Experts' opinion

Konstantin Polunin

BCG expert partner

Moscow construction industry makes a significant contribution to Doing Business rating

03.11.2019

Moscow managed to achieve significant results by shifting its managerial focus to creating comfortable conditions for doing business, which helped strengthen Russia’s position in the Doing Business World Bank rating. Konstantin Polunin, BCG expert partner, spoke about the reforms that influenced the leap in the rating and the role of the capital’s construction.

 – Konstantin, in your opinion, what contributed to the growth of Russia in the Doing Business ranking?

Firstly, the rating itself is very important. Not only Russia, but all countries over the past 6 years, have made significant efforts to change their positions in it. This is important because it is a relatively simple and understandable story that allows us to say whether countries are doing something to create a competitive environment in terms of doing business. Moreover, there is a direct dependence on the place in the ranking, the dynamics of the rating and macroeconomic indicators.

Secondly, it is very important that in Russia, including due to last May’s presidential decrees, systemic measures and tools were created, such as a national entrepreneurial initiative and a national investment climate rating, which made it possible to focus the actions of national and regional authorities on promoting this rating . This all has a fairly serious and deep meaning.

Over the past 5-6 years, Russia has made a giant leap in this rating from 120 to 28 place. We are not yet in the 20th century, as the task was set, but the breakthrough that Russia has shown is not comparable with other countries.

The rating itself is important, you need to understand its structure. It consists of a large number of indicators that are understandable to any entrepreneur who conducts business activities. For example, connecting to power grids, obtaining permission to open a business or building permit. Year after year, we monitor what is happening and where the main results were shown.

Russia fell into that category of countries, the 30th, where the air is already discharged. There you need to take much greater efforts to get into higher positions. Conventionally, it is relatively easy to jump from 120 to 80 places. But if you start to compete with countries such as Austria and Japan, now Russia is between them, you really need to try. And the question is not so much in the methodology of this rating, but in the focus of managerial efforts.

We carefully looked at what is happening in the ranking, we are closely following it, and, of course, we have something to be proud of and something to think about. In terms of ease of paying taxes, we are at 58th place, and in terms of international trade – at 99th. This is not a reason to rejoice, we understand that these are country priorities. On the other hand, we are showing very strong movement in such infrastructure-complex events as obtaining permits for connection to electric networks and building permits. It’s great that according to the indicators on which the country has focused, we have the most serious breakthrough. First of all, this concerns the speed of obtaining permits for connection to electric networks, now we are in 7th place in the world. But on the construction site, we had the most serious breakthrough – plus 22 positions per year, now we are in 26th place. And for two years – 89 positions. This is actually a fantasy, a miracle. The rest of the indicators did not demonstrate such a large contribution, but in fact the competition between countries is increasing and in these two indicators we have the most significant breakthrough.

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