Issue #36 Reforms in Azerbaijan Open
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Issue 36 A Word From Executive Director of AmCham Credits Dear members, Now, when we are leaving behind another year, it is time AmCham Executive Director: to look back and recapitulate the most important changes Natavan Mammadova and events of the year. And this is with certainty that we can say: 2019 was a year to be remembered as the year of even deeper structural and economic reforms. Editor: Moreover, we observe tremendous judiciary reforms Aykhan Nasibli which will serve as a strong enabler of transparent, competitive economy. Having said that, we devoted the Articles contributed by: current edition of IMPACT to “Reforms in Azerbaijan”. Arif Guliyev, Gunel Sadiyeva Sharaf Asgarova, Gulchin Mammadova It must be highlighted that AmCham, benefiting from strong contribution of member companies and experts of our committees, is always supporting reforms in the Asim Hashimov country by providing strong expertise and know how. We do that by the mean of our Pavel Belorusskiy position papers as well as creating different platforms for discussing diverse issues Farid Mammadov affecting economic development of the country and the investment climate in the Gumru Eyvazova country. We take a lot of pride to note that the significant number of recommendations Elnur Aliyev have been incorporated to different legislative acts and government programs. Huseyn Mammadov As of early next year, in order to contribute for ongoing reforms, AmCham Vladimir Remyga members will work on White Paper 2020, with a focus on taxation, customs, banking and finance, ICT, compliance, labor, migration, tourism, safety, CSR, etc. Advertisers: BP As usual, AmCham stands ready to support the Government of Azerbaijan in its Azerfon aspiration to make Azerbaijan strong business and investor friendly country. Turkish Airlines Nobel Oil Best regards, Natavan Mammadova Betta Publisher: Editor’s Comment American Chamber of Commerce Dear members, dear friends. in Azerbaijan Welcome to the next edition of IMPACT Azerbaijan magazine! Tel: (+994 12) 497 13 33 This month we celebrate the end of 2019 and welcome 2020. Fax: (+994 12) 497 10 91 It is a festive period. Even more, Azerbaijan is implementing www.amcham.az further wave of progressive reforms. It is expected that these www.impact.az reforms are not only aiming to enhance socio-economic conditions, but at the same time contribute for further diversification of the economy. It should be mentioned that Advertising opportunities: these reforms carry positive signals and a lot of expectations Please contact the Editor at for different stakeholders. Thus, the current edition is devoted [email protected] to “Reforms in Azerbaijan.” Herein, the magazine covers lots of interesting interviews and articles thanks to The articles in IMPACT Azerbaijan contribution of experts from the AmCham community. Also, using this opportunity, express the opinions of the authors and I would like to appreciate for our advertisers – Azerfon, Turkish Airlines, BP, Nobel Oil and Betta. do not necessarily reflect the position of the American Chamber of Commerce in Happy upcoming holidays and enjoy reading IMPACT! Azerbaijan Sincerely, Aykhan contents IN FOCUS 4 16 EY Azerbaijan Launches the Unique Changes in Banking Sector ‘EY Entrepreneur Of The Year™’ Program Special interview with Gumru Eyvazova Nargiz Kerimova Senior lawyer, GRATA International 6 17 Commercial Courts as Part of Reshaping Organizational Structure Judicial-Legal Reforms with Changing Commitment of CFOs Elnur Aliyev Rauf Aghayev Senior associate, BHM Law Firm Chief Financial Officer, Nobel Oil Services 18 8 Institutional and Legislative Adapting the Azerbaijan Tax System Changes in Azerbaijan to the International Tax Principles Sharaf Asgarova, Partner, EKVITA Arif Guliyev Gulchin Mammadova, Legal Assistant, EKVITA Director, Tax Advisory Services, PwC Azerbaijan Gunel Sadiyeva MEMBER CONTRIBUTION Manager, Tax Advisory Services, PwC Azerbaijan 21 Employees’ Wellbeing and Clients’ 11 Satisfaction - a Key to Unlocking Major Transformations in Electric Success Power Sector Huseyn Mammadov Betta LLC, Chief Executive Officer Asim Hashimov Legal Consultant, KPMG Azerbaijan 22 Cyber Crisis Management: 13 Readiness, Response, and Recovery How Do We Manage? Vladimir Remyga Director in Risk Advisory department, Deloitte Dr. Pavel Belorusskiy CEO, Dərs Evi Educational Center AMCHAM AZERBAIJAN 26 15 About Us “Platforms of Trust” - Trade Exhibitions in Azerbaijan 27 Business Events Farid Mammadov 33 Amcham Members’ Luncheon General Director, Caspian Event Organisers 40 Social Events 2 Issue 36 NEW YEAR NEW DISCOVERIES 126 countries to be discovered. Happy New Year. FINLAND in focus EY Azerbaijan Launches the Unique ‘EY Entrepreneur Of The Year™’ Program Special interview with Nargiz Kerimova Assurance Partner, EY Azerbaijan the country’s economy. While the government’s efforts have already brought about positive changes and substantial results, this is still very much work in progress. Indeed, a lot is yet to be done and achieved to improve the business climate and stimulate the business community in the country. I: Why is economic diversification so important? NK: It is very straightforward: the prosperity of any country rests on the entrepreneurial spirit of its small and medium- sized enterprises (SMEs) and their ability to operate and grow seamlessly. Indeed, these small and medium-sized companies make up the backbone of the economies of most competitive, developed nations. In the United Kingdom, for instance, small businesses currently contribute more than 90% of new private-sector jobs. In emerging economies, SMEs account for up to 60% of employment and up to 40% of GDP. Therefore, the importance of these small businesses cannot be understated. Azerbaijan’s newly appointed Economy Minister, Mikail I: But what will this improvement of the business climate Jabbarov, expects significant growth in the non-oil sector and economic liberalization achieve? next year. He made this optimistic forecast during the recent parliamentary debates over Azerbaijan’s state budget for NK: I have already suggested that there is a direct link 2020. Mr. Jabbarov said he anticipated an increase of 8.8% between small and medium-sized enterprises and economic in the non-oil sector, but insisted that much work still needed growth. Apart from creating new jobs and paying taxes that to be done in terms of improving the business environment. fill the nation’s coffers, SMEs play the role of what we call The Azerbaijani government has consistently pursued a sentiment barometers. Small businesses are quicker to policy of diversifying the country’s economy. Impact spoke to react to international trends and global changes than larger Nargiz Kerimova, a Partner at EY Azerbaijan, which recently companies or huge corporations. Small and medium-sized launched a special program to recognize and reward the businesses realize vividly that they will be able to compete and most successful and innovative entrepreneurs in the country. grow by responding to technological advances. Eventually, We asked Nargiz about the need for a better business climate they form the nucleus that local economies revolve around. and its relevance to the ongoing economic reforms. It is not surprising then that the output of these businesses directly relates to confidence in the markets in which they NK: Azerbaijan has, for quite some time now, been creating operate. It is this optimism that often brings about new supply incentives and taking measures to diversify its economy and chains, creates new jobs and generates investment to fuel wean it away from heavy reliance on oil and gas. It is with economic prosperity. To answer your question, the better the this objective in mind that the government recently launched business climate, the bigger the output of small businesses, comprehensive administrative and economic reforms: to and, eventually, the more positive the overall economic and encourage continuous growth of the non-energy sectors of investment climate. 4 Issue 36 in focus I: What role can EY Azerbaijan play in forging such a backbone of the economy? NK: We at EY realize that entrepreneurs shape not only our economy, but also our lives. As I already said, they create jobs, and that is very important for any economy, developed or emerging. More importantly, businesspeople stimulate innovation without limitations. They are motivated by their desire to grow their business and succeed, and, in doing so, they better the world around them, sometimes even without knowing it. This is why, for the first time in Azerbaijan, we have launched the EY Entrepreneur Of The Year™ program. Actually, Azerbaijanis have traditionally been good merchants and resourceful entrepreneurs. Therefore, this program intends to celebrate the entrepreneurial ingenuity of our businesspeople, share their inspiring stories and recognize their achievements. I: What makes this program special? NK: EY Entrepreneur Of The Year™ is a recognized global brand and has long been the world’s most prestigious competition for the benefit of entrepreneurs. It is a unique global program that recognizes entrepreneurial achievement by individuals and companies that demonstrate vision, leadership and success and work to improve the quality of life in their communities, countries and around the world. This program was established more than 30 years ago and today operates in more than 60 countries and 145 cities around the world. By participating in this competition, entrepreneurs can