1. Doing Business in Russia 2012
Augusto Lopez-Claros
Director, Global Indicators & Analysis
World Bank-IFC
Saint Petersburg International Economic Forum
June 21, 2012

2. Doing Business indicators reflect on some of the most important obstacles firms face
Percent of firms identifying the problem as the main obstacle to their business activity
Based on Enterprise Surveys in 118 countries around the world
Direct responses from representative samples of the private sector
Access to finance, electricity, informality and tax rates are the top obstacles across the developing world

3. The Doing Business indicators have a strong theoretical foundation
The Regulation of Entry by Djankov and others, Quarterly Journal of Economics, Feb 2002.
Countries that regulate entry more heavily have greater corruption and larger unofficial economies, but not better quality of public or private goods
Private Credit in 129 Countries by Djankov, McLiesh and Shleifer, Journal of Financial Economics, May 2007.
Creditor protection through the legal system and information sharing institutions such as credit bureaus are associated with higher ratios of private credit to GDP. Credit rises after improvements in creditor rights and in information sharing
Trading on Time by Djankov and others, Review of Economics and Statistics, Nov 2008.
Each additional day that a product is delayed prior to being shipped reduces trade by more than one percent
Courts by Djankov and others, Quarterly Journal of Economics, May 2003.
Procedural formalism is associated with higher expected duration of judicial proceedings, more corruption, less consistency, less honesty, less fairness in judicial decisions, and inferior access to justice
The Regulation of Labor by Botero and others, Quarterly Journal of Economics, June 2004.
Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young
The Effect of Corporate Taxes on Investment and Entrepreneurship, by Djankov and others, American Economic Journal: Macroeconomics, July 2010.
The corporate tax rate has a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. It is also correlated with investment in manufacturing as well as with the size of the informal economy.

4. Doing Business indicators – 11 areas of business regulation (10 included in the ranking)
Start-up
Expansion
Operations
Insolvency
Starting a business
Minimum capital requirement,
procedures, time and cost
Registering property
Procedures, time and cost
Getting credit
Credit information systems
Movable collateral laws
Protecting investors
Disclosure and liability in related party transactions
Enforcing contracts
Procedures, time and cost to resolve a commercial dispute
Dealing with construction permits
Procedures, time and cost
Paying taxes
Payments, time and Total Tax Rate
Trading across borders
Documents, time and cost
Getting electricity
Employing workers (annex)
Resolving insolvency (formerly Closing a business)
Time, cost and recovery rate
Entry
Property rights
Investor protection
Access to credit
Administrative burden
Flexibility in hiring
Recovery rate
Reallocation of assets 4

5. How does Doing Business measure the ease of doing business?1
Singapore
The overall ease of doing business: 2
Honk Kong SAR, China
(1) Starting a business
(2) Dealing with construction permits
(3) Getting electricity
(4) Registering property
(5) Paying taxes
(6) Trading across borders
(7) Enforcing contracts
(8) Protecting investors
(9) Getting credit
(10) Resolving insolvency 3
New Zealand 4
United States 5
Denmark
Top ranked countries in DB2012 6
Norway 7
United Kingdom 8
Korea, Rep. 9
Iceland 10
Ireland

6. New metric on ‘distance to the frontier’: tracking economies’ progress over time
Narrowing the Distance to the Frontier from 2005 to 2011 (percentage points)
China
India
…captures the absolute improvement that countries have made over time, and
…also provides information on how far countries have been away from the “frontier” – a measure based on the most efficient business regulatory practices observed by the Doing Business Project across countries and over time.

7. New metric on ‘distance to the frontier’:
tracking Russia’s progress over time
Narrowing the Distance to the Frontier from 2006 to 2011

8. Subnational Doing Business (SNDB) – How does Russia benefit from it?
Creates baseline and captures local difference in regulations
Pinpoints bottlenecks and provides information on good practices within the same country that can easily be replicated
Captures reforms
Diagnostic Tool 1
Monitoring Device 3
Reform Instrument 2
Allows locations to compete locally and globally
Promotes peer to peer learning
Initiates a reform process by engaging local governments and reforms stakeholders
Measures progress over time through repeated benchmarking
Creates an incentive to maintain reform effort even when governments change

9. What is new in Doing Business in Russia in 2012?
Covers 30 cities
Updates data and tracks reforms for the 10 cities measured in the Doing Business in Russia 2009 in 3 topics
Data is current as of November 2011
Surveys administered through over contributors
The report covers 4 indicators
Starting a business
Dealing with construction permits
Getting electricity
Registering property

10. Doing Business in Russia 2012 benchmarks 30 locations
Round 1 locations
Round 2 locations
St.Peterburg
Petrozavodsk
Murmansk
Vyborg
Kaliningrad
MOSCOW
Tver
Yakutsk
Yaroslavl
Kaluga
Saransk
Surgut
Voronezh
Rostov-on-Don
Khabarovsk
Tomsk
Samara
Irkutsk
Stavropol
Ulyanovsk
Vladivostok
Ekaterinburg
Kazan
Perm
Omsk
Kirov
Vladikavkaz
Volgograd
Kemerovo
Novosibirsk

11. What are the key findings?
No city outperforms the others in all areas
Average start up costs are among the least expensive in the world
Registering property is inexpensive and easy across Russian cities
All 10 cities measured for the second time have improved in at least two of the 3 areas measured twice
Numerous procedures take a long time and carry a high cost in the areas of dealing with construction permits and getting electricity
Overall, it is easier to start a business, deal with construction permits, get electricity and register property in Ulyanovsk and Saransk

12. No city outperforms the others in more than one area
Aggregate Rank
Starting a business
Construction permits
Getting electricity
Registering property
Ulyanovsk 1 3 4 5 8
Saransk 2 20
Vladikavkaz 27 11
Rostov-on-Don 26 15
Kazan 14 17
Kaluga 6 9
Stavropol 7 19
Yaroslavl 16
Surgut 30
Irkutsk 10 18
Petrozavodsk 21
Kirov 12 13
Omsk
Vyborg 23
Vladivostok 22
City
Aggregate Rank
Starting a business
Construction permits
Getting electricity
Registering property
Volgograd 16 2 27 26 4
Voronezh 17 15 28 8
Tver 18 21 25 14
Kaliningrad 19 11 3 22
Tomsk 20 6 10
Samara 24
St. Petersburg 1 9
Khabarovsk 23 29
Yekaterinburg 13
Perm 12
Murmansk
Kemerovo 7
Yakutsk 30
Novosibirsk
Moscow

13. It is easier now to do business in all 10 cities measured twice
City
Starting a
business
Dealing with construction permits
Registering
property
Irkutsk √
Kazan
Moscow
Perm
Petrozavodsk
Rostov-on-Don
St. Petersburg
Tomsk
Tver
Voronzeh
Doing Business reforms making it easier do to business

14. Compared globally, starting a business is inexpensive in all cities

15. More efficient one-stop shops and better coordination speeds up start up in some cities
One-stop shop in Saint Petersburg (ranks 1st in Starting a business)
One-stop shop in
Saransk (ranks 20th in Starting a business)

16. Construction permit requirements vary significantly across cities—especially before construction

17. Cities are improving the construction permitting process, but challenges remain
City
Reduced time for processing permit applications
Streamlined procedures
Adopted new building regulations
Introduced risk-based approvals
Irkutsk
Moscow
Kazan
Perm
Petrozavodsk
Rostov-on-Don
St. Petersburg
Tomsk
Tver
Voronezh

18. Getting electricity: Fewer procedures do not necessarily shorten delays

19. Property registration is easy and inexpensive in Russia
Procedures, time and cost to register property 13 60
Yakutsk
7.3
India
Brazil 45
5.7
Kemerovo
Japan 44
St. Petersburg
5.2
Germany
Eastern Europe
& Central Asia, Japan, Turkey 40
Germany, Kazakhstan
4.4 6
OECD high income 39
Brazil
4.0
Finland
3.6
India, Germany,
OECD high income, Kemerovo, St. Petersburg 35
China
Russia average
3.3 5
Turkey 33
Eastern Europe & Central Asia
2.8 31
Eastern Europe & Central Asia
OECD high income
2.3
Russia Average, Yakutsk China, Kazakhstan 4 29
Brazil
China 26
Vladivostok, Vladikavkaz
Finland, Vladivostok, Vladikavkaz, Kaluga 3 19
0.59
Kaluga
Yakutsk 14
0.23
Russia average
Finland, Japan
Saudi Arabia 1 6
Turkey
0.1
Kazakhstan 1
Saudi Arabia
Saudi Arabia
Procedures
(number)
Time
(days)
Cost
(% of income per capita)

20. Property registration is faster in the 10 cities studied in 2008

21. Russian cities can learn from each other
Doing Business indicator
Sub-Indicator
Global Rank DB 2012*
 Best practice in Russia
Value
Rank (1-183)
City
Starting a business
Cost (% income per capita) 2 28
1.7 21
Kazan
Procedures (number) 9
124 7 86
Kirov, Murmansk, Perm, Petrozavodsk, St. Petersburg, Stavropol, Yakutsk and Yaroslavl
Time (days) 30
126 16 87
Kaliningrad
Dealing with
construction permits
183.8
113
40.0 46 51
181
103
Murmansk
423
173
150 78
Surgut
Getting electricity
1852.4
140
112.2 47
Omsk 10
182 6
121
Kemerovo, Perm, Rostov-on-Don, Samara and Yakutsk
281
178
120
Vladikavkaz
Registering property
Cost (% of property value)
0.2
16 cities including Kaluga, Kazan and Surgut 5 49 3 12
18 cities including Irkutsk, Rostov-on-Don and Tver 43
104 13
Khabarovsk
Source: Doing Business database

22. Why does it matter?
Starting a business
Countries that regulate entry more heavily have greater corruption and larger unofficial economies, but not better quality of public and private goods.
A recent study in the United States shows that accelerating permit approvals by 3 months in a 22-month project cycle could increase construction spending by 5.7% and property tax revenue by 16%.
Dealing with construction permits
Managers in 109 economies consider electricity to be among the biggest constraints to their business; they estimated losses due to power outages at an average 5.1% of annual sales.
Getting electricity
Following a land titling project in Thailand, property increased in value by 75–197% after being registered.
Registering property

23. Good business regulations and governance
In countries where business regulation is efficient and information on documentation requirements and fee schedules is easily accessible, the costs to start a business are much lower.

24. Average Ease of Doing Business rank
Economies that score higher on the ease of doing business, tend to receive higher FDI inflows
Average Ease of Doing Business rank
FDI inflows per capita, 2010 (US$) 6 45 96
Denmark, Finland, Iceland, Ireland, Korea, Rep., New Zealand, Norway, Singapore, United Kingdom, United States
Chile, Colombia, Kazakhstan, Oman, Peru, Rwanda, Slovak Republic, Spain, Tunisia
Belize, China, Greece, Guatemala, Jordan, Morocco, Serbia, Vietnam, Yemen