Regulatory Reforms Improve Russia's Business Environment but Challenges Persist, According to New World Bank-IFC Report

June 21, 2012

Saint Petersburg, June 21, 2012—A new report by the World Bank and IFC comparing business regulations affecting domestic firms in 30 cities across Russia finds that overall it is easier to start a business, deal with construction permits, get electricity and register property in Ulyanovsk and Saransk.

The report Doing Business in Russia 2012 finds a variety of good practices across the 30 cities. Saint Petersburg, for example, climbed to the top of the starting a business indicator for its reforms of the one-stop shop. Rostov-on-Don ranks third on the getting electricity and fourth on the registering property indicators; while Kaliningrad and Tomsk stand out on the ease of dealing with construction permits, ranking third and sixth respectively.

Property registration is easy and inexpensive across Russia. Additionally, the average startup cost of 2.3 percent of income per capita places the country among the 30-most affordable economies worldwide to start a business. Consistent performers stayed at the top with Kazan among the top performers in the areas of starting a business and registering property. Irkutsk remained in the top third of cities measured for starting a business and dealing with construction permits, and ranks tenth on the newly measured getting electricity indicator.

Despite these good practices, challenges remain. Firms across Russia still face inefficient and lengthy procedures that carry a high cost, especially in the areas of dealing with construction permits and getting electricity. Inspections and approvals need further streamlining in many cities to enable a more business-friendly environment.

“Cities in Russia have a lot to gain from adopting good practices that are working elsewhere in the country and reform-minded local governments can use the World Bank Group’s Doing Business indicators to motivate and sustain reform efforts,” said Augusto Lopez-Claros, Director, World Bank Group.

Doing Business in Russia 2012 is the second report in a series analyzing four areas of business regulation across Russian cities—starting a business, dealing with construction permits, getting electricity, and registering property. These indicators were selected because they cover areas of local jurisdiction or practice. In October 2009, quantitative indicators on business regulations were published for 10 cities. Trading across borders included in the first round was replaced by the getting electricity indicator in the second round published today. This year, the report documents improvement in the cities previously measured and expands the analysis to 20 additional cities. The data shows that all cities benchmarked for the second time improved in at least two out of the three areas covered.

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Doing Business in Russia 2012 was funded by the Ministry of Economic Development of the Russian Federation, 26 participating regions and one municipality; and by the European Union, represented by the European Commission. The report was produced in collaboration with the Higher School of Economics and the Institute of Urban Economics.

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