The government plans to eliminate administrative and legal barriers.

The government plans to eliminate administrative and legal barriers.

Prime Minister Vladimir Putin ordered relevant agencies to check the legal norms and exclude those that impede business activities. Speaking at the Monday meeting of the board of the Ministry of Economic Development Putin said not only drafts but already existing regulations must be subjected to expertise.

"We must expand the scope of public consultations with the business community. In part, in assessing the regulatory impact, we must work together with it on expert analyses of both operating regulations and drafts," Putin said.

He emphasized the need to clear our legislative framework of all clauses and provisions that unreasonably impede entrepreneurial and investment activity in Russia. Tax breaks may be introduced to support new business.

In early May the Strategic Initiatives Agency's Supervisory Council must endorse roadmaps on improving the business climate and present them to the prime minister. These maps contain proposals on removing administrative barriers during connection to power grids and in construction, facilitating customs clearance, and supporting exports. The prime minister instructed relevant ministries, departments and ASI to draft maps on other directions before the end of the year.

Minister of Economic Development Elvira Nabiullina said that the tax reform should accompany the policy on reducing administrative barriers and that the tax burden must be fair – those who are engaged in modernisation should pay less.

Development of high-tech companies should be encouraged not only by tax breaks but also by government agencies' purchases and the allocated budget funds must reach the producers.

"I believe that the Economic Development Ministry should draft an effective system to regulate and control all stages of state purchases," Putin said.

In effect, a new system of state purchases already exists. Head of the Federal Antimonopoly Service (FAS) Igor Artemyev told Izvestia earlier that the ministry and FAS came to terms on the principles of a federal contract system (FCS). Only some procedural changes were introduced into a relevant draft law. It has already been submitted to the government, Nabiullina said.

In general, the efficiency of federal spending was discussed at the board meeting more than once. Putin instructed relevant agencies to submit a draft law on strategic planning to the government by July 1 of this year. Earlier, this document was strongly criticised by the Finance Ministry and the Federation Council as unsafe and non-strategic.

"I'd like to emphasise that we're not just switching to a new budget structure now. We're also preparing to adopt new, result-oriented principles of state governance and budget spending in major directions," Putin explained.

Big private companies are not happy about the business and investment climate in Russia. Suffice it to say that according to the Ministry of Economic Development, about 65% of Russian companies opted for foreign jurisdiction in placing their shares. Nabiullina promised a change – during large-scale privatisation state companies will be offered for sale on the united Russian exchange: "The legislation prevents our investors and shareholders from conveniently structuring their deals in Russian jurisdiction. The state must provide an example. I think that privatisation of large companies should be carried out on Russian platforms."

In 2011, the state sold stakes of 360 joint-stock companies for 121 billion roubles. The most important deal was the sale of a 10% stake in VTB, as well as the sale of a 75% stake in Russian Railways, and 125.5 billion roubles worth of shares in Pervaya Gruzovaya Kompaniya. Nabiullina suggested stepping up the sale of state companies this year.

"In theory I fully agree with you but in practical terms, I'd like you to pay attention to the following (it is not a nice subject to talk about but we have to, it's life): we were soliciting investment in electric power generation, and many of our partners responded to our appeal and invested billions of euros and dollars. Then – bang – you decided to slow the growth of tariffs. And our partners have every reason to ask: what about your promises?" Putin explained.

He warned that it would be inappropriate for the state to give up its assets to attract investment and then to keep the tariffs growth in check. This was not the only issue to which Putin suggested paying attention. During the discussion of the tax reform for oil and gas companies, the pension reform and other urgent economic issues, he obviously tried to pit the economic development minister against the finance minister who traditionally has opposite views.

"I absolutely support what Ms Nabiullina said," Putin summed up and thanked the minister for her work.

The Economic Development Ministry is likely to be the last ministry to be visited by the prime minister before the inauguration. Nabiullina refused to comment on any offers of seats in the new government. Some near-government sources are convinced she no longer wants to work in government agencies, whereas others predict that she will become a deputy prime minister in the new government.

Pavel Baranov and Maria Zhebit