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. Last Updated: 07/27/2016

Plan Gives a Boost to Regional Businesses

The federal government Thursday unveiled a new two-year program to promote small business at the regional level by chopping through the bureaucracy and developing alternative methods of financing.

The program, to cover 1998 and 1999, hopes to boost the number of small businesses by 100,000 to 950,000, said Irina Khakamada, chairwoman of the State Committee for the Support and Development of Small Business.

If successful, the plan would provide employment for about 14 million people in the sector and raise small business' contribution to the gross domestic product from the current 12 percent to 14 percent, Khakamada said.

Organized crime, high taxes, lack of credits and bureaucratic red tape all contribute to Russia's stunted small-business sector, which in other countries account for up to 50 percent of GDP.

Khakamada's program would tackle the problems of red tape and access to capital, the latter by developing credit unions, insurance and other means of finance.

"For small businesses, greater access to credits is a priority, " Khakamada said. "But the need for obtaining state guarantees for foreign credits continues to be the main hurdle."

As for the red tape, she said a presidential decree is in the works aimed at stopping the abuses of regional bureaucrats, some of whom often require a dozen licenses where one is needed, and force renewals every year, instead of every three years as currently required.