Upward and forward. What makes Russia to rise in Doing Business ranking

22.11.2016

Russia has risen by 11 positions up to 40th in the Doing Business ranking that shows the easiness of entrepreneur’ doing business in different countries.

According to experts and authority representatives, a breakthrough can be made in the next 2 years due to improving situation in construction sector.

NOTHING BUT UPWARD

The World Bank has published the new Doing Business ranking on October 25. During its formation the countries are estimated from the point of easiness of doing business. There are following criterions: starting a business, dealing with construction permits, connection to utility networks, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts,  resolving insolvency.

This year Russia has risen by 11 positions. Russia has ranked 40th position taking a place between Bulgaria and Hungary, outrunning such countries as Belgium, Italy, Greece and Luxembourg.

It should be reminded that according to May’s decrees which had been signed by the President Vladimir Putin at the beginning of his third presidential term, Russia would have to ascend to 50th position by 2015 and to 20th position in 2018. For the past 3 years Russia has risen by 60 positions.

TO BUILD A RANKING

The World Bank pays special attention to the topic of dealing with construction permits. Actually this indicator is one of the key criterions during the estimation of business climate in a certain country. The World Bank always improves the procedure of estimating this criterion. The quality index of construction supervision was introduced in 2015. Generally the organization ranges countries by counting the amount of procedures, time and financial expenses necessary for constructing a so called “reference object”.

Tsvetkova Lyubov Chairman of the Board, Association of Investors of Moscow (AIMOS)
Since 2014 Russia has moved from 178th to 115th position in terms of obtaining construction permits. Our country has boosted up to 4 positions in comparison with 2015. As we can see Russia still has a room for improvement in terms of easiness of obtaining construction permits.

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“Russia enters the top-10 countries in the world ranking in respect of registration of property and also the top-50 in respect of starting a business, connection to utilities, getting credit, enforcing contracts and paying taxes. The main thing about our work is not ranking but achieving the results which allow entrepreneurs to feel an improvement of conditions of starting a business in Russia. Russia has outrun BRICS countries in the ranking for the second year in a row. However our country has perspectives for moving up as long as Russia is at a lower position in terms of the construction and trading across borders,” commented on the new ranking Stanislav Voskresensky, the Deputy Minister of Economic Development.

Andrey Nikitin, the Director of the Agency for Strategic Initiatives in its turn noted that we approached European standards in terms of doing business. At the same time he called on “not ease off, because we still have quite disappointing positions in terms of international trade and issuance of construction permits”.

Authorities’ representatives pay close attention to construction industry not without a reason. The improvement of situation can drastically raise Russia’s positions in the prestigious ranking. Therefore it is very important to simplify the process of obtaining construction permits. This plies specially to Moscow. Obviously the business climate of the country is assessed by the situation in the construction sector of Moscow.

REFORMS TO MAKE BREAKTHROUGH

Moscow is actively moving forward in this respect. Here are some examples of reforms making life for business easier: 5 excessive procedures relating to construction industry were revoked in 2016, the amount of procedures has been notably reduced from 36 to 14 in the past 2 years, and the indicator of administrative construction procedures’ cost has been cut by one-quarter in several years. The World Bank positively assesses the success of Moscow. According to international organization’s data, administrative barriers have been reduced by half since 2014.

What has the Moscow Government undertaken to achieve such results? A comprehensive work has been carried out in several key areas.

Authorities optimize procedures in construction industry and elaborate online services, they have created the interagency electronic interaction system in order not to require documents from businessmen that are already at authority’s disposal, they provide developers with access to information on conditions and restrictions of exploiting land plots.
Besides that the procedures of obtaining architectural and urban planning solutions (AGR) for small non-residential objects at the outskirts of Moscow were excluded.

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Polidy Tatiana Head of division “Real Estate Market” of the Fund of the Institute for Urban Economics
“Improvement of Russian indicators in the rating is a positive result, which is largely provided by Moscow. In the capital we witness the active process of transfer procedures related to construction to electronic format, increase of information availability on the necessary procedures, moreover training sessions for developers are held in Moscow,” says Tatiana Polidy, the Executive Director of the fund “Institute of Economics and the City”, Head of division “Real Estate Market” of the Fund of the Institute for Urban Economics.

“The efforts of the Moscow government in the field of simplification of obtaining construction permits were reflected in the World Bank ranking,” told the Partner, Head of Real Estate, Hospitality & Construction Services, the Head of the Transportation, Infrastructure and Government & Public Group in the CIS, Olga Arkhangelskaya in interview with “Lenta.ru”.

“The result of the ranking was influenced by reduction of terms of procedures, proper control of their performance, and increase of transparency of the whole process. This has become possible due to the transfer of document flow to electronic format. There is everything necessary for a favorable prognosis on the further improvement of indicators of Moscow in the World Bank’s “Doing Business” ranking in terms of “Dealing with Construction Permits”. “Firstly, Moscow continues to reform and improve the process. And, secondly, not all the companies “catch” the current changes in time, so in a while their awareness of the new and improved regulations will also grow,” said Olga Arkhangelskaya.

Sergey Levkin, the Head of the Urban Planning Policy Department, reminds that the total period of carrying out necessary procedures was reduced to 14,5 days and their cost fell by 10% at a time. As a result a developer which constructs for example a warehouse has to pass through 14 procedures in 229,5 days, the total cost of which amounts to 1,5% of the project cost.

“Actually the cancelation of excessive duplicating procedures in construction industry as well as regulations of existing procedures and transparency of passing through these procedures has been ensured for the past 5 years. This year the Moscow Government has focused on reforms aimed at facilitating collection by construction companies of information and data on land plots, which is necessary for design development. The Moscow Government has also focused on creating information systems which include data on geological and topographic researches, possibilities of connection to utility networks and providing maximally free access to such systems. I suppose the specified reforms will serve as a room for improvement in the ranking for the next year,” emphasized Levkin.

The World Bank doesn’t take into account the reforms which have been launched recently. Formation of the Consolidated plan of underground utilities and structures in e-format will be completed in 2016; transferring of Geofund in respect of engineering surveys to e-format is also being carried out. Also a cadastral registration of anew constructed objects of capital construction is being carried out on the basis of submitting application of Mosgosstroynadzor to the cadastral authorities without the participation of businessmen. The effects of such reforms will be reflected in the next World Bank ranking.

Russia has 2 years to rise in the Doing Business ranking up to 20 positions. The facilitation of procedures in construction industry can provide the country with essential breakthrough.

Lenta.ru