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Russian businesses need available credit, incentives, tax breaks, analysts say

February 03, 2015, 17:32 UTC+3 Zamyatina Tamara
© TASS/Nikolai Galkin

MOSCOW, February 3. /TASS/. The measures to promote small and medium businesses by slashing financial and administrative costs, identified in the government’s anti-crisis plan for 2015, are expected to give an impetus to private enterprise, but none of these measures has worked so far, polled analysts told TASS.

"To make the environment for doing business more comfortable, the political will of the country’s leadership is to be translated into specific action. This has not happened yet, though. So far we just heard the government pronounce fine words and declarations," the co-leader of the non-governmental organization Business Russia (an association of businesses in 77 regions of Russia), Anton Danilov-Danilyan, told TASS.

"Number one problem for small and medium businesses is that they have virtually no chance of getting a normal loan to develop business or to step up business activity. Although Russia’s Central Bank in January lowered the key rate from 17% to 15%, the level remains prohibitive. Only a key rate below the level of inflation, in other words, under 10%, might help business develop," Danilov-Danilyan said.

"What business people wish the most is not a helping hand from the government. They would like the authorities to leave them in peace and minimize interventions. But the regulators are still conducting no end of inspections of small and medium businesses, an insane number of authorizations and permissions for construction projects and for connection to power supply grids, with the net effect of curtailing the investment process, and not stimulating it," the analyst said.

The head of the Neocon consultancy, Mikhail Khazin, is very critically minded. "The plan bears no trace of an intention to change the economic policies and get structural reforms going. We still see the government provide support exclusively to big businesses at the expense of small and medium businessmen."

"To achieve a situation where small and medium businesses will work as an economic growth engine, the way they do in many other countries around the world, entrepreneurs are to have easy access to credit and enjoy genuine incentives. Tax legislation must be revised and taxes on real estate lowered," Khazin told TASS.

"As for the Central Bank’s key rate, the question of lending is not so important to small and medium businesses alone. It is a problem for the whole Russian economy," the director of the Globalization Problems Institute, Mikhail Delyagin, told TASS.

"As a professional economist, I can see only one realistic way of encouraging small and medium businesses in Russia. All entrepreneurs must be freed of all taxes at least for a period of five years, except for those business structures that are involved in consulting and financial speculation. In that case the administrative pressures on business will ease dramatically and private enterprise will have much room for growth," Delyagin said.

"For the time being, Russia’s individual regions have received the right as of this year to introduce two-year tax breaks for individual businessmen who have registered themselves for the first time. Now this right is to be spread to all self-employed businessmen in the manufacturing industry and in the services. It is good that this measure was included in the government’s anti-crisis plan. Besides, the tax breaks may encourage some to open private businesses of their own," says Yury Savyolov, a member of the presidium of the Opora Rossii (Support of Russia), which unites 450,000 businesses.

"In the current no easy situation the government should do something specific to bolster the entrepreneurs’ morale," the analyst said.

TASS may not share the opinions of its contributors