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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
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
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
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
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
-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
8
25.8
15.322.1
38.9
23.7 15.516.9
41.7
22.820.619.4
37.2
01020
3040506070
8090
100
<10 employees 11-20employees
21-50employees
>50 employees
Tomsk Kalinigrad Perm
SizeSize Group Distribution,
500 Firms Per Region
9
0
0,1
0,2
0,3
0,4
0,5Stock-market regul.
Foreign exchangeLabor
IPR
Antimonopoly
Registering
Police
Sanitary
Reorganization
Anti-competitive practicesEnvironment
Fire/safety regul.Debt restructuringCustoms
Judiciary system
Certification
Infrastructure
Licensing
Corruption
Taxes
Construction permitsLand
% of the surveyed firms % of firms which gave answers
Barriers in 3 Russian Regions
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
Statement: Land Market in Russia is almost monopolistic and controlled by “friends” of local authorities
.
Renting Land Plots in Three Regions of Russia (distribution, %)
1
4
35
8
1
3
29
7
2
2
3
33
6
3
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
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.
14
20
18
24
19
10
30
19
20
18
25
14
11
28
14
12
11
16
6
7
16
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 (%)
14
20
18
24
19
10
30
19
20
18
25
14
11
28
14
12
11
16
6
7
16
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 (%)
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
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
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
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
Phase II: Dialog between Government and Business
• Participation by relevant Government agencies
• Representatives of the private sector
• Donor involvement
• Facilitators
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
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
Phase III: Implementation
• Amendments to laws
• Changes in regulations/ procedures
• Performance indicators for agencies
• Training/technical assistance
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
Cycle of Reform
1. Identification of
problems
2. Government/
business dialogue
3.Implementation
by decision-makers
4. Monitoring and
evaluation to assess impact
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: [email protected]
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