Yesterday the Russian government discussed the SME situation in Russia – see Komsomolskaya Pravda article (in Russian). Prime Minister Fradkov acknowledged that the government does not provide adequate support to SMEs even though “successful small business development is essential for the country’s economic stability.” He also said that entrepreneurs often suffer from excessive pressure of various government structures and that the situation becomes a fertile ground for abuses and corruption. According to the Prime Minister “only risk-takers would attempt these days to register a new enterprise” – too many barriers to overcome, too much time to spend on obtaining neccessary documentation, too much money to pay every step of the way…The Prime Minister said the government needs to review registration regulations and try to make more business-friendly.
About 25,000 new enterprises are registered on average in Russia every year. Thought this number is significantly larger when compared to previous years, in comparison to other countries it is rather small. Poland, for example, registers about 80,000 new enterprises each year, while France – over 440,000. World Bank’s data on starting a new enterprise in Russia states: “Entrepreneurs can expect to go through 8 steps to launch a business over 33 days on average, at a cost equal to 5.0% of gross national income (GNI) per capita. They must deposit at least 4.4% of GNI per capita in a bank to obtain a business registration number.”
Recognizing and addressing the difficulties that small- and medium-sized businesses are facing in Russia, CIPE, with support from the USAID, has been working with business coalitions in 16 Russian regions since 2002. These regional coalitions identified local barriers to business development and organized advocacy campaigns to encourage regional administrations to implement much-needed reforms. The project is still going on, but the interim report that shows impact in the first eight regions is available already (CIPE will update the report once the project is complete).
In addition to working with the regional coalitions, CIPE also partnered with the Russian Chamber of Commerce and Industry (RCCI) and “The Russian Union of Business Associations” (OPORA) to address needed reforms at the federal level. Several recommendations made by the RCCI and OPORA were incorporated into federal laws signed by President Putin in July 2005.
Published Date: May 25, 2006