Private Sector contributes less than 5 % of total export in Azerbaijan

Private Sector contributes less than 5 % of total export in Azerbaijan

Total export was $ 8,4 billion in the first forth months of 2012 in Azerbaijan- State Customs Committee Reported.  4764 legal entities and individuals were dealing with export and import operations in Azerbaijan in January-April 2012. According to the Committee, of them 2,638 are legal entities and 2,125 are individuals. The state share in export operations over the past period made 95.25% or $8.033bn, private sector-4.48% or $0,378 billion and individuals-0.27% or 0,021.
In 2011, the state share in export operations made $25,2 billion, or 95.03%, private sector made 4.24% or $1,2 billion, share of individuals made 0.73% or $192,9 million.

Center for Economic and Social Development (CESD) stated that state dependence in Azeri export show that private sector has low export capacity. Lack of capacity of local business is the main reason why state has dominate share in total export. Local business mainly runs for domestic market. Secondly, since share of oil and oil products in Azeri export is extremely high and such kind of activities is managed by state company, it drives private sector’s contribution to minimum.

CESD also mentioned that the fact confirms that local business in Azerbaijan is underdevelopment in terms of exporting goods and services. There are certain artificial and administrative barriers to export from Azerbaijan. According to World Bank Doing Business 2012 report, 38 days is needed to export from Azerbaijan where 24 days is required only for document preparation. Cost of export procedures is $2,905.  The report added that 42 days is needed to import to Azerbaijan and total cost of import procedures is $ 3,405. 8 documents are officially required to export to Azerbaijan meanwhile 10 is need for importing to the country.

Azerbaijan is not yet a member of the World Trade Organization- despite a stated interest in WTO membership, Azerbaijan has been making little effort leading to a serious negotiating-stated in USA Commercial Service report. The report mentioned that there are several barriers to trade with Azerbaijan that make doing business here difficult. Non-tariff barriers include a weak and unpredictable legal regime, arbitrary customs administration, clear conflicts of interest in regulatory and commercial matters often leading to export/import monopolies, and corruption. The Azerbaijani government’s inadequate enforcement of IPR protections also counts as a trade barrier. In addition, tight quality control and international certification is key to realizing the export potential of Azerbaijani produce and products.

Goods imported into Azerbaijan for processing and then re-exported are subject to normal duties and taxes at the time of importation. As soon as processing has been completed and the goods are re-exported, a draw-back procedure can be initiated to recover the taxes and duty paid. There is no formal procedure for submitting an application, and this process is cumbersome to use. Customs establishes the time for the processing and re-export of the goods, usually within two years. In addition, Customs may also stipulate a minimum amount of finished product be held to assure that the imported goods are utilized for the purpose intended.

CESD concluded that keeping high share of the state in Azeri export makes foreign trade unsustainable.

© CESD, 2012


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