The FINANCIAL — The Russian Federation adopted three key business reforms in continuation of efforts to improve its investment climate and create jobs, says the World Bank Group’s latest Doing Business 2018: Reforming to Create Jobs report.
Marking its 15th anniversary, the report notes that Russia has carried out 36 business reforms in the past 15 years. The bulk of the reforms were carried out in the areas of Registering Property (seven reforms) and Starting a Business (six reforms).
“There has been a demonstration of a sustained and clear commitment in Russia to improve the business climate for domestic small and medium enterprises. Much success has been achieved in recent years. Indeed, in this year’s ease of doing business global ranking of 190 economies, Russia comes in at 35th place. This compares with the 124th position just seven years ago,” says Andras Horvai, World Bank Country Director and Resident Representative for the Russian Federation.
The reforms implemented in the past year in Moscow and St. Petersburg, the two cities covered by the report, are:
Access to credit was strengthened by adopting a new law that further improves the collateral registry system.
Cross border trade was made easier by opening a new deep water port on the coast of the Gulf of Finland, thereby increasing competition and reducing the cost of border compliance at the Port of St. Petersburg.
Registering Property was made easier by decreasing the time needed to apply for state registration of title transfer.
Russia performs best in the area of Getting Electricity, with a global ranking of 10. The country’s performance in this area is underpinned by the reliability of electricity supply and the transparency of the tariff, the affordable cost to obtain an electricity connection and the ease with which an electricity connection can be obtained. It takes only three procedures and costs only 42 percent of income per capita to get connected to the electrical grid in Russia, compared to the global average of five procedures and 1,345 percent of income per capita.
The Registering Property area has been a focus of reforms in Russia in recent years and is an area in which Russia performs well, with a global ranking of 12. With the latest reform, the time needed to legally transfer a property title has been reduced to 13 days now, from 52 days in 2004 when Doing Business began monitoring this set of measures.
The country also performs well in the area of Enforcing Contracts, with a global ranking of 18 worldwide, thanks largely to the establishment of E-courts, a judiciary system that implements different measures and good practices to allow certain steps within the court proceeding to be completed electronically (this may include e-filing, e-service, e-case management, etc.). For example, it takes 337 days and costs 16.5 percent of the claim to resolve a commercial dispute in Russia, compared to an average of 578 days and 21.5 percent on average in the OECD high-income economies.
Several improvements have also been made in recent years in the area of Starting a Business, on which Russia is ranked 28 globally. The reforms have included simplification of registration and post-registration formalities, improving information sharing between state agencies and reducing the time needed to open a corporate bank account. In addition, the minimum capital requirement to start a business has also been eliminated. As a result, a new business can now be registered in Russia in 10 days, with four procedures, compared with 43 days and nine procedures 15 years ago. The cost to start a new business has been reduced to 1 percent of income per capita, from 12 percent, over the same period.
The areas where additional efforts would bring major benefits for Russia’s businesses include Dealing with Construction Permits and Trading Across Borders. For example, the time to obtain all the necessary clearances and approvals to build a warehouse has been reduced by half over the past six years, although it is still almost twice the global average. And, despite improvements in infrastructure and the implementation of an electronic system to submit documents to export and import, the cost for border compliance to export and import remains high.
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