1. Removal of Administrative Barriers in Russia: Key Issues and Experiences in the NW Region Jacqueline Coolidge World Bank Creating A Conducive Legal & Regulatory Framework for Small and Medium Enterprise Development in Russia A Policy Dialogue Workshop, St. Petersburg, Russia September 14-16, 2003

2. 2 FIAS in Russia 2000: V. Novgorod, St. Petersburg, Leningrad, Sverdlovsk, Tomsk 2002: Follow-up, plus Perm, Kaliningrad, Nizhny Novgorod and Magadan 2003: Follow-up, plus Rostov, Irkutsk, and Sakhalin

3. 3 Administrative Barriers to Investment Phase I: Administrative Barriers Report, including description, analysis, and recommendations (FIAS team+ Govt.) Phase II: Dialog/Prioritization/Action Plan (Government and business community) Phase III: Implementation (Government) Phase IV: Monitoring and Evaluation (Government + business community)

4. 4 Phase 1: Data from Agencies Hard data from each of the agencies –Official fees –Volume of transactions –Average processing speed Date received Date completed –Number of rejects –Number of appeals –Outcome of appeals

5. 5 Business Surveys Baseline survey and follow-up –How long do procedures take? –How much do they cost? –Is everyone treated the same? –Any special problems? League table of agencies League table of regions/localities

6. 6 Perception of Federal and Local Governments as an obstacle/supporter for doing business in 2000 (percent of respondents) Federal Oblast/Subject

7. 7 Six Most Problematic Areas (based on the average of 5 regions, % of respondents) in 2000 1 2 3 4 5 6

8. 8 Size Size Group Distribution, 500 Firms Per Region

9. 9 0,1 0,2 0,3 0,4 0,5 Stock-market regul. Foreign exchange Labor IPR Antimonopoly Registering Police Sanitary Reorganization Anti-competitive practices Environment Fire/safety regul. Debt restructuring Customs Judiciary system Certification Infrastructure Licensing Corruption Taxes Construction permits Land % of the surveyed firms% of firms which gave answers Barriers in 3 Russian Regions

10. 10 Land Market Near-Monopolistic Many allegations of favoritism –Cronies get favorable access/terms –Below-market rent on primary leases –Profitable to sub-lease at higher market rates Allegations of abusive lease agreements –Municipality can raise rent any time to any rate –Highest rates of reported bribery –Lowest rates of quality of service

11. 11 Statement: Land Market in Russia is almost monopolistic and controlled by “friends” of local authorities. Note: Not rebased

12. 12 Statement: Land Market in Russia is almost monopolistic and controlled by “friends” of local authorities Note: Data have been rebased, to exclude from the total those respondents who responded either DK or NA.

13. 13 Prepare Draft Report Description of each of the procedures Analysis –Investors’ experiences –Cross-region and international comparisons –Strengths and weaknesses Recommendations for improvement

14. 14 Need Private Secondary Market of Land Competition in real estate market Transparency regarding real estate sales Transparency regarding procedures, fees and processing time Create level playing field Remove discretion

15. 15 Recommendations - Land Allow municipalities to retain most land tax revenues Eliminate land rent concessions for firms Accelerate implementation of land-use zoning as per RF Land Code Eliminate architectural authorities from land privatization

16. 16 Recommendations - Construction Eliminate state monopoly on technical passports Encourage coordination between agencies and development of “single window” Establish standards and formulas for connection fees and charges Establish time limitations for technical conditions

17. 17 Phase II: Dialog between Government and Business Participation by relevant Government agencies Representatives of the private sector Donor involvement Facilitators

18. 18 Workshop to Discuss Draft Report Discuss findings and recommendations of report; Prioritize among recommendations; Discuss how recommendations can be implemented Prepare Action Plan to present to Policy Makers and donors

19. 19 Action Plan What are the objectives? What is to be done? Who will do it? When will it be completed? How will we measure impact?

20. 20 Phase III: Implementation Amendments to laws Changes in regulations/ procedures Performance indicators for agencies Training/technical assistance

21. 21 Phase IV: Monitoring and Evaluation Once reforms have been agreed, there is a need to monitor implementation –Checklist of reforms –Data from agencies –Business surveys Evaluate Impact Revise reform agenda

22. 22 Cycle of Reform

23. 23 Foreign Investment Advisory Service, joint facility of International Finance Corporation and World Bank Jacqueline Coolidge Program Manager, Europe, FIAS Tel.: + (1-202) 473-3791 Fax: + (1-202) 522-3262 E-mail: jcoolidge@ifc.org www.fias.net www.worldbank.org.ru Creating A Conducive Legal & Regulatory Framework for Small and Medium Enterprise Development in Russia A Policy Dialogue Workshop, St. Petersburg, Russia September 14-16, 2003