A plan to counteract administrative barriers and support business has been formed in Russia for 2016
Russia needs a new government reform, which will allow to relieve entrepreneurs of enormous administrative pressure and reduce multibillion financial expenses, said the State Secretary - Deputy Minister of Economic Development of the Russian Federation Oleg Fomichev at the conference on “Regulatory Policy in Russia: Business Performance as a Reflection of Authorities Operation Quality” which took place in Moscow on December 15, 2015.
“The total amount of costs for business to complete a variety of reporting forms is about 789 billion rubles per year,” – reported Oleg Fomichev. At the same time, he pointed it out that “the quality of government control is far behind everything that grows from the bottom”, and the number of specialized institutions and the grounds demonstrating openness of the government (e.g., “Open Government”) is so great that “there is a sense of spam and blank noise.”
The General Director of the Agency for Strategic Initiatives (ASI) Andrey Nikitin reminded that the attempts to implement large-scale administrative reforms in Russia had been taken more than once, but did not have the desired effect. Instead of the government reform the Head of ASI suggested to focus on particular steps and create a clear action plan to counteract the administrative barriers.
“I have a book on the shelf in my office – reminiscences of contemporaries of Peter the Great about reform projects, it almost completely repeats the presentation of Oleg Fomichev - joked Andrey Nikitin. Of course, a systematic approach is closer to me in the context of logic, but it is unlikely to be efficient now. We need a set of clear objectives for 1-2 years. It seems to me that this is a more realistic history than the government reform which we have been dealing with for the past 300 years with about the same result.”
He presented the results of implementation of the “roadmaps” of the National Business Initiative (NBI) in 2015 and announced the activity plan for 2016.
The “road map” to simplify the procedures for obtaining construction permits is almost implemented and it is very important to trace at the next stage how the adopted statutory legal acts will be applied. “We will continue this road map. We would like the working group which is developing the road map to consider not only the housing projects, but also construction related to industrial infrastructure facilities, bakeries, coffee shops, barber’s shops,” - said Andrey Nikitin.
At receipt of construction permits entrepreneurs faced the problems of connection to various engineering infrastructure facilities. “We have identified a serious problem related to connections to water supply, sewerage, heat supply networks – everything that is within the competence of either regional or local authorities. We wish we had this kind of a “road map” too. I think we need to move towards creation of model regulations for connection and model contracts for small and medium businesses so that this procedure would be countable and transparent in each city”, - said the General Director of ASI.
The Head of ASI proposed to apply the mechanisms used to facilitate the procedures in electrical energy industry in the adjacent segment - connection to gas networks. “Entrepreneurs say: well, the time frames of connecting to power grids are reduced but it still takes two years to connect to the gas networks, so the total time from the moment of launching the enterprise remains unchanged because of this. That is why we decided that the energy roadmap will be supplemented by work related to connection to gas networks”, - said Andrey Nikitin.
One more “road map” which will enter into an active phase of implementation in 2016 is aimed at support of Russian exporters. “This road map is devoted to creation of an institution for export support - the national export centre. It is clear that we are on the right track, but still there’s a lot to be done to ensure that our exporters receive the same support as their colleagues from the European countries, to have the same insurance and banking tools,” – explained the head of the Agency for Strategic Initiatives.
Arranging access to foreign markets and the mechanisms to facilitate export-import operations will be reflected in a new “road map” for the development of international trade.
“The main objective of the road map on customs administration was a reduction of formalities at the border. Customs procedures at the border were reduced. At the same time, we still have such colleagues as Rosselkhoznadzor (Federal Service for Veterinary and Phytosanitary Surveillance) and Rosgranitsa (Federal Agency for the Development of the State Border Facilities of the Russian Federation). And often the checkpoints do not allow exporters and importers to export and import goods quickly. There is a problem with the sea ports, with a monopoly of stevedores in these ports, who drive up the price for servicing containers, etc. We will rename this road map into the map on international trade and will look more broadly at the administrative barriers which exist here”, - Andrey Nikitin said.
In 2016, implementation of measures of the “road map” for property registration will also be continued. Andrey Nikitin reminded that Russia had shown its best result in the Doing Business rating exactly for this indicator (the 8th rank in the world). This means that “our Rosreestr works at the level of Singapore and Dubai in terms of timeframes.”
Work in some areas of the NEI will be completed in 2015. The “road map” of support to SMEs, according to Andrey Nikitin, has already accomplished its task. “The government adopted a resolution which sets quotas for access to purchases of small and medium businesses from state-owned companies. The established SME Development Corporation should ensure its implementation. During this year all state companies and state corporations will submit their plans and show how they will transfer 10-20% to small enterprises. Let's see what happens ", - said the General Director of ASI. Besides road maps on tax administration, business registration and regulation documents will be completed.
The “road map” on regulation of valuation activities is in the final stage. “There is the final objective there related to a delicate issue for the business - the state cadastral valuation, and we need to create a clear and transparent procedure here,” – reported Andrey Nikitin.
However, he pointed it out that the “used” “road maps” will not disappear from ASI’s area of interest and provided the case of cancellation of obligatory affixing seals to the documents as an example: “Just a month after cancellation of obligatory use of seals within the “road map” for regulation of documents Rostrud (the Federal Labour and Employment Agency) releases a departmental instruction that in their case the use of a seal is mandatory and don’t you even think about not using the seal. This means that, apart from those basic decisions which we implemented in the road maps, there is a large number of by-laws that just need to be taken away, cleaned off, etc. And this work is still awaiting us.”
Andrey Nikitin outlined four issues which “ASI has not historically dealt with”: credit availability, insolvency resolution, protection of minority shareholders’ rights and contract performance insurance. These topics will be combined in a new “road map” devoted to improvement of corporate governance. “Such map will be created now. We have been repeatedly asked the question if we plan to do it. Yes, we do”, - announced the Head of ASI.
He also reminded that the regional projections of NEI’s “road maps” are measured with the help of the national rating of investment climate.
“Here is an example of the first rating. Construction permit under the unified federal law was received after 60 days in one region and after 560 days in another one. This means 500 days of difference at one and the same model object. This is not a historical centre with special conditions; it is a simple model object on the suburbs. 500 days is the region’s input in the barriers, 60 days are possible in a region which removes such barriers”, - explained Andrey Nikitin.
The President of the Russian Union of Industrialists and Entrepreneurs (RUIE) Alexander Shokhin pointed it out that pro-active measures taken by the governors on creation of favourable environment for business sometimes turn against it. A side effect of the fight against administrative barriers is an increased attention of the regulatory authorities. “To be honest, when we signed the rating we considered it to be a procedure of implementing best practices, and now we realize that we have created a new field for law enforcement agencies. It is, apparently, necessary to agree on what is more important”, - said Alexander Shokhin.
The Head of RUIE reported that the General Prosecutor’s Office assumed obligations to check all the leaders of the national rating of investment climate and find out whether they violated the laws regulating the minimum normative periods of providing services. “Many colleagues from the regions said that, when we summed up the results (of the rating) that we cannot do quicker than the normative period. And the investigative committee and the public prosecution office promptly asked a question: did they take a bribe for expediting the issue? The public prosecution office will immediately visit us. Well, it has come,” – resented Alexander Shokhin.
The Assistant to the President of the Russian Federation Andrey Belousov reminded, that in September 2016, the term of the parliament members of the VI-th convocation will expire, and, therefore, it is necessary to prepare an exhaustive list of statutory legal acts to ensure implementation of the NBI’s “road maps” as soon as possible.
“In 2016 Duma will change and it seems that we have only six months to finish off the regulatory framework, as they will adopt, collect their thoughts and pull themselves up for the next six months and then we will smoothly enter the presidential election cycle, and this is not the best time to start some new major initiatives,”- the Assistant to the Russian President said.
Andrey Belousov identified two approaches fundamentally different in the methodological context. He suggested to distinguish between the regulatory composition and the lobbying mechanisms. “This is what refers to the rules of the game which are set for the business. And what is related to RIA (regulatory impact assessment - note) with the expertise and different levels of business involvement in the process of decision making and implementation. Firstly, these are important elements to be distinguished and secondly, we still can apply horizontal measures - measures of universal nature and vertical measures which are focused on industries and on certain groups of companies”, - said Andrey Belousov.
In the upcoming agenda of 2016 Assistant to the President outlined the group of actions “most powerful by intensity", related to “vertical type regulation”.
“For the first time we are going to introduce unprecedented measures to support import substitution. For the first time we took a risk and decided to set a zero income tax. This allows the RF territorial entities to use this measure so that it wouldn’t lead to a reduction in subsidies which the regions receive from the federal budget. For the first time a decision was made to purchase 30% of products in the framework of import substitution and under special investment contracts on a non-competitive basis. It is a large deduction by state agencies (pursuant to 44-FZ), and not only at the federal level, but also at the regional and municipal levels. I would add the launch of corporation headed by Braverman to measures in the same area. All the measures available to the government to support small and medium businesses are concentrated here for the first time, especially with regard to financial regulation which was distributed among the governmental agencies”, - said Andrey Belousov.
Another ambitious and unprecedented, according to the Assistant to the President, task of 2016-2017 is formation of a regional network of the Russian Export Centre (REC): “More than 200 companies have already become clients of REC, 80% of them are small and medium enterprises. It is apparent that it is necessary to change the network model which the REC must establish in the regions of the Russian Federation, otherwise it will be drowned in clients with such a structure.”
Andrey Belousov also referred to the measures of “vertical nature” support mechanisms for the sectors, which were “in a difficult life situation”, such as the automotive industry, construction, railway and agricultural machinery building. “About 80 billion rubles of budget funds are now provided for this”, - he said.
The Assistant to the President named as horizontal measures the second phase of implementation of the National Entrepreneurial Initiative. The main focus, he said, will be laid on analysis of law enforcement practices. One of the commissions under the leadership of the first Deputy Prime Minister of the Russian Federation Igor Shuvalov will start assessment of efficiency of the “road maps”.
“Business will check how the regulations which have been adopted within the last 3 years under NEI are working, will prepare cases, and the commission will review them. And subsequently they will either be sent to the public prosecution office in case of violations, or the regulatory framework itself will be improved if it turns out that the legal framework is full of gaps and the measures there are ineffective”, - said Andrey Belousov.