World Bank Warms to Business Climate
By Maria Levitov

The Moscow Times
Friday, September 10, 2004. Page 5.

Staff Writer Russia ranks in the top third of countries in terms of doing
business, according to a report published by the World Bank this week.

Despite acknowledging the country’s need to improve corporate governance and
transparency, the World Bank put Russia in 42nd place in its survey of legal
parameters for businesses in 145 countries. The World Bank made no
comparison to last year because its set of criteria has since changed.

“Russia’s business climate is one of the best in the region,” the World Bank
said in a statement.

The rosy assessment left some Russian entrepreneurs puzzled.

“Our own data and a growing amount of complaints about abuses of
entrepreneurs’ rights in the regions leads us to the opposite conclusion,”
said Sergei Borisov, president of Opora, which supports small business
development.

“It’s possible that compared to Morocco or Haiti, it really is very easy to
do business in Russia,” he said. “But comparing something bad with something
very bad, does not make the bad good.”

The report analyzes governments’ regulations on such things as starting a
business, hiring and firing workers, registering property, enforcing a
contract and filing for bankruptcy.

The World Bank positively appraised Russia’s business climate because of the
country’s flexible employment regulations and improvements in business
administration procedures.

“[The assessment] is based on an analysis of regulations — not the feedback
of entrepreneurs,” Irina Likhachova, the World Bank’s spokeswoman for
Central and Eastern Europe, said by phone from Washington.

It takes 36 days to register a new business in Russia, compared to 123 days
in Azerbaijan. Registering a property takes 37 days in Russia, while in
Croatia it takes more than 2 1/2 years.

Despite such positive factors for entrepreneurs, the country still needs to
improve transparency and corporate governance, the report said.

“If Russia increases its information transparency to the level that exists
in Slovakia or the Czech Republic, [Russia’s] market capitalization could
grow by more than half,” the World Bank said.

Slovakia topped the list of ten best reformers, which Russia did not make.
The country’s ranking was hurt by such considerations as the fact that it is
the only economy among the countries with 40 largest stock markets without
credit bureaus.

Overall, Russia was placed in the second best of five categories, along with
Armenia, Bulgaria, Georgia and Estonia. Belarus, Hungary and Jamaica ranked
in the second to last category.

The top 20 countries included the usual suspects like New Zealand, the
United States and Switzerland, but also transitional economies like Slovakia
and Lithuania, and developing countries like Botswana and Thailand.