CBN, 18 April 2005

BAKU, Azerbaijan - Despite a number of improvements carried out by the government, there are some problems hampering the development of entrepreneurship in Azerbaijan, minister of economic development, Farhad Aliyev, said at the 5th meeting of the Entrepreneurs' Council last week.

Addressing these problems, Aliyev pointed out that bribery, interference in entrepreneurial activities, the monopolization of certain types of businesses, excessive hurdles to competition within the national market and the selling of low-quality goods coupled with rising prices are the problems for national entrepreneurs.

"Businessmen still face corruption, are subject to irrelevant inspections and non-registration of products is also one of the serious problems. These problems are working as obstructions to the development of the business environment and are the reason for price increases. However, entrepreneurs do not want rising prices," Aliyev added.

According to Aliyev, inflation is a serious problem. However, it is not the sole reason for skyrocketing prices.

"The price hike does not concern the businessmen; it is only the worry of the population. Businessmen purchased fuel for a 10-12 percent higher price than before, while prices for water and gas remained untouched. But why do you increase the price for produced goods by 200 percent," Aliyev asked.

The United Nations resident coordinator for Azerbaijan, Marco Borsotti, said at the meeting that the level of inflation was a very serious problem for Azerbaijan.

Borsotti said that based on the rate of economic growth, Azerbaijan has taken second place in the world and this indicator will continue to grow in the future.

According to the International Monetary Fund (IMF) report, Azerbaijan will become a world leader for economic growth starting from 2005 onward.

As the report said, Azerbaijan will enjoy economic growth rates of 21.6 percent in 2005 and 38.3 percent in 2006. Meanwhile the Azeri government forecasted 14 percent growth this year.

The IMF said that high prices for oil and gas in international markets as well as investment in the energy sector will contribute to rapid development in Azerbaijan.

"However, iinflation may bring to naught all of the successes achieved up to this period. Inflation is the worst enemy for the development of the economy. Monopoly is the second largest obstacle to this. The bulk of people who came here today are representatives from the non-oil sector. This sector must be improved. Because, naturally, resources will be depleted and your economy will be faced with very serious problems," Borsotti said.

Borsotti added that current economic growth was fully dependent on oil growth.

"It was important to apply international customs organization standards in Azerbaijan by increasing import duties on certain goods as the domestic market is not protected," Turkish businessman, Ali Ihsan Ganj said.

According to a member of the Entrepreneurs' Council, Natik Shirinzadeh, fire security and sanitary epidemiological committee employees have not given up their bad habits of interfering in business activity.

"Banks do not direct financial resources into the real sector, the tax burden remains high and income gained from export is not directed to the economy," Shirinzadeh said.

The chairman of the tradesmen and producers union, Sevgim Rahmanov, said that the main part of locally produced goods were sold without documentation.

"Therefore, prices increase artificially. How the government accounts trade turnover, I can not understand," Rahmaov added.

According to the chairman of Bakeletrmash joint stock society, Nuraddin Huseynov, there are certain government organizations creating problems for businessmen.

"I promise to decrease the prices, but first you liquidate the monopoly," said Huseynov while the minister advised to him decrease the prices.

The chairman of the entrepreneurs' confederation, Alakbar Mammadov, said that monopolies are the largest problem hampering the development of entrepreneurship in Azerbaijan.

According to Mammadov, government officials and parliamentarians involved in business activity create problems for businesses.

"You were witnesses to the events in connection with Haji Mammadov [former interior ministry official accused of heading a crime group involved in kidnapping and murder]. There is no guarantee not only for the security of property, but also for the lives of businessmen and their families. The police become an organized crime structure. Did anybody investigate further facts after the well-known crimes exposed at the Interior Ministry," Mammadov asked.

At the end of the meeting, Aliyev promised that he would inform the president of the problems of entrepreneurs.