Reducing and optimizing: how Russia grows in Doing Business thanks to construction

26.06.2018

In recent years, Russia has shown a positive momentum in the promotion in the World Bank’s rating, including through improvements in the indicator “Obtaining construction permits.” At the same time, experts note that in this direction our country still has considerable potential, as the reforms continue, and a number of transformations already working in practice have not yet been taken into account by the World Bank.

What is Doing Business?

Rating Doing Business, which is prepared by the World Bank for fifteen years, serves as a kind of indicator of the business climate in different countries. It covers 190 countries and examines regulatory standards that facilitate or impede the development of business throughout the entire business cycle, including setting up an enterprise, doing business, carrying out foreign trade activities, paying taxes, and protecting investors’ rights.

The degree of convenience of doing business in a country is estimated by ten indicators: registration of enterprises, obtaining construction permits, connection to the electricity supply system, registration of property, obtaining loans, protection of minority investors, taxation, international trade, enforcement of contracts and resolution of insolvency. Recently, they have also been supplemented with a methodology that takes into account the activity of carrying out reforms in the country.

In general, the rating is devoted to small and medium-sized enterprises and the assessment of regulatory acts that regulate their activities throughout the life cycle. The research methodology and the cost-analysis model are the only standard instruments used in various countries to assess the impact of the rule-making of states on the activities of enterprises.

In addition to the fact that the rating is focused on small and medium-sized businesses, it assesses only the quality of regulation, not taking into account the economic and political components.

What and how did Russia achieve

As Maxim Oreshkin, the head of the Ministry for Economic Development and Trade noted, Russia shows one of the best dynamics in the last six years in terms of promotion in the rating. So, in 2011 our country was on the 124th place, and in the last rating, published in 2017 according to the results of 2016, took 35th position already. In many respects such growth became possible due to the improvement in obtaining a building permit. In the same 2011, according to this criterion, Russia was on the 179th place, and now rose to 115th.

Head of the Department of Urban Development Policy of Moscow Sergey Levkin specified that the number of procedures fixed by experts of the World Bank has decreased more than threefold – from 48 to 15. At the same time, the procedure has been reduced almost twofold – from 452 days to 239 days. The cost of the procedures also decreased.

The Ministry of Construction of the Russian Federation said that one of the reforms in Moscow and St. Petersburg, which had an impact on the reduction of the procedure, is the complete automation of procedures in the field of issuing construction permits, permits for commissioning of facilities with subsequent setting of a newly constructed facility on cadastral registration and transition to electronic interdepartmental interaction with federal and regional authorities. These procedures now turn out to be exclusively in electronic form. “The Moscow team has been carrying out this work consistently since 2012 and simultaneously with St. Petersburg completed it in 2017,” the Ministry of Construction said.

A transition to a risk-based approach to building control was also implemented. This means that the more complex the facility and the risks in its construction are higher, the more stringent the control and the more often the inspections are carried out. An exhaustive list of procedures was also approved for the construction of non-residential facilities, and now the passage of procedures not included in it is excluded. In addition, unification of the procedures and terms of connection of capital facilities to networks of electricity, gas, heat, water and sanitation was ensured.

As part of streamlining the procedures, the information contained in the town planning layout of the land plot was also significantly expanded – this made it easier to collect data for design. At the same time, engineering surveys were simplified through the creation of information resources and electronic services.

“Of course, the result is far from ideal, but imagine – when we just started to prepare a” road map “for construction, the entrepreneurs could not even count how many construction procedures in Russia. From region to region, their number differed at times! The investor, coming to the new region, often simply did not know what would happen, “says Artyom Avetisyan, Director of New Business of the Agency for Strategic Initiatives, noting that each region can additionally shorten the terms for rendering services provided for by federal legislation.

Avetisyan also draws attention to the fact that in the ranking in terms of the number of construction procedures we have approached the best world practices (15 in Moscow and 13 in St. Petersburg). “For comparison, Saudi Arabia (2 nd place in the construction rating), 14 procedures,” – says the expert.

At the same time, Levkin stresses that the accounting of reforms is deferred, since the World Bank experts take into account only the reforms fully implemented in practice. For example, in 2015, the need to harmonize the architectural and town planning solution for small non-residential facilities on the periphery in Moscow was excluded, which was later recorded in the Doing Business 2017 rating, the official explains.

Avetisyan adds that the town planning plan for the land plot (GPRS) now includes information on engineering and technical support networks located within the boundaries of the land plot, as well as technical conditions for connection to water supply and sanitation networks. Only this innovation will combine the three procedures into one and shorten the time for 30 days. The reform is working now, but, unfortunately, will not be reflected in the rating right away. “Traditionally, due to the long construction cycle, the World Bank’s respondents in the construction sector feel the effects of the reforms after 1-2 years,” Avetisyan says.

Business appreciated

 

Research VCIOM showed that business representatives noticed the effect of the reforms. So, according to the latest research, more than half of the respondents appreciated the changes positively. The greatest benefit for developers was from the transfer of public services to the electronic form (76.2% of respondents), as well as from the inclusion of data on engineering communications and technical conditions for connection to them (68.3%). At the same time, the All-Russian Public Opinion Research Center (VCIOM) notes that a more positive perception of the changes would be promoted by raising the awareness of the representatives of the construction industry.

In the opinion of Marina Lubelskaya, deputy general director of the Krost concern, all procedures in the sphere of construction and in the sphere of housing purchase in Moscow in recent years have come to a maximum simplification. She explains that thanks to the introduction of the principles of a single window and the transfer of most services to the electronic form, obtaining permits for construction, land use and connection to engineering networks has taken considerably less time.

“We, as a capital builder, note this trend: in Moscow, to start new construction and to put ready housing into operation became really easier. The period from the start of the project to its completion now takes significantly less time, which is beneficial for both developers who save resources and buyers who wait less for the completion of their apartments construction. Construction industry today, we can say, is at the peak of form, and therefore ready for a new breakthrough, “Lubelskaya argues.

Director of marketing and market research of FGC “Leader” Ksenia Tsaplina confirms that today a number of decisions have been made that allow to say that the authorities have thought about the development business development in a civilized way. In particular, the translation of the coordination of documentation through electronic services significantly optimizes and simplifies the work of developers, and now the review and approval of the documentation is within the time limits, she clarifies.

The convenience of the electronic document management system that speeds up the process of filing and approving documents is also noted by Alexander Gusev, the head of the department for project management in the Moscow region of the Ingra Group of Companies, adding that now every developer can apply for any service and document through a single portal, .

“Today this is the best practice in Russia and one of the best in the world”, – adds member of the Bureau of the RUIE, the Chairman of the Board of the Barkley Corporation Leonid Kazinets. He recalls that during the transfer of services to the electronic form in 2013-2015, the developers themselves did not keep up with the authorities. Everyone used to carry documents on paper, which made it possible to correct mistakes and inaccuracies in the process of rendering services, in fact the authorities were consultants when filling out the documents, Kazinets explains.

Gusev also draws attention to the fact that among the changes that have positively affected the construction industry, it is possible to distinguish the transition from individual interaction with each municipality to the centralized system of “one window” circulation in the Ministry of Construction. “One cannot but note the close cooperation of the authorities, which has recently improved significantly. Thanks to efficiently built communication between the Ministry of Construction and Rosreestr, a number of approvals are much faster than it was several years ago, “the expert adds.

What lies ahead

Currently, there are still a number of reforms that can contribute to improving the status of Russia in the rating, including in terms of building permits.

So, according to the Moscow construction complex, the changes that should be taken into account by the World Bank include the inclusion in the GPRS of information on technical conditions for connection to water supply and sanitation networks and on existing underground communications and facilities. Also in Moscow, a consolidated plan of underground communications and facilities in electronic form is being formed. It is translated into the electronic form and integrated into the information system for the provision of town planning activities of the Moscow Geofund in terms of engineering surveys. Innovation is also the implementation of cadastral registration of newly constructed capital construction projects on the basis of the application of Mogosstrojnadzor to the cadastral registration body within the framework of interagency cooperation without the participation of the applicant.

In addition, an experiment is under way in Moscow, St. Petersburg and the Moscow region to switch the connection services to the engineering support network into an electronic form, the Ministry of Construction said. The tasks of the experiment are optimization (unification) of the composition of documents for all types of networks, and the transfer of services for connection exclusively to the electronic form on the basis of a single application through the regional portals providing state and municipal services. The implementation of the experiment will shorten the time for passing the procedures, increase the transparency of their conduct.

“In the future, the results of the experiment will be extended to other regions of Russia. We plan to complete this work in 2019, “the Ministry of Construction said.

At the same time, according to the ministry, a bill is being drafted on a common standard for the provision of state and municipal services in construction, which will eventually ensure a uniform practice of law enforcement on town planning activities throughout the country and lay the foundations for the digitization of services in the construction industry.

According to Levkin, the potential for improving Russia’s position in the rating, including through the “Obtaining construction permits” direction, is available. At the same time, the official acknowledges that it is difficult to make specific forecasts because the countries participating in the rating are also carrying out reforms in order to simplify regulation both in the construction sector and in other industries evaluated in the rating.

Source: RIA Novosti