New law to help small business in Russia
Russia's small businesses are on the rise. In the past year, the sector has seen a number of governmental initiatives to support it and a new law on small business comes into force in January. But there is still a range of issues hindering the development
Just 20 years ago small businesses didn’t exist in Russia, while the sector currently makes up about 12 % of GDP. This is a drop in the ocean by the standards of most developed economies, so Russia has to some catching up to do.
“The Russian economy has inherited a lot of negative features from the Soviet economy, based on huge industrial complexes in all sectors. Small business has emerged out of nowhere, so we can’t expect it'll take leading positions straight away,” said Aleksandr Shokhin, President of the Russian Union of Industrialists and Entrepreneurs.
Small businesses are now at the centre of the government’s focus. First Deputy Prime Minister Dmitry Medvedev has highlighted the importance of developing the sector further, saying it’s essential for Russia’s economic growth.
“Our fundamental tasks are dynamic economic development, reviving the towns and opening new opportunities for the growth of small and medium business,” said Medvedev.
In the past year, small business has gained financial and legal support. The government has urged regional authorities to allocate funding to a range of initiatives designed to promote small businesses.
In addition to this, banks have started to offer credit services to prospective enterprises.
Among the first to reap the benefits were farmers.
“Credit programmes have finally reached small forms of agricultural business including microbusiness, farmers and individual farmsteads. Nearly 400,000 loans have been given over two years under the national project on agriculture,” commented Minister of Agriculture, Aleksey Gordeev.
Despite the evident credit boom, it’s still not enough to meet demand. It’s a good sign, however, showing that the sector is on the rise.
The Head of the National Small Business Support Organisation, Sergey Borisov believes it’s a sign that more small businesses are prepared to come out and be officially registered.
“The number of small enterprises is rising. Small business is now coming out from the shadows. More and more entrepreneurs are applying to banks for legal, official loans,” said Borisov.
However, small business in Russia still faces a range of issues which impede progress, including red tape and corruption, as well as the domination of whole sectors by large companies.