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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 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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