KEY CONCLUSIONS
Although the national rating for the investment climate in 2020 was compiled under difficult conditions, the results for Russia’s regions did not worsen: they improved
«The National Rating for the investment climate in the constituent entities of the Russian Federation was calculated following a difficult year under the pandemic. Regional heads, entrepreneurs, and citizens of our country all found themselves in a difficult situation. Significant federal and regional resources were allocated to support business, which faced a sharp drop in revenue. Thus, more than RUB 1.5 trillion were issued under all concessional lending programmes in 2020. At the end of 2020, the number of small businesses in the country had decreased by 4%», General Director of the Agency for Strategic Initiatives to Promote New Projects Svetlana Chupsheva.
«We understand that the results we are now discussing were measured in extreme conditions, and if the rating was previously characterized by regional achievements and possibilities for improving the business climate in one way or another, then we can clearly see how this year it shows the degree of positive interaction between the regions — between regional head and administration — and business, which, of course, found itself in a difficult situation objectively», First Deputy Prime Minister of the Russian Federation Andrei Belousov.
Despite the restrictions imposed by the coronavirus pandemic, almost half of Russia’s regions were able to improve the investment climate within their territory
«Despite the pandemic and last year, 40 out of 85 constituent entities of the Russian Federation improved their average index for all indicators. I would like to say that for the country as a whole, the index has decreased for the first time in 5 years. [...] The primary key rating areas, including under pressure on business, assess the amount of time required to be connected to infrastructure, the issuance of a building permit, to be connected to power grids, to register an enterprise. And every year we record a decrease for these indicators in both the average time frame for the country and the constituent entities of the Russian Federation. [...] Pressure on business has decreased. This is also a trend that we can witness for the first time in the last 5 years of the rating. Previously, we would record an increase in administrative pressure on entrepreneurs, an increase in unnecessary documentation, and the inspections taking place in the regions. At the end of last year, the number of entrepreneurs talking about administrative pressure had decreased by almost 30%», General Director of the Agency for Strategic Initiatives to Promote New Projects Svetlana Chupsheva.
«Success is the work of the regions, because the governors have done a tremendous job, and in this difficult pandemic year, we managed not to stop building at all. This is the first time in the history of all crises», Deputy Prime Minister of the Russian Federation Marat Khusnullin.
«I really liked the fact that all the regions in the ranking are doing well, everyone has achieved better results, and the investment climate in Russia is improving. Russia is becoming stronger not only as a power, but also as an economic force that can offer investors all over the world new solutions», Governor of the Sakhalin Region Valery Limarenko.
«Each region is doing everything to make the economy grow — this is the only way to ensure changes that make people live better», Governor of the Moscow Region Andrei Vorobyov.
Federal and regional authorities and especially business representatives have made note of the improved regulation in various areas
«It is very gratifying that the results have shown several positive trends. First, there has been an increase in government support for SMEs. Second, a decrease in administrative pressure on business was noted for the first time, and measurements were made within the rating and outside the rating. A very important trend is that business has noted an improvement in the regulation of construction. This is the work of Marat Khusnullin, who organized the breakthrough, and more than three thousand regulatory norms have been cancelled over the past year», First Deputy Prime Minister of the Russian Federation Andrei Belousov.
«Regulation concerns an enormous number of industries — we have done everything, and even exceeded expectations. [....] We amended 72 laws over the past year. 72 laws in a year is something that has never happened before. One hundred normative acts were issued, a lot of work was done to reduce mandatory requirements, because we had more than ten thousand requirements, and sometimes there were even, I can honestly say, absurd. Requirements were written once upon a time, decades ago, and for some reason no one thought to rewrite them, and this has also been an inhibiting factor», Deputy Prime Minister of the Russian Federation Marat Khusnullin.
PROBLEM
Capital repair funds must be digitized
«It is very important to put things in order in the digitization of capital repair funds. We have done a lot at the federal level; these are regional funds. People still run around with bundles of paper and travel around the regions. Let’s digitize capital repair funds; maybe we will create a federal standard so that if we talk about „digital“, then, including major repairs, small business, first of all, will carry out on the best practices of the 21st century for capital repairs as well», President of the All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses OPORA RUSSIA Alexander Kalinin.
PROBLEM
The methodology for compiling the National Rating of the investment climate in the constituent entities of the Russian Federation should be revised for a number of positions
«Due to the density of the results, due to the fact that many regions are really replicating the best practices of key players, a situation has emerged wherein much depends on changes at the federal level. [...] It can be seen that regulation and changes to supervisory control in activities at the federal level are the next opportunity for the next leap forward. [...] Now, if we make a real breakthrough at the federal level, then the investment climate in the regions will not increase slowly, instead making a major breakthrough. And in this regard, we probably need to change the rating methodology for a number of positions», President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin.
«Not only are management teams growing, but so is the consumer. Business increases demands all the time. The rating also teaches us to become more demanding and arrogant in a good way and, accordingly, to demand the appropriate level from the entities. [...] Regions look at where the failures are, work with ASI to improve the climate situation. [...] I would urge you to be very active, to focus on work with ASI, such as according to the major new rating — the Rating of the Quality of Life» President of Delovaya Rossiya (Business Russia) and Chairman of the Board of Group R-Pharm Alexey Repik.
SOLUTIONS
Building channels of direct communication between government and business
«In addition, direct communication between investors and the regional authorities making decisions has improved. [...] Last year, it likely only intensified when this direct dialogue, this feedback was carried out literally every day. I know that all governors personally met with business associations on a daily basis; they met with entrepreneurs working in the regions, with investors. We dealt with completely different situations ourselves, with problems faced by entrepreneurs. It can also be seen throughout the country in the assessments made by business, which says that the direct communication channel has almost doubled», General Director of the Agency for Strategic Initiatives to Promote New Projects Svetlana Chupsheva.
«And in this situation, feedback — and there is a survey for entrepreneurs — becomes critical, which adds points. And those governors who on a systematic basis every month meet with business associations, with investors, with the entrepreneurial community, they scored these points, which allowed them to move forward in this dense group. Therefore, I would urge that this be established on a systemic basis — constant direct communication with investors», President of the All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses OPORA RUSSIA Alexander Kalinin.
«What does business wish for today? Of course, to maintain such dialogue, such openness, such shared work. And the second thing that can be seen at the federal and regional levels is the speed of decision-making», President of the Chamber of Commerce and Industry of the Russian Federation Sergei Katyrin.
«Last year, decisions had to be made at lightning speed. [...] Despite the fact that we spent the last year in isolation, we have become closer to each other. We have begun to communicate more actively and more closely», Governor of the Tyumen Region Alexander Moor.
«[Our] breakthrough is associated with the creation of the institution of investment commissioners. There is such an investor in every municipality, in the regional administration, scheduled meetings. There was an emphasis on interaction. We had a failure in control and supervision activities; there was a lot of pressure, and a large number of inspections. There is a lot of federal oversight. It’s very difficult to find the necessary balance so that there is no pressure and norms are not violated. The prosecutor’s office in Nizhny Novgorod helped a lot, they set KPIs for colleagues from other departments, and we regularly held meetings with the prosecutor’s office, and they were our ally from the outset» Governor of the Nizhny Novgorod Region Gleb Nikitin.
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