The issues that most hinder the entrepreneurs in Azerbaijan regions

The issues that most hinder the entrepreneurs in Azerbaijan regions have been announced. Research has unveiled the issues disturbing the entrepreneurs in the regions are the activity of non-official competitors, as well as bribes.The results of research that conducted by ‘Uluchay’ Social-Economic Innovation Center on September-November, 2013among 480 entrepreneurs working in various fields are reflected as following.

**Note research was held in 2008-2009 by the World Bank and “Enterprise Surveys” of  International Finance Corporation in Azerbaijan and this year’s figures have been compared with the results of their investigations.

11Activity of on-official competitors30,7%38,8%
34Access to Finance23,2%27,4%
45Personnel issues15,3%18,4%
57Acquisition of business licenses8,5%14,1%
63Tax management24,5%12,7%
78Customs and trade regulations7,1%12,5%
86Tax rates9,9%9,4%
99Labor rules0,6%4,3%

About the activity of non-official competitors:

The majority of entrepreneurs participating in the survey complained that non-official competitors “(Officers who abuse their powers) impede their ability to expand their activity.Monopoly  by non-official competitors  impedes free development of business entities and negatively impacts the free market environment as a whole by discouraging would-be entrepreneurs to take risks who must navigate inefficient resource environments. Furthermore, this monopoly chaotically and unfairly increases prices.

Bribery is one of the issues that worry survey participants most. However, some of the entrepreneurs stated that they prefer to pay bribesas a short-cut instead of preparing the relevant, convoluted and confusing, documentation in accordance with law.

Access to finance

Easy access to finance is another issue that worries entrepreneurs. In the root of this problem we should emphasize the following issues: providing loans at high interest by rates banks and credit institutions, high maintenance costs, lack of transparency and fairness in property valuation, as well as bureaucratic obstaclesfor obtaining a loan from the National Fund for Entrepreneurship Support. According to the ratings issued by site it can be noted that,as of August 1, 2013,the loan given by banks operating in Azerbaijanamounted to £14.2 billion , but only 1.4 billion (9.8%) from this amount accounted for regions. Entrepreneurs face difficulty obtaining credit not only in the capital, but also in the regions.

Personnel issues:
A lot of large and medium entrepreneurs complain about personnel problems and associate this problem with the migration of highly educated and experienced personnelfor Baku and otherforeign countries.Most people cite low wages and lack of jobs as the primary reasons for moving to the capital. This “brain drain” increased constantly over recent years. Thus, entrepreneurs can’t find the specialists that they need and hireinexperienced workers. This process hindersentrepreneurial development.

Acquisition of business licenses:
Entrepreneurs believe one of the factors creating an obstacle to the development of production area in the regions isassociated with the acquisition of licenses. The entrepreneurs associate the existing  problemswith stringent requirements, corruption, and bureaucratic proceduresspecified by legislation

Tax management:
As aresult of research, compared to 2009, most progress occurred in the area of ​​tax management. This progress is associated with the giving reports by entrepreneurs through  the internet and getting necessary information from relevant tax structures,rapidly. Most of entrepreneurs also emphasize development in the areas of governance and accountability besides noting tax system in bribery issues.

Customs and trade regulations
Themajority of surveyparticipants who aremainly engaged in foreign trade note the excessive level of public duties, non – official payments, and other bureaucratic obstacles in the customs make hassles in foreign trade.

Tax rates:
The entrepreneurs note that reduction of tax rates relates with the reduction of wage withholding tax rate (Lowered from 30% to 25%).

Labor rules:

Labor protection and regulations bother entrepreneurs who blame relevant authorities for these headaches. Many entrepreneurs keep double-entry books that grossly violate labor regulations, service agreements, and do not pay into the Social Security Fund and Ministry of Taxes.

The data used: