RBC daily (№ 49 (1582) 19.03.2013): Foreigners Evaluate Russian Business Climate

Red tape scares foreign investors more than problem of corruption and extortion. The foreign business still considers that government treats it first and foremost as the pocket to be picked for money, and only secondarily — as a junior partner.

Foreign companies, operating in Russia, perceive business climate hasn’t changed significantly in the country for the previous year. According to the research based on 2012 results and released by the Russian Union of Industrialists and Entrepreneurs together with Fleishman-Hillard Vanguard, 44 percent of the respondents noted an improvement (with 34 percent saying it was a minor one), while in 2011 this share was 55 percent. The share of neutral answers increased the most significantly from 31 percent in 2011 up to 48 percent in 2012.

As many as 50 percent of the respondents said red tape was a major obstacle for business (19 percent growth), while 42 percent named corruption, and 37 percent noted underdeveloped infrastructure. It is interesting that the acuteness of illegal practices – corruption – according to those participating in the survey, has decreased within the last year (from 59 percent to 42 percent), while the number of ‘legal’ obstacles – administrative obstacles – has increased (from 31 percent to 50 percent) and moved into first place.

“As the priority measures, capable to stimulate business on the principles of social responsibility, 52 percent of respondents see tax incentives (growth twice from 27 percent), transparency of decision-making by authorities (48 percent), and also overcoming of excess regulation and elimination of administrative pressure (40 percent)”, — General Director of Fleishman-Hillard Vanguard, head of Communications Group of RSPP Elena Fadeeva, comments.

By foreign companies opinion Russian government treats business as a pocket to be picked for money (they completely agree with the Russian colleagues’ views on this problem), or as a junior partner. Nevertheless in 2011 the share of respondents considered in priority of financial interest of government was rather higher (61 percent instead of 48 percent).

The foreign companies are not afraid of serious influence from controlling bodies. Moreover, about a third of the respondents say that they do not come across them. Nevertheless the most difficult controller the participants of the survey named the Federal Customs Service (49 percent), licensing bodies (41 percent), tax authorities (36 percent), the Federal Consumer Protection Service (34 percent), and regional government (32 percent).

In the survey the respondents were asked to name interaction tools that are actively applied between business and government bodies. The most popular turned out to be personal contacts (83 percent), business associations and industry associations (63 percent).

Anastasia Litvinova