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Forbes Magazine Presented Its Annual Ranking of the Best Countries for Doing Business
December 24, 2018 00:17


Forbes magazine presented the annual ranking of the best countries for doing business: the UK is the leader of the rating again. The UK took the first position for the first time last year.

The rating takes into account 15 different factors, including taxation, levels of corruption and bureaucracy, innovation, the situation with property rights, and more.

The second place in the ranking was taken by Sweden, while Hong Kong closes the top three. Also, the first five includes the Netherlands (4) and New Zealand (5) - last year they took the third and second places respectively. The United States ranked the 17th, losing five positions during the year.

Russia took the 55th place in 2018.  Last year Russia was placed 58th by Forbes, noting the country's continued dependence on oil prices.

Recall that Russia was ranked 31st in the “Doing Business” ranking  composed by the World Bank. Despite the fact that Russia has managed to rise by four positions, as compared to last year, the goal of joining the top 20 of the list that was stated in the decrees as of May 2012 by the President Vladimir Putin, has not yet been achieved.

Russia managed to enter the top 20 in three separate spheres taken into account when composing the ranking: registration of enterprises and property (12th place), connection to electricity supply networks (12th place) and provision of contracts implementation (18th place). At the same time, Russia ranks 22nd in providing loans, occupied the 32nd place in simplicity of starting a business, the 48th place in issuing construction permits, the 55th position in resolution of solvency issues and the 99th in international trade.

We also remind that Russia took the 26th place in the ranking of the best countries in the world, according to the US News & World Report, having risen by one position during the year.

Read More Articles about Business and Economy in Russia

The reforms related to construction, international trade, lending, etc., helped to improve the position in comparison with the previous year, the Ministry of Economic Development said. In particular, we are talking about introducing a risk-based approach in controlling construction, shortening the time for issuing building permits and putting into operation, reducing the cost of technological connection to power grids, electronic declaration of goods at customs, followed by automatic registration and release. Among other reforms that have had positive effects is clarification of the grounds for the release of mortgaged property from the moratorium on foreclosure procedures, when the debtor falls under the procedures of financial rehabilitation and external management.

Back in 2011, Russia was ranked 124th in Doing Business. Entry into the top 20 rankings by 2018, which was spelled out in the decrees of 2012, has so far been fulfilled in only three areas: connection to power grids (12th place), registration of enterprises and property (12th place), and also enforcement contracts (18th place). In terms of ease of starting a business, Russia is in 32nd position, in terms of building permits - in 48th place, in terms of lending, protection of minority shareholders and taxation - in the 22nd, 57th and 53rd lines, respectively. The worst situation is with international trade, in which Russia ranks 99th (last year it was in 100th place). By resolving insolvency, Russia was in 55th place.

Russia has shown the most serious improvement on the item on construction permit, having risen from 115th place last year to 48th.  In its rating, the World Bank considers the business climate only in two Russian cities - Moscow and St. Petersburg. The authors of the study analyze the regulations and interview experts, mainly lawyers, judges and notaries, some of the information is provided by the state. There are no companies among the respondents: first, because they do not always have the necessary legal information, second, they start a business once, and then it becomes more difficult for entrepreneurs to evaluate how to open a new company in the country, the World Bank explained. World Bank experts do not take into account such indicators as macroeconomic stability, development of the financial system, quality of labor resources, corruption and security problems. Periodically, the World Bank specifies the rating methodology (for example, in the past and the year before last it helped Russia improve its position). This year there have been no changes in the methodology.

Russia was not included in the top 20 in Doing Business, since  2015–2016 “we have weakened our grip,” Oreshkin noted. In addition, there are a large number of reforms that Russia carried out in 2017–2018, but which the World Bank has not yet considered in the rating, he added. According to the calculations of the Ministry of Economic Development, if all of them were included in the study, Russia would now be in 18th place. “This is an assessment of the potential of where Russia may find itself in the next few years if we achieve the World Bank’s integration of reforms and keep pace with the competing countries in terms of reform rates,” said Oreshkin. If in the past, the goals for promotion in Doing Business were clearly set forth in decrees, now there is no mention of the rating in either the May decree of Putin in 2018 or in the “Main areas of government activity” for the next six years. Doing Business is only a small part of the authorities' work on the investment climate, Oreshkin said.

The current position of Russia in Doing Business is the limit that can be reached by tightening the indicators, says Daniil Tsygankov, director of the Center for Regulatory Impact Assessment at HSE. “The jump to the 20th place suggested a comprehensive regulatory policy. You can not only work on the indicators without changing the environment itself. Administrative rent in this case begins to move into areas where there are no Doing Business indicators,” he stresses. You can open a car repair business or a bakery, but after that, 33 supervisors will come to the company and from the “ease of doing business” and the trace is gone, Tsygankov notes.


Author: Anna Dorozhkina

Tags: Russian business Russian economy    

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