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. Last Updated: 07/27/2016

TACIS Targets Small Businesses

The European Union's TACIS is kick-starting a 1.9-million ($1.7-million) euro program to back the nation's stifled small and medium enterprises, and hopes its support for a new federal program for developing the sector will see small business expand to 12 percent of gross domestic product over the next two years.

"We aim to provide support and advice to strengthen the confidence and capacity of the Anti-Monopoly Ministry ... so that the federal program for development of small and medium enterprises will be implemented," said Charles Default, the team leader of the TACIS program for Support to the Development of Small Entrepreneurship.

"The small-business sector and growth of it is very important for Russia. It is critical for its ability to create many jobs in a small period of time, to create substitutes for imported goods and create enterprises that can boost economic growth," he said Wednesday at a news conference.

He said the two-year program aims to provide support to the Anti-Monopoly Ministry, which is also charged with developing small and medium enterprise, in implementing a new federal program to boost the sector. If implemented the program aims to help create 200,000 to 250,000 small businesses by 2001, which would create 8.5 million jobs and provide revenue and income for 30 million people, he said.

Small business is strangled by bloated bureaucracy, heavy taxation, corruption, complicated registration procedures and arbitrary laws and checks, he said. A recent report by the European Bank for Reconstruction and Development found that small enterprises have to spend 25 percent of their profits on bribing officials just to stay in business.

Conceding that plenty of other government programs to develop the sector in the past had had little impact, Default maintained that the new program carried more weight.

"Previous federal programs had no teeth, no simplified rules and were without funding for concrete aims," he said after the news conference. "But the new federal program maps out clearly defined areas for which ministries are responsible and how much budget money should be targeted for which concrete task."

However, Anti-Monopoly Ministry head Ilya Yuzhanov failed to turn up at the conference Wednesday even though he was billed as a key speaker, raising questions about the ministry's commitment to collaborating with TACIS.

Default said that recent legislative moves to cut the tax burden and bring regional legislation in line with federal law were encouraging.

The federal small-business program was passed by the State Duma and the Federation Council in April. Default said the unanimous Duma vote, without the usual acrimonious debate, on the passing of the program was a sign the pendulum was swinging in favor of small businesses.

The program foresees state spending totaling 330 million rubles ($11.7 million) in 2000 and 2001 from the federal budget and other state funds. It calls on the government to boost conditions for micro-crediting small and medium enterprises and to lower interest rates on these credits. It also calls for simplifying declaration forms for businesses and accounting systems, for bringing regional law in line with federal law and developing a system of financing small businesses in the regions with state-guaranteed credits.

It calls for accelerating the creation of new jobs for the former military and in construction and maps out training schemes.

The TACIS program will provide consultancy services to the Anti-Monopoly Ministry and its resource center, and aims to give advice on legislative action to make it easier for small businesses to operate. It does not provide direct financing to the sector.