Nezavisimaya Gazeta (№55, 20.03.2013): West Gets Used to Our Climate

Foreign investors are satisfied by the Russian business environment

Western investors are quite optimistic about the business climate in Russia. It is confirmed by the results of the poll of representatives of the foreign companies working in our country. According to the study of the Russian Union of Industrialists and Entrepreneurs (RSPP), in 2012, the majority of respondents saw improvement of the situation. Only 8% of the polled said the business climate had worsened comparing to 14% a year earlier.

Every year RSPP conducts research dedicated to evaluation of the business climate in Russia. Since 2011 the research includes the results of the poll of foreign companies active on the Russian market prepared by the Fleishman-Hillard Vanguard communications agency.

Companies participating in the poll represent such industries as manufacturing, energy, trade, HoReCa, transport, telecommunication, financial services, realty, agriculture, education, healthcare.

As it turns out, Western businessmen feel quite comfortable regarding operating in our country: 44% of the respondents even noted an improvement. Another 48% said no changes had taken place. And only 8% of foreign entrepreneurs said the business climate had deteriorated. For comparison, in the previous year, these figures were 55, 31 and 14% respectively. Thus, there is a positive trend.

General Director of FHV Elena Fadeeva speaking about unresolved issues, identified by the survey, noted high red tape, indicated by 50% of respondents (19 % growth from 2011), corruption (42%) and underdeveloped infrastructure (37%). The foreign business are not enjoyed that government treats them as the pocket to be picked for money, according to 48% respondents. Nevertheless, the previous year this opinion was even more widely spread – 61%. At the same time, the share of those convinced that business and government relations cause an environment for corruption decrease from 29 to 15%.

Among other problems the foreigners claimed lack of property and contract rights (33%), inefficient judicial system (29%), lack of qualified staff (27%)

As to legal interaction tools actively applied between business and government bodies – the most widely spread turned out to be personal contacts (83%), business associations and industry associations (63%). However, work within the framework of constantly operating advisory deliberative bodies has dropped from 45% in 2011 to 17%.

A comparison with the 2011 data demonstrates that the share of those reporting administrative obstacles from Russia’s regulatory bodies has increased in respect of such bodies as the Federal Customs Service (from 33% up to 49%), licensing bodies (from 31% up to 41%), the Federal Consumer Protection Service (from 20% up to 34%). Meanwhile, separate structures and bodies improved their images according to enterpreneurs’ opinions. Thus, respondents had experienced problems with tax authorities and with the Federal Anti-Monopoly Service down. The current condition of infrastructure necessary for business activities can also be described as average – the overall score is 4.0 out of 7 (taking into account that the 2011 score was 3.9). The most complicated situation is related to the parameter of “availability of real estate/land” – 2.7 (2.6 in 2011).

Russian entrepreneurs assess business environment is much more critical. In particular, number of those considered that the investment climate in our country had worsened, was three times more, than those who saw improvement, – 15% against 5% respectively, according to RSPP poll. While 40.9% said they didn’t not see major changes. Experts explain a difference of opinions with certain national features of relationship between government and business in the Russian Federation. Foreigners can traditionally count on the certain privileges and preferences, that can’t be told about Russian business. That’s why the answers to the survey of domestic and foreign entrepreneurs can’t completely coincide. The chief economist of “Sberbank CIB” Evgeny Gavrilenkov explains this with distinctions in levels of protectability of investors. Foreigners are protected by an international law, and Russians – by not always perfectly working domestic legislation. Thus, foreign investors are less vulnerable than ours.

Vice-President of “Delovaya Rossia” Nikolay Ostarkov described the situation as a mosaic. On the one hand, some areas are changing to the better, such as those connected with the work of the Agency of strategic initiatives, making “Road maps” on improvement of the business environment in Russia. On the other hand, only one area – taxation (talking about wages fund) eliminates all achievements. Therefore it is impossible to imagine Russian businessmen are sharing the optimism with their western colleagues operating in our country.

“Conditions for foreign investors in Russia are much more easy than for domestic ones. This is a myth that they are oppressed. Attitude of our authorities to western business, especially realizing major projects, can be characterized like almost trembling. I can’t remember scandals with confiscation of property,” – says Head of the Department of applied political science at Finance University Konstantin Simonov. Here comes a conclusion – foreign entrepreneurs possess political protection in Russia. They aren’t disturbed once again by authorities and don’t have problems with the raiders. Meanwhile the Russian business lives in a bit different reality, and therefore is more critical to a current conditions of business climate in the country.

Igor Naumov