Business in Russia

Russia turned out to be one of the cheapest countries for doing business

Russia has overtaken the United States in the ranking of the cheapest countries for doing business. Taking fourth place from 19, Russia lost only to India, China and Mexico. Relatively low costs for electricity and gas helped to achieve a high place in the ranking of the country.

By 2018, Russia should rise from 120th to 20th place in the Doing business ranking, newly elected President Vladimir Putin instructed the government immediately after the inauguration. The least effort in this “stepwise” step is the problem of reducing the cost of doing business. According to a KPMG study compiled on the basis of an assessment of the cost of labor, insurance, connection to communications, transportation costs, taxation and fundraising, Russia ranks fourth out of 19 in terms of the cheapest business.

As a baseline, the experts took the cost of entrepreneurship in the United States. In comparison with it, China and India were recognized as the most "profitable" countries, where, due to low wages, business costs were about 25% lower. Among the developed countries, the leaders were the United Kingdom and the Netherlands (where entrepreneurs' expenses turned out to be almost 5% less than in the United States). The most expensive business is in Australia (where an entrepreneurial initiative costs 3,7% more) and Japan (9,4% more). In Russia, the cost of doing business was 19,7% lower than in the United States. Among the fast-growing countries, Russia has become the leader in terms of attractiveness in terms of electricity and gas costs. "Bright spots" in the Russian economy were the IT market, where doing business is 39,4% cheaper than in the United States (the sector leader, China, - by 45,4%), and the professional services sector (60,4% of the expenses in the USA).

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On the other hand, experts note that the high cost of renting production and office premises is a sore spot for entrepreneurs. The country ranks first in the first indicator, and second in the second (after Great Britain).

The cost of doing business is not a decisive factor for making a decision to open a business in a particular country, says Elena Khromova, BDO partner in Russia. According to company research, among the main problems cited by company leaders, as a rule, is the problem of personnel selection. In addition, business in Russia is negatively impacted by high administrative costs and an unregulated tax system. “As a result, Russian enterprises open production in China and India, where business is cheaper,” she said.

For business, it is not costs that are more important, but payback and comfortable conditions, agrees FBK expert Igor Nikolaev. Against this background, Russia looks unattractive. "In the first quarter of this year alone, $ 35,1 billion flowed out of the country. Despite the economic growth, entrepreneurs are not satisfied with the conditions for doing business in Russia," he says. RBC daily writes about this.