Removal of Administrative Barriers in Russia: Key Issues and Experiences in the NW Region Jacqueline...

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Removal of Administrative Barriers in Russia: Key Issues and Experiences in the NW

RegionJacqueline Coolidge

World Bank

Creating A Conducive Legal & Regulatory Framework for Small and Medium Enterprise Development in

RussiaA Policy Dialogue Workshop, St. Petersburg, Russia

September 14-16, 2003

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

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)

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

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

-45 -30 -15 0 15 30 45

Novgorod Oblast'

St. Petersburg

Leningrad Oblast'

Sverdlovsk Oblast'

Tomsk Oblast'

Aver. of 5 regions

Very helpful Mildly helpful Very unhelpful Mildly unhelpful

-45 -30 -15 0 15 30 45

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

Federal Oblast/Subject

15.322.1

23.7 15.516.9

22.820.619.4

3040506070

<10 employees 11-20employees

21-50employees

>50 employees

Tomsk Kalinigrad Perm

SizeSize Group Distribution,

500 Firms Per Region

0,5Stock-market regul.

Foreign exchangeLabor

Antimonopoly

Registering

Police

Sanitary

Reorganization

Anti-competitive practicesEnvironment

Fire/safety regul.Debt restructuringCustoms

Judiciary system

Certification

Infrastructure

Licensing

Corruption

Construction permitsLand

% of the surveyed firms % of firms which gave answers

Barriers in 3 Russian Regions

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

Statement: Land Market in Russia is almost monopolistic and controlled by “friends” of local authorities

Renting Land Plots in Three Regions of Russia (distribution, %)

0 5 10 15 20 25 30 35 40

From the Federalbodies

From the Regionalbodies

From the Localbodies

From Juridicalpersons

From physiscalpersons

Kaliningrad Oblast' Perm Oblast' Tomsk Oblast'Note: Not rebased

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.

0 5 10 15 20 25 30 35

Excess ive paperwork

Artificial complications

Information about theprocedures is not avail able

Bureaucratic voluntarismof some officials

Requirement to give bribes

Lack of competence ofoffici als

Need to rely on personal /private connections

Kaliningrad Tomsk Perm

Respondents who thought that following problems in dealings withland/premises permit issuing authorities are a usual practice (%)

0 5 10 15 20 25 30 35

Excess ive paperwork

Artificial complications

Information about theprocedures is not avail able

Bureaucratic voluntarismof some officials

Requirement to give bribes

Lack of competence ofoffici als

Need to rely on personal /private connections

Kaliningrad Tomsk Perm

Respondents who thought that following problems in dealings withland/premises permit issuing authorities are a usual practice (%)

Prepare Draft Report

• Description of each of the procedures

• Analysis– Investors’ experiences– Cross-region and international comparisons– Strengths and weaknesses

• Recommendations for improvement

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

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

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

Phase II: Dialog between Government and Business

• Participation by relevant Government agencies

• Representatives of the private sector

• Donor involvement

• Facilitators

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

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?

Phase III: Implementation

• Amendments to laws

• Changes in regulations/ procedures

• Performance indicators for agencies

• Training/technical assistance

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

Cycle of Reform

1. Identification of

problems

2. Government/

business dialogue

3.Implementation

by decision-makers

4. Monitoring and

evaluation to assess impact

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, RussiaSeptember 14-16, 2003

Removal of Administrative Barriers in Russia: Key Issues and Experiences in the NW Region Jacqueline...

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