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New agency to enhance role of small, medium businesses in Russian economy - analysts

April 08, 2015, 19:12 UTC+3 Zamyatina Tamara
Meeting of the State Council discussing the future of small and medium businesses

Meeting of the State Council discussing the future of small and medium businesses

© Mikhail Metzel/TASS

MOSCOW, April 8. /TASS/. The Russian authorities regard private enterprise as the driving force of the modern economy, polled experts have told TASS following Tuesday’s meeting of the State Council, which discussed the future of small and medium businesses.

"It is of fundamental importance to promote society’s awareness of the special role of business people and their efforts as one of the most important resources of the country’s development and sustainable economic growth. The state and all bodies of power should do their utmost to make private entrepreneurship an attractive, available and prestigious pursuit," Putin said.

Creation of a special agency to support small and medium businesses is expected to become the main result of the State Council’s session. Economic Development Minister Aleksei Ulyukayev said the newly-established agency would be responsible for drawing up plans for state purchases from small and medium businesses. With time it will be financing government programs for supporting small businesses and providing grants and loans.

"The main thrust of the new government policy guideline for supporting private enterprise will be to increase the share of small and medium businesses in Russia’s GDP from the current 20% to at least 50%. In the industrialized countries around the world this share ranges 50% to 80%. To come close to it the existing procedures of registering and opening a new business should be simplified. This job is to be done by a computer, and not a government bureaucrat. Quite a few useful anti-corruption proposals regarding private businesses were voiced at the State Council’s meeting, and this cannot but make one optimistic," an expert on the history of Russian enterprise from the presidential academy RANEPA, Aleksandr Bessolitsyn, has told TASS.

"Quite inspiring is the fact that the newly-established body, expected to promote the development of small and medium businesses, is emerging on the basis of the MSP-Bank - a subsidiary structure of Vneshekonombank, which specializes in lending to small businesses, and of the Agency for Loan Guarantees. If the new agency does have the resources and opportunities for promoting private enterprise in Russia, that will mean that the government has made a dramatic turn in favour of support for private business initiative. In 1997 Russia had a special state committee for the promotion and development of small enterprise under Irina Khakamada. That committee was not financially independent and it lacked the required powers. Too bad the good idea sank into the quick sand," Bessolitsyn recalls.

"The state committee for private enterprise coped with its task at least from the standpoint of providing legal basis for the operation of small and medium businesses," Khakamada told TASS. "Russia’s former Economic Development Minister Yevgeny Yasin and myself drafted and submitted to the State Duma a law easing the taxation of small businesses. It still works. But amid the 1998 crisis the Cabinet of Ministers had to step down. So did I."

Khakamada believes that direct business ties should be established between retailers and farm producers and that private farming should be encouraged in every way possible. "Otherwise it may turn out that small businesses will be confined to minor trading outlets. It all looks like an oriental bazaar. Real estate transactions - leasing, purchase and sale of properties is small businesses’ second most favored pursuit. Promotion of small and medium manufacturing businesses requires proper infrastructures, thermal power, gas, electricity and water supply facilities and the creation of industrial sites. Then the quality of enterprise will better match society’s needs," Khakamada said.

She believes that anti-monopoly control of big businesses might give private enterprise a powerful boost, because giants literally kill small and medium enterprises. The head of the Neocon consultancy, Mikhail Khazin, agrees. "No small food store will be able to withstand competition with a large retailer. The new agency founded to support private enterprise should maintain tight cooperation with the anti-monopoly committee to ensure the "sharks" do not swallow "small fry."

"Besides, everything new is actually well-forgotten old. The Russian Economics Ministry once had a special division for insuring the risks of small and medium businesses. To stimulate enterprise in the current condition it might be useful to recreate such a unit, possibly, within the newly-created agency," Khazin said.

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