President fronts up for small business
Published: 05 August, 2009, 22:46
TAGS: Investment, Manufacturing, Regional development, Economy
Wednesday saw President Medvedev meet legal officials to urge progress on legislation affecting small business, repeating criticisms made earlier this year, that authorities hinder entrepreneurs.
Ahead of the meeting Dmitry Medvedev decided to see for himself how new legislation on small and mid size business works in Russia by visiting a Moscow region bakery.
The president was interested in everything – pie recipes, salary levels, and, of course, problems.
The bakery is a typical example of a mid size business – 260 employees, and an annual turnover of around $3 million. In the last two years the owners have invested around $1 million in technical modernization, but further investment is in doubt as new loans are too expensive.
Interest rate on credits for small business may reach up to 22% making them almost unaffordable. But even if a businessman finds the money to start or expand the business other administrative obstacles appear on his way, according to Pavel Skurikhin, Chairman of the Sakho Agro Holding.
“The main problem if we build a new plant or modernize the existing production is to get additional power capacity, deal with gas service and other infrastructure organizations. That’s where we have serious difficulties now.”
In 2008 the Russian government developed a range of new laws to reduce administrative barriers for small business, such as endless inspections, unfair access to tenders for state orders, and simple delays in different procedures by local authorities.
And President Medvedev believes the work brought results.
“The number of inspections of small business decreased significantly due to the measures that’ve been taken last year. But the task to remove administrative barriers remains. The Federal legislation on small business that has been signed into law recently may be corrupted at a local level. The Prosecutor General and other law enforcement authorities present here must assimilate local legislation with Federal law in the shortest period possible. On the positive side in the last year we've made more progress than in the last 5 to 7 years.”
Representatives of small business agreed, that life had become easier but say some problems remain. For example, fire safety certificates for some firms cost $20 thousand. The President’s reaction was tough. He demanded to cut the price to $2 thousand.
Dmitry Medvedev repeated that the development of small business is under his personal control and it shouldn’t take much time for the government to solve other issues.
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Streamlining government and squeezing out the corruption is not a flashy job, but the vitality of the country depends on it. Let's see what happens next year, after Medvedev has been in office a couple of years. If his programs are going to work, they should start having a noticeable effect by next summer. I do not expect it to be quick, because there is still so much Soviet-era bureaucracy in place, and some of those guys will probably die of old age in their chairs before they are removed. Putin made some changes but he didn't finish, so hopefully Medvedev will be able to make a lot more progress in reforming the bureaucracy.
Yes Pr Medvedev really is initiating the start of the right policies, as i said before these have to be incentive based, but what is it all for if some zombie bank keeps small business loans at 22%? by the way this is happening globally, Banks are getting a free ride while all the time saying "well you see, we had this problem and now it's your problem so give us more money". Small business incentive performance rewards and competition are the answer, if 22% is all the local banks offer what about a community credit union? Russia is in a unique political position; it is I believe the only single nation at the moment apart from maybe the USA that is able to effectively institute these reforms and create a real market economy, not a market economy of words only where the only wealth flows to the top, fore that is a monoploly posing as a market. I have thought in all sorts of ways but as i have become more educated, one can clearly see that the "Market" the real market and competition is the ever present force of nature, and it will eventually , no matter how long, wear down every monopoly, move against it and one may as well be pissing in the wind. we (the earth) are entering a phase of increasing information (as I'm sure people are now aware) if one looks at this as an equation the information flow is a multiplier to this market effect , in essence competition will increase globally, nations that either don't move or try to move against these forces, will just be bypassed or left behind or forgotten about. there are reasons people around the world know who Ron Paul is, there are reasons People around the world know the name Medvedev and Putin, and the Russian leadership, and they aren't the same old deceptive cold war reasons.