Smes in asia and the pacific

Attiudes:
- Perceived opportunities
- Perceived capacity
Activity:
- Early-stage
- Persistence
- Exits
Aspirations:
- Growth
- Innovation
- Social value creation

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14
of doing so. Unreasonable waiting times and/or prohibitive costs can be major barriers 
for many potential new businesses, and can translate into a potentially major opportunity 
cost for the economy, in terms of, among other things, jobs foregone and income not 
generated. Within the Asia-Pacific region, Azerbaijan is recognized as one developing 
country that has made considerable improvements in its regulatory framework relating to 
start-up.
9
But these are certainly not the only potential inhibitors to greater SME start-up 
rates. For example, if an entrepreneur is unable to gain access to the capital needed 
to finance the planned business venture, he or she may opt not to proceed. Another 
inhibitor can actually be found at the opposite end of the SME life cycle: closure. If the 
regulations pertaining to shutting down a business or bankruptcy are too onerous, then 
an entrepreneur may be unwilling to take the risk of establishing an SME, given the risks 
attendant with any new business, and the possibility of failure resulting in a gratuitously 
arduous process of legal closure.
While the obstacle posed by high costs of market entry can be easily understood, 
the obstacle posed by a time-consuming process is perhaps a little less apparent. For 
some business ventures, the timing of market entry can be an important determinant of 
success. If a business opportunity opens, but subsequently closes (for whatever reason) 
before all the regulatory hurdles associated with start-up are completed, then it is likely 
that fewer SMEs will be established. Returning to the Doing Business rankings again, 
table 6 shows the figures for Asia-Pacific economies covered by the survey, in terms of 
the ease of starting a business. This indicator is aimed at measuring the bureaucratic 
and regulatory hurdles that an entrepreneur must typically navigate through in order to 
incorporate a new firm that employs up to 50 staff and has start-up capital that is 10 times 
the per capita gross national income of the relevant country. There are some striking 
contrasts to be discerned, most noticeably in the number of days required to commence 
a business, which ranges from 1 to 116 days.
9
See the starting-a-business case study on Azerbaijan produced by the Doing Business project: Svetlana 
Bagaudinova, Dahlia Khalifa and Givi Petriashvili, “Azerbaijan business registration agencies cooperate 
on a new one-stop-shop”, in Bruce Ross-Larson, ed., Celebrating Reform (Washington D.C., International 
Finance Corporation, World Bank and USAID, 2008).