Russia in First Decile For Business Reform

Russia is in the bottom 10 percent of countries when it comes to business-friendly reforms, while the world's top reformer is Azerbaijan, the World Bank said in a new survey.

Azerbaijan, which like Russia depends heavily on its oil and gas resources, shot up from 97 to 33 in the survey, which ranks 181 countries in order of ease of doing business.

Russia, by contrast, enacted no new legislation to ease conditions for doing business in the last year and fell in the rankings to 120, down from 112 the year before, said the report, to be published Wednesday.

Other notable CIS reformers in the survey were Kyrgyzstan, which moved up from 99 to 68, and Belarus -- often thought of as a Soviet-style economy under authoritarian President Alexander Lukashenko -- which jumped from 115 to 85 in the rankings.

In total, 113 countries made it easier to do business in the survey, which ranks 181 of the world's economies according to 10 indicators of business regulation.

The Doing Business annual report tracks the time and cost to meet legal requirements in starting and running a business, foreign trade, tax payment and closing a business. Singapore, New Zealand and the United States are ranked as three countries where business regulations are the easiest.

Russia stands ahead of Uzbekistan, Tajikistan and Ukraine but lags behind other CIS countries. Along with Latvia, Russia was the only country in Eastern Europe and Central Asia to administer no reforms that would encourage the growth of small and mid-size businesses.

Unlike some similar rankings like Transparency International and Global Competitiveness reports, Doing Business does not use perception-based data in its methodology, relying on factual legislation and regulations, and does not take into account problems such as corruption, said Svetlana Bagaudinova, a co-author of the report. Since results reflect no changes in Russian business-related legislation, they show that government priorities lie elsewhere, she said.

"Russia is not regressing, but it's falling in the ranks because other countries are reforming faster," she said.

Two of Russia's most problematic areas are acquiring construction permits, where it is ranked second to last, and foreign trade, where it is ranked No. 161. To get permission to start construction in Russia, 54 procedures over the course of 704 days are needed, the report said.

Tangled bureaucratic processes are pulling Russia toward the bottom of the rankings, Bagaudinova said.

"Corruption is often an effect rather than a cause," she said. "When the legislative base is transparent and simple, there is no room for it."

Commenting on the improvement achieved by Azerbaijan, Kyrgyzstan and Belarus, Bagaudinova said, "Each of these countries has a reason to reform."

Azerbaijan wants to diversify its oil- and gas-based economy, Kyrgyzstan is trying to improve its business climate to rival that of its giant neighbor Kazakhstan, and Belarus is looking for ways to cope with the end of Russian oil subsidies, Bagaudinova said.

Georgia is the highest-ranked regional economy on the list at 15. The three Baltic states are also in the top 30.