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Transmission

The Worst Place To Do Business In Russia

“It seems to me that it has become easier to make investments in Moscow compared to what was two or three years ago,” Moscow Mayor Sergei Sobyanin told members of the American Chamber of Commerce. (file photo)
“It seems to me that it has become easier to make investments in Moscow compared to what was two or three years ago,” Moscow Mayor Sergei Sobyanin told members of the American Chamber of Commerce. (file photo)
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It may be home to the government and parliament. It may be the largest city. It may be the most important political and financial center. It may be home to many of the country's iconic landmarks and best-known monuments.
 
But if you want to start a business in Russia, stay away from Moscow.
 
That's the takeaway from a new survey by the World Bank and the International Finance Corporation that analyzes Russian cities in four areas of business regulation -- starting a business, dealing with construction permits, getting electricity, and registering property.
 
Moscow came in 30th out of 30 cities surveyed.
 
As "The Moscow Times" reports, the report is a major embarrassment for the city, which has been promising businesses at home and abroad that they would face fewer red-tape nightmares and bureaucratic headaches.

Deputy Moscow Mayor Andrei Sharonov was in Davos in January, attempting to promote Moscow as an attractive international financial center.

Also in January, Moscow Mayor Sergei Sobyanin met with the leaders of some of the city's 300,000 small and medium-sized businesses -- which account for one-quarter of the city's economy -- in an effort to convince them that the city is aware of -- and addressing -- their concerns.

And in April, Sobyanin promised members of the American Chamber of Commerce that he would do his best to cut back on red tape for any investors looking to sink their money into Moscow, especially in the areas of Russian medicine, education, transport, and in big projects related to the planned massive expansion of the capital.

We're No. 1! A general view of the city of Ulyanovsk
We're No. 1! A general view of the city of Ulyanovsk
If Moscow is dead last, which Russian city came out on top?

Surprisingly, perhaps, the No. 1 spot was the city of Ulyanovsk, on the Volga River, some 900 kilometers east of Moscow.

In second place was Saransk, the capital of of the Republic of Mordovia, also in western Russia.

The North Caucasus city of Vladikavkaz, the North Ossetian capital, rounded out the top three.
 
Sharonov, Moscow's deputy mayor, acknowledges Moscow's shortcoming and reiterated to "The Moscow Times" that plans are, indeed, under way to change the climate. For example, the city wants to make it possible for business owners to submit a single application in order to obtain construction permits and electricity:

"This is a serious negative signal for us to change the situation, and that's what we're trying to do. … We are trying to create a one-stop shop where the applicant could submit a request, and the rest would be the city's problem rather than the problem of the applicant."
 
Overall in the World Bank survey, Russia was ranked 120th out of 183 economies on the ease of doing business. While that doesn't sound so good, that's up four places from last year's survey.

Russia is also among 30 national economies that have improved the most since 2005 by making significant improvements in regulations to encourage investment.
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Comment Sorting
Comments
     
by: Mamuka
June 25, 2012 12:59
What I would like to know is if the cities near the top of the list, including Ulyanovsk, Saransk, and Vladikavkaz, had specific programs to attract business. Or were they just the least unattractive?

by: Eugenio from: Vienna
June 25, 2012 17:36
Look at that beautiful picture of Ulyanovsk! Like Leningrad, Ulyanovsk was named for the great Soviet hero Vladimir Lenin. Russian cities are beautiful, unlike the ugly US city of Chicago, home base of NATO minion George W Obama.
In Response

by: Eugenio from: Vienna
June 25, 2012 19:01
Konstantin, thank you for once again borrowing my name to promote tourism in Russia :-)! You know what, if thanks to your comments I get a job in the Russian Tourism-Promotion Authority, we can have the following deal: you write the comments (using my name, obviously), I get paid for this and then send you 1/3 of my salary as a commission fee. Deal, Konstantin :-)?
As far as interesting cities are concerned, I can recommend a number of Ukrainian ones that I visited as a tourist over the last 3 years:
- Odessa is just great, it has everything;
- Czernowitz is also very charming - you know, Konstantin, this kind of mixture of the Austrian Jugendstil of the late 19th century with the Soviet spacious urban planning;
- Lemberg is not bad, even if the weather could be a bit better :-);
- Kiev is just magnificent!
- but the best one is of course Kamenets-Podolsky - as you enter the historical part, you feel like you are in a fairy tale, Konstantin, I am telling you!
Well, as far as US cities are concerned... Ehh... Umm... Well, Konstantin, you know, I have personally been to New York and Washington D.C. only and please do allow me to limit my comment to saying that after having spent some time in both, the only kind of desire that I personally had was to book a flight and fly very fast JUST LIKE ANYWHERE, Konstantin, das war ein Wahnsinn einfach!!!
In Response

by: Konstantin from: Encino, CA
June 25, 2012 20:44
Where is Lemberg? What are you smoking? Those cities are called by their German names in the sauerkraut country?
In Response

by: William from: Aragon
June 26, 2012 00:14
Hey Eugenio, I am not sure that this is Konstantin. The grammar and word-use do not match the usual contribution from our more "poetic" correspondent from LA.

(Curiously, looking back on another one of the major topics we both have commented on with many other contributers, I believe that on that page at least two - and possibly up to four! - of those entities were contained within the same host, if you follow my meaning.)

Look closely, where have you seen this word formation before?
In Response

by: J from: US
June 26, 2012 02:27
What's Lemberg? Lwow in the Koniglich Keiserlich language? It's about as Ukrainian as Karachi.
In Response

by: Eugenio from: Vienna
June 26, 2012 16:55
To WILLIAM: Hey, William, yes, you are right, the grammar is much better than the grammar that Konstantin usually uses, but very frankly I can not figure out who else would be amused by using names of other people for his comments. Camel? Who knows. Vakhtang? No, I don't think so. Ilya? Eli? No, very frankly, William, I have no idea. Just give me a hint if you think you know :-)).
To KONSTANTIN: Yes, Konstantin, in the Sauerkraut country all the places are called in German, the same way as in the US all the places are called in English, in Russia - in Russian and in Brasil - in Brasilian :-)))).
In Response

by: William from: Aragon
June 27, 2012 00:26
Hey Eugenio, I am not certain yet, but I have some suspicions and will watch the comments very closely from here on. Also, I have noticed that our friend Ilya is not about these days, and I now miss his short, sharp, well-referenced comments - perhaps he is on holidays.

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Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at transmission+rferl.org

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