Presentation of the National Investment Climate Rating for the Russian Regions has become a traditional feature on the agenda of the St. Petersburg International Economic Forum. In 2017, the rating results will be presented at the SPIEF for the third time, but this year the attendees will have their first opportunity to trace the evolution of its criteria across all Russian regions.
The rating is produced by the Russian Agency for Strategic Initiatives jointly with the leading business associations to assess the regional authorities' progress in developing a favourable business environment. 2017 is the first year when the rating embraces all Russian regions and provides an opportunity to analyse the evolution of investment climate (in 2016, the research also covered all constituent entities of the Russian Federation, but the Nenets and Chukotka Autonomous Areas along with the Republic of Crimea and Sevastopol were assessed outside the rating scope).
The key mission of the rating is to identify best practices and bring them to the other regions. The analysis focuses on four major areas:
- Regulatory environment (quality of government services)
- Business institutions
- Infrastructure and resources
- Support for small businesses
The previous ratings helped to identify undisputed leaders (in 2015–2016, the Republic of Tatarstan and the Belgorod and Kaluga Regions made it to the Top 3) and determine the key impediments to developing a favourable business environment. One of such impediments is inefficient law enforcement. The issue was heatedly discussed during the presentation of the rating at the SPIEF in 2016, and was later raised by President Vladimir Putin in his address to the Federal Assembly: “We have overhauled the legal framework that regulates business activity. At the current stage, it is important to ensure that the adopted provisions are enforced, especially in the regions.”
In February 2017, the Government signed off on 12 target models for the regions to simplify doing business based on proven best practices. The key topics of the World Bank's Doing Business ranking were taken as one of the benchmarks for further improvement. Those topics include registering property, dealing with construction permits, getting electricity, exercising compliance oversight, supporting SMEs, etc. The regions are supposed to use the above models to develop their own investment climate improvement roadmaps, with the first results to be reviewed in late 2017.
Quality of the business environment is increasingly becoming one of the key criteria used to assess the performance of the governors and their teams. In 2016, Vladimir Putin warned that the Government will need to take administrative action and reshuffle staff if the regions fail to improve the situation.
A better investment climate in Russian regions is instrumental in achieving the objective set in Vladimir Putin's order of 2012, which vowed to raise Russia in the World Bank's ranking from the 120th place in 2011 to the 20th spot in 2018. Russia has since significantly improved its standing and was ranked 51st in Doing Business 2016 becoming a frontrunner by the number of implemented business environment improvement reforms (5). In 2017, Russia took the 40th spot on the ranking.