President fronts up for small business

Wednesday saw President Medvedev meet legal officials to urge progress on legislation affecting small business, repeating criticisms made earlier this year, that authorities hinder entrepreneurs.

Ahead of the meeting Dmitry Medvedev decided to see for himself how new legislation on small and mid size business works in Russia by visiting a Moscow region bakery.

The president was interested in everything – pie recipes, salary levels, and, of course, problems.

The bakery is a typical example of a mid size business – 260 employees, and an annual turnover of around $3 million. In the last two years the owners have invested around $1 million in technical modernization, but further investment is in doubt as new loans are too expensive.

Interest rate on credits for small business may reach up to 22% making them almost unaffordable. But even if a businessman finds the money to start or expand the business other administrative obstacles appear on his way, according to Pavel Skurikhin, Chairman of the Sakho Agro Holding.

“The main problem if we build a new plant or modernize the existing production is to get additional power capacity, deal with gas service and other infrastructure organizations. That’s where we have serious difficulties now.”

In 2008 the Russian government developed a range of new laws to reduce administrative barriers for small business, such as endless inspections, unfair access to tenders for state orders, and simple delays in different procedures by local authorities.

And President Medvedev believes the work brought results.

“The number of inspections of small business decreased significantly due to the measures that’ve been taken last year. But the task to remove administrative barriers remains. The Federal legislation on small business that has been signed into law recently may be corrupted at a local level. The Prosecutor General and other law enforcement authorities present here must assimilate local legislation with Federal law in the shortest period possible. On the positive side in the last year we've made more progress than in the last 5 to 7 years.”

Representatives of small business agreed, that life had become easier but say some problems remain. For example, fire safety certificates for some firms cost $20 thousand. The President’s reaction was tough. He demanded to cut the price to $2 thousand.

Dmitry Medvedev repeated that the development of small business is under his personal control and it shouldn’t take much time for the government to solve other issues.

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