“Gazeta”: “The gost of planned economy”
Russia will welcome all new-comers.
Yesterday, Vladimir Putin addressed foreign investors at an annual meeting of the Foreign Investment Advisory Council (FIAC), of which he is the chairman. The participants, comprised of Russian officials and representatives of 25 different companies, came to their usual conclusion: On the whole, investors are satisfied with their work in Russia, but administrative barriers and excessive red tape are still a big headache.
"When the crisis erupted, the Russian government did exactly what it needed to do and Russia may very well be in the clear before other countries," said James Turley, the Council's co-chairman, and Chief Executive Officer of Ernst & Young. Interestingly enough, Turley believes that if this happens, it will happen not because, but in spite of, the work of officials below the government level.
"One company has delayed the construction of a plant in Russia for over a year because of administrative barriers. It built two plants in another country during this time," Turley said, without revealing the company.
He was speaking for all foreign investors when he cited another endemic Russian problem: poor infrastructure and poor transport accessibility.
Putin agreed with all the criticism. "All the critical remarks are completely justified. We fully agree with them," he said. He went on to explain that the red tape involved in opening businesses and making investment decisions was part of the dire legacy left behind by the planned economy. "All the decisions, including market decisions, were made at the administrative level, and it was assumed that an administrator at a certain level knew better than business representatives what should and what should not be done. Unfortunately, many administrators still think that way."
In Putin's opinion, two recent decisions will help eliminate the problem. First, the introduction of a notification-based method rather than permit-based method for opening up businesses. "We're getting ready for it," the prime minister said. "The notification-based procedure for conducting activities is already effective in 13 different spheres," Economic Development Minister Elvira Nabiullina indicated. The list will soon be much longer.
Second, the transfer of certain functions, including the powers to issue permits and licenses, to self-regulating organisations. As Putin admitted, however, this is still a problem. "We don't have enough self-regulating organisations yet, and the ones that we do have are often ineffective and weak. But we will move in that direction regardless."
Elvira Nabiullina, for her part, said that the prime minister had already issued orders for permits for participants in investment projects to be expedited dramatically.
As for Russia's infrastructure problems, Putin said that in spite of the crisis, "We're almost not scaling down our infrastructure projects at all."
Whatever the case, foreign companies are still coming to Russia. According to Turley, a recent poll of 50 foreign companies working in Russia revealed that only one intends to change its plans. That said, investors don't even seem to notice that there has been much change. "When talking to company representatives, you never hear anyone mention substantial changes," Yelena Panfilova, the head of Transparency International in Russia, told Gazeta. According to representatives of small and medium-sized enterprises, however, the number of audits has gone down markedly, she noted.
Andrei Biryukov
