13 November 2013

Eurasian Countries Improve Global Standing

Russia Climbs 19 Slots in World Bank’s “Doing Business” Report Ukraine Jumps 28 Places and Kazakhstan Enters Top 50 Globally

Russia has climbed 19 spots in the “Doing Business-2014” report published by the International Finance Corporation (IFC) and the World Bank (WB), moving up from 111th place to 92nd out of 189 countries. Russia also finished a close 3rd behind Ukraine and Rwanda in demonstrating the most overall improvement according to the World Bank’s economic indicators. Ukraine climbed a remarkable 28 spots in this year’s study, and Kazakhstan reached the top 50 in the global ranking.
Results and Rankings
The 189 surveyed countries were ranked according to 10 criteria. The World Bank combined the results from each of the individual indicators to determine the country’s overall ease of “doing business”. The 2014 report featured changes in methodology in two of the indicator sets, trading across borders and paying taxes. The y-o-y comparative data have been adjusted to reflect these changes. According to the WB/IFC 2014 report, Russia received the following results:
Topics 2014 Rank 2013 Rank Change in Rank
Starting a Business 88 100 +12
Dealing with Construction Permits 178 180 +2
Getting Electricity 117 188 +71
Registering Property 17 46 +29
Getting Credit 109 105 -4
Protecting Investors 115 113 -2
Paying Taxes 56 63 +7
Trading Across Borders 157 162 +5
Enforcing Contracts 10 10 0
Resolving Insolvency 55 53 -2

Advancing Russia’s business standing has been one of President Vladimir Putin’s top priorities since 2012, when he set a goal for Russia to reach the top 20 in the global survey by 2018. In this year’s report, the World Bank noted five areas where the Russian economy displayed noteworthy progress:
  • Ease in opening new businesses;
  • A simplified application process for construction projects;
  • Streamlined registration of property rights;
  • Timely connectivity to electric grids; and,
  • Progress in global trade procedures.

Road Maps
Russia’s significant progress can be largely attributed to a series of “road maps” designed to improve Russia’s business climate. In 2012, President Putin signed a decree “On Long-Term National Economic Policies,” which outlined specific sectors of the Russian economy to be targeted for improvement. The overall goal of the decree is to catapult Russia’s business ranking into the top 20 by 2018. The Agency for Strategic Initiatives, a non-commercial organization created to foster small and medium-sized business projects, is responsible for overseeing and implementing the road maps. Since the 2012 decree, 9 road maps consisting of 520 tasks/projects have been developed. The topics of the road maps include the following:
  • Increasing the availability of energy infrastructure
  • Improving the business climate in the construction industry
  • Improving customs administration
  • Support for export services
  • Improving the quality of public services in real estate and accounting
  • Improved development of competition
  • Optimization of procedures for the registration of legal entities and individual entrepreneurs
  • Increased access for small and medium-sized businesses to public resources
  • Improving the quality of the regulatory environment for business 
A 10th road map on tax administration, designed to simplify compliance and filing for businesses, was slated to be presented to President Putin on November 14. 

Country Comparisons

In the 2014 study, Russia has overtaken China as the leader among the BRIC countries for overall ease of doing business. China improved from 99th to 96th place, but compared to Russia, which saw improvement in six of ten categories, China improved its standing in only three of the ten: getting credit (73rd), paying taxes (120th), and resolving insolvency (78th). The World Bank also noted that China demonstrated targeted reform in the sectors of getting credit and enforcing contracts through the introduction of new industry regulations and amendments to its civil procedure code.
Ukraine, Kazakhstan and Belarus

Several of the former Soviet republics have also increased their standing in this year’s study. For example, Ukraine jumped 28 places over the past year from 140th to the 112th spot. Ukraine also demonstrated improvements in 8 of the 10 World Bank indicators, including a leap of 145 rungs in the category of dealing with construction permits (186th to 41st). These developments led the World Bank to name Ukraine as the most comprehensively improved business climate.

Kazakhstan was ranked 50th overall this year, having moved up three places over last year. The World Bank recognized Kazakhstan’s reforms in the categories of starting a business and registering property -- Kazakhstan advanced 9 spots in the category of registering property, for example. Despite its cumulative progress, on an individual category basis, Kazakhstan only demonstrated improvement in 3 out of the 10 indicators.

Of the Customs Union members, Belarus demonstrated the least improvement by finishing only one slot higher than last year (from 64th to 63rd). Although Belarus showed progress in 5 out of the 10 categories, its performance was hurt by a drop of 18 spots in the category of resolving insolvency (from 56th to 74th).
The chart below shows country comparisons by category. 
  Russia China Kazakhstan Ukraine Belarus
Overall Rank 92 96 50 112 63
Starting a Business 88 158 30 47 15
Dealing with Construction Permits 178 185 145 41 30
Getting Electricity 117 119 87 172 168
Registering Property 17 48 18 97 3
Getting Credit 109 73 86 13 109
Protecting Investors 115 98 22 128 98
Paying Taxes 56 120 18 164 133
Trading Across Borders 157 74 186 148 149
Enforcing Contracts 10 19 27 45 13
Resolving Insolvency 55 78 54 162 74

Andrei Nikitin, Head of the Agency for Strategic Initiatives, noted that over the past two years, Russian officials and businessmen have taken great strides in reforming Russia’s business climate, remarking that, “We’re no longer talking about whether we need to improve the business climate or not, but realizing specific policies to achieve it.” Despite this progress, Nikitin emphasized that the key to Russia’s future economic prosperity lies in ensuring that “all of these positive changes are being reflected in the regions, and not just in Moscow.”