems and analyse the information received, which greatly reduces the period of providing services to clients.

According to the chairman of the State Agency for the provision of services to citizens and social innovations, Ulvi Mehdiyev, the government has recently launched an electronic procurement system, which covers many areas of operation starting from the announcement of tenders to the selection of winners. "We estimated that the cost of participation in the tender for one business entity is ₼900. The new system enables entrepreneurs to request, receive and provide necessary documents online, which significantly reduces both the time and costs of the process," U. Mehdiyev said.

By the way, over seven years of ASAN Xidmət's activity, the state budget provided ₼132 million for the service's maintenance, and transferred ₼ 135 million to the state budget thanks to the collected fees and service charges.

In a word, there are new and beneficial opportunities for doing business in Azerbaijan easier not only by local but also foreign entrepreneurs, as well as strengthening the cooperation between state and private sectors. In a global perspective, all these measures should serve as the main economic idea of ​​the government to reduce its dependence on oil and ensure adequate growth rates of the non-oil sector. Even if it becomes more difficult to surprise rating agencies in the future, direct consumers of reforms will use their results for many years to come, which is much more important for any country.