1. NATIONAL BUSINESS AGENDA Sabit Bagirov Entrepreneurship Development Foundation

2. 23.02.2009Sabit Bagirov 2 Developing of private entrepreneurship in Azerbaijan Private entrepreneurship has been developing in the country after it regained its independence in 1991. This was furthered by:  the policy of switching from the soviet economic system to a market economy;  the programs related to this policy;  the measures to adopt new laws;  creating market institutions;  macroeconomic stability;  large-scale foreign investments in energy and other spheres of the economy;  privatization of small and medium-sized enterprises and land;  other measures.

3. 23.02.2009Sabit Bagirov 3 Developing of private entrepreneurship in Azerbaijan  Today there are more than 60 thousand private companies in the country – small, medium-sized and large. Small enterprises account for 20% per cent. Moreover, entrepreneurial activity without setting up a legal entity is quite developed. There are more than 260 thousand such businessmen in the country today.  The share of the private sector in GDP is 84 per cent today (including the activity of foreign oil companies).  There are more than 10 large private companies in the country which have their own well-known brands.

4. 23.02.2009Sabit Bagirov 4 Developing of private entrepreneurship in Azerbaijan In 2008 the government implemented a “one-stop- shop” principle for the registration of legal entities. The effectiveness of this decision is obvious. In the first six months, the number of registered enterprises increased by 30 per cent. The same principle is used in Custom from January 1 2009.

5. 23.02.2009Sabit Bagirov 5 Developing of private entrepreneurship in Azerbaijan The electronic system of tax payment has also been actively developing over the past year. According to the results of a sociological poll conducted among 1,000 small businesses in May-July, 34.4 per cent of are already using the electronic system of tax payment. Another 22.7 per cent intend to start using the electronic payment system in the near future.

6. 23.02.2009Sabit Bagirov 6 Developing of private entrepreneurship in Azerbaijan Over the past year, a number of important amendments to the labor law have been adopted as well, the system of registering rights to own real estate has been developing and the situation surrounding the credit registry.

7. 23.02.2009Sabit Bagirov 7 Developing of private entrepreneurship in Azerbaijan All these measures allowed Azerbaijan to become a leader by the number of reforms carried out in the country in the “Doing Business in 2009” report by the World Bank and the International Finance Corporation.

8. 23.02.2009Sabit Bagirov 8 Developing of private entrepreneurship in Azerbaijan At the same time, the latest surveys, carried out by WB (Governance Indicators), EBRD, ADB, WEF, the Fraser Institute of Economics, the Heritage Foundation, the Transparency International and other internationally-recognized institutions and consultancy organizations, as well as national organizations such the Entrepreneurship Development Foundation, there are considerable reserves for the further development of the business climate in Azerbaijan.

9. 23.02.2009Sabit Bagirov 9 National Business Agenda for 2009 The document was drawn up by the Entrepreneurship Development Foundation (EDF). The proposals were prepared within the framework of the Project “Improvement of the Business Climate in Azerbaijan”, financed by the Center for International Private Enterprise (CIPE, Washington, DC). NBA can be find at: www.edf-syf.org

10. 23.02.2009Sabit Bagirov 10 National Business Agenda for 2009 While preparing the proposals included in this document, EDF carried out a number of surveys, including:  a survey among 1,000 representatives of small businesses;  the deep interviews with business-leaders and some of government bodies;  analysis a number of laws and legal acts that regulate business;  activity in Azerbaijan. Moreover, EDF analyzed recommendations from world institutions and the experience of a number of transitional economies.

11. 23.02.2009Sabit Bagirov 11 The survey among 1,000 representatives of small businesses. The geography of the survey. Participants% Baku50050 Barda323,2 Guba414,1 Ganja838,3 Khachmaz42 4,2 Lankaran343,4 Мingechevir313,1 Shamakhi313,1 Sheki515,1 Shirvan525,2 Sumqayit838,3 Yevlakh202,0 Total1,000100,0

12. 23.02.2009Sabit Bagirov 12 The survey among 1,000 representatives of small businesses. Composition of respondents: Legal entities - 61,6 % Private individuals- 38,4 %

13. 23.02.2009Sabit Bagirov 13 1. How do you assess the current economic situation for your business?

14. 23.02.2009Sabit Bagirov 14 2. What are your plans regarding the recruitment of new employees in the next six months?

15. 23.02.2009Sabit Bagirov 15 3. Are you planning to expand your business in the same sphere or in any other sphere?

16. 23.02.2009Sabit Bagirov 16 4. How often are you visited by someone from government agencies

17. 23.02.2009Sabit Bagirov 17 7. How do you assess the conditions for competition in the sector of the economy in which you work?

18. 23.02.2009Sabit Bagirov 18 19. Have you had to apply to the State Fund to Support Entrepreneurship for a loan?

19. 23.02.2009Sabit Bagirov 19 23. How accessible a commercial loan in a bank?

20. 23.02.2009Sabit Bagirov 20 24. Do you think you are protected from officials’ arbitrariness?

21. 23.02.2009Sabit Bagirov 21 26. Do you use the opportunity to pay your taxes electronically?

22. 23.02.2009Sabit Bagirov 22 39. Name the measures that the state needs to take in order to accelerate the development of private business in Azerbaijan (Choose no more than five answers)

23. 23.02.2009Sabit Bagirov 23 41. In conclusion, assess the business climate in the country as a whole, not just with regard to your own business

24. 23.02.2009Sabit Bagirov 24 The survey among 1,000 representatives of small businesses The full information about the survey among 1,000 representatives of small businesses can be find at: www.edf-syf.org

25. 23.02.2009Sabit Bagirov 25 National Business Agenda for 2009. www.edf-syf.org www.edf-syf.org 52 recommendations on 14 directions: 1. Institutional reform 2. The introduction of European definitions of small businesses 3. Regulatory reform 4. The improvement of the tax regime 5. Reform of the licensing system 6. Improvement of property registration system 7. The creation of an effective information system 8. Reform of the system of various approvals and construction permits 9. The development of the infrastructure of small businesses 10. Tightening of punishment measures for non-accounting commercial activity 11. Streamlining of inspections 12. To ensure the supremacy of the law and fairness of the courts 13. Improvement of foreign trade procedures 14. Social corporate responsibility: from coercion to encouragement

26. 23.02.2009Sabit Bagirov 26 NBA was presented to the president of Azerbaijan

27. 23.02.2009Sabit Bagirov 27 World Economic Crisis and its challenges for Azerbaijan The global economic crisis while had insignificant influence on a situation in Azerbaijan. The basic reasons: 1) Low level of integration in the global financial markets; 2) Structure of the goods of foreign trade; 3) Currency stocks of the country; 4) Insignificant external duty;

28. 23.02.2009Sabit Bagirov 28 World Economic Crisis and its challenges for Azerbaijan The following tendencies are observed: Decrease of the budget incomes; Decrease of the Oil Fund incomes; Decrease of the FDI; Decrease of state and local private companies investment; Decrease of volume of currency transfers from the citizens of Azerbaijan working abroad; Decrease of volumes of export non-oil goods; Decrease of volumes of consumers crediting; Insignificant devaluation of national currency; Decrease of the domestic production on a number of the enterprises. As a consequence - dismissal of the workers and sending them in long no-charge vacation; others

29. 23.02.2009Sabit Bagirov 29 THANK YOU FOR YOUR ATTENTION For more information: bagirov.sabit@gmail.combagirov.sabit@gmail.com