IN TOP TEN

The World Bank's Doing Business 2019 declared Azerbaijan a record holder thanks to the number of reforms carried out to improve the business environment in the country. Azerbaijan thus proved that the fall in oil prices and the associated economic crisis only helped the country's economy to boost the development of the non-oil sector. Thus, the government of Azerbaijan has implemented a broad reform program to create the most favourable climate for the development of entrepreneurship and alternative non-oil production. Such a significant breakthrough in one of the most prestigious rating reports will be an incentive to continue the reform program and serve as another important argument in negotiations with foreign investors.

Record indicators

"Economies in the Europe and Central Asia region stepped up the pace of reforms to improve the ease of doing business for domestic small and medium-sized enterprises," says the WB report published on October 31, 2018. "Nearly all of the region’s 23 economies carried out reforms that help create jobs and stimulate private enterprise," continues Doing Business 2019: Training for Reform report prepared by the World Bank and the International Finance Corporation (IFC) said.

Thus, a total of 54 business reforms were carried out in the region during the past year, and the number of reforms worldwide reached 314. More than 170 reforms were implemented in low- and middle-income countries. In general, since 2004, 3,519 reforms have been implemented worldwide. "We are pleased that the Doing Business initiated 1,116 business reforms. This year, Sub-Saharan Africa, as well as Europe and Central Asia, which carried out 107 and 54 reforms, respectively, became the main reformer regions," WB expert Hülya Ülkü told to Azerbaijani journalists.

So, Azerbaijan in the new report improved its position by a record 32 points, taking the 25^th place among 190 countries. In the past ranking Doing Business 2018: Reforms to create jobs, Azerbaijan ranked 57^th among 190 countries.

According to a report published on the Doing Business website, Azerbaijan carried out a record number of reforms in the past year - 8. They concerned obtaining building permits, registering property rights, connecting to the power supply system, obtaining loans, taxation, protecting minority shareholders, and international trade.

Thus, Azerbaijan entered the top ten reformer countries. In general, Azerbaijan and Turkey took the first positions in the region improving their performance over the year.

As for Azerbaijan, according to the WB expert, such significant achievements are the result of the consistent policy of the Azerbaijani government in the sphere of reforms that have been carried out since 2006, and were somewhat weakened only in 2011-12. "Azerbaijan has recorded advancements of 8 out of 10 points of the rating. The only exceptions were two indicators relating to the simplification of border trade procedures and the execution of contracts," H. Ülkü, responsible for the report on Azerbaijan, said.

According to Ülkü, over the past ten years (before the last report), the lowest number of points scored by Azerbaijan was 60, and the highest - 80 points on 5 indicators. In terms of three indicators, Azerbaijan achieved the best results in terms of growth in the world – getting electricity (from 69 points to 77.3), dealing withconstruction permits (from 60.5 to 73) and getting credits (from 40 to 80). A record number of points are received on the starting of a business (96.1), paying taxes (85.4), and registering property (84.6).

On three of the ten indicators Azerbaijan is ranked in the top twenty. In particular, on protecting minority investors (with non-controlling interest), Azerbaijan scored the maximum number of points, which is considered the best result in the field of corporate transparency. At the same time, experts consider the increase in the role of investors in important corporate decisions to be the most important on this indicator.

Another point is construction permits: during the period covered by the report, Azerbaijan managed to create a "one window" system (permits are now issued only by the executive power of Baku). The same was done in the field of getting electricity, as well as investing in this area. WB experts noted significant advances in the transition to the electronic payment of taxes and the provision of fiscal reporting, as well as most of the services in the customs field. "In addition, Azerbaijan has begun to use the "green corridor", which simplified the implementation of border trade and reduced costs in this area," Ülkü said.

In addition, the report indicates progress in the reduction of employees and the payment of appropriate compensation to employees.

Future potential

Doing Business is considered the most important and reliable rating indicator in the world. The Doing Business team evaluates the reforms based on the responses received from government representatives, businesses, and well-known consulting companies. To check the ongoing reforms, special expert missions are sent to the countries, the implementation of reforms is studied in situ according to the relevant criteria. As a result, a special estimated score (general and compliance with ten indicators) for each country is calculated and the rank of the country is determined.

As a result, this report can be considered a "reference book" for foreign investors who can evaluate in detail the business climate in the country and decide their participation in a particular project. Accordingly, such a significant success of Azerbaijan in the last report is very important in terms of attracting new investors to the economy, in particular in its non-oil sector, which will help intensify the business environment, create new jobs, achieve GDP growth, etc.

In addition, Doing Business is a reference for reports of other international organisations such as Global Specificity Report, Global Innovation Index, Economic Freedom Index, Global Opportunity Index, etc.

"This is a very big success, one of the next achievements gained as a result of complex reforms conducted under the leadership of our president," Vüsal Shikhaliyev, official of the presidential administration, said.

Aliya Azimova, IFC Permanent Representative in Azerbaijan, noted that today we are at the beginning of a long journey in terms of development and economic reforms in Azerbaijan.

Vüsal Gasimly, executive director of the Centre for Analysis of Economic Reforms and Communications, believes that the achieved result is a historical record for Azerbaijan, and we can rightfully be considered the country most rapidly advancing in the CIS space. "If in the last Doing Business report Azerbaijan advanced by 32 steps, then Kazakhstan crossed by 8, Russia - by 4, Belarus - by 1, Kyrgyzstan - by 7, Ukraine - by 5, Uzbekistan - by 2, Tajikistan - by 3 steps," V. Gasymly noted.

However, the achieved record does not mean that we can stop. There is a potential for improving the result in subsequent reports considerably. "In the future, Azerbaijan may further improve its performance in the Doing Business. This can be achieved by carrying out reforms in those areas where the country is in lower positions," said Ülkü. As noted above, Azerbaijan has a weak position on such indicators as issuance of construction permits, execution of contracts in the procedures related to the bankruptcy of companies. "Additional reforms in these areas will allow Azerbaijan to further improve its position in the rating," the expert added.

If Azerbaijan further improves its position in the Doing Business, it will strengthen its image as a reliable investment partner and accelerate the results of measures to reduce the oil dependence of the national economy.