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Putin sends long-awaited message to Russian businesses - analysts

December 04, 2014, 17:42 UTC+3 Zamyatina Tamara
Russian President Vladimir Putin

Russian President Vladimir Putin

MOSCOW, December 4. /TASS/. The measures for giving Russian businesses more freedom that President Vladimir Putin proposed in his annual message to the Federal Assembly on Thursday are precisely the constructive signal that the national businesses had long been waiting for from the authorities, polled representatives of Russian businesses told TASS.

Speaking in the Kremlin on Thursday, Putin said that relations between the state and businesses should be based on partnership and trust. For that, he went on to say, businesses should be relieved of excessive control and supervision. Putin proposed a certain period of immunity from inspections by watchdogs. Private firms with an impeccable three-year record will be exempt from checks for three years to come. Also, Putin called for a freeze on taxes at the current level for four years, for lax taxation on start-up projects during the first two years, and for the full amnesty for capital that may be returned to Russia from offshore zones.

“Businesses have at last received a clear and unambiguous signal that the authorities will be prepared to meet them halfway. Without support from the business community, getting out of the current complicated for the Russian economy situation, would be impossible," the vice-president of Business Russia (an organization uniting small and medium businesses in 77 regions of Russia) Nikolay Ostarkov told TASS.

“It will be important to see how Putin’s message will be interpreted at government ministries and agencies. Years-long experience shows that the authorities’ good intentions quite often run into slack or weak response from executive officials. Now that the president has identified a new vector of the economy’s development and the freedom of enterprise, Russia’s entire system of control requires fundamental retuning,” Ostarkov said.

“As far as incentives to developing enterprise are concerned, Putin voiced some crucial ideas. Particularly important is the call for easing administrative hurdles standing in the way of small and medium businesses," says Deutsche Bank’s chief economist in Russia Yaroslav Lisovolik.

“In Germany and in other countries of the European Union, small and medium businesses account for more than 50% of the gross domestic product and more than 50% of jobs. In that sense, Russia has vast room for development. So far, this resource has not been used to the full extent, and it was appropriate of Putin to put the emphasis on the need for giving people the freedom of enterprise,” Lisovolik said.

“It remains to be seen, though, how effective the measures to enforce Putin’s program for liberalizing business will be. Such goals were proclaimed on many occasions in the past only to get bogged down in bureaucratic procedures. If this time the authorities show enough political will to monitor the efforts to achieve the set tasks, the markets’ response will be positive,” he believes.

“In his message the Russian president sent quite a few positive signals to the market. Putin said that total distrust between the government and businesses was very harmful. He proposed an end to excessive control of businesses. Everybody is pretty sick with unpredictable tax policies. I liked Putin’s promise that the existing taxes would be frozen at the current level for four years,” says Garegin Tosunian, the president of the association of Russian banks.

“As far as amnestying capital returning to Russia, I believe that this measure will work and money will start pouring into the country. Even neutral Switzerland has begun to find faults with Russian banks and businesses and addressed them with warnings their bank accounts may be closed under some directive. When businesses feel the environment is changing for the better and enforcement is improving, they will get more active to invest into the national economy and social infrastructures,” Tosunian said.

ITAR-TASS may not share the opinions of its contributors