The World Bank has released its 2015 Ease of Doing Business rankings.
Compared to last year, Russia moved from 92nd position to 62nd, but most of the improvement comes on the back of changes to the ranking's methodology. Starting this year, the Doing Business report has extended its coverage to include the second largest business city in economies with a population of more than 100 million (St. Petersburg). Adjusted for methodology changes, the improvement was rather meagre – only 2 positions up – revealing a contrast to last year, when Russia ranked among the top-3 reformers, moving 19 notches up.
Over the reporting period, Russia implemented two reforms: i) made starting a business easier by eliminating the requirement to deposit the charter capital before a company's registration as well as the requirement to notify tax authorities of the opening of bank accounts and ii) made transferring property easier by eliminating the need for notarisation and reducing the time required for property registration. This helped to improve the country's standing across 'Starting a business' and 'Registering property' rankings. Russia also improved in 'Dealing with construction permits' ranking last year, while losing ground across the rest of the sub-rankings, mostly due to faster progress by other countries.
Underlying reform momentum in Russia has slowed down significantly since 2H13 (the reporting period for Doing business review is 2H13-1H14) according to World Bank review and has likely cooled further after the reporting period, as dealing with the consequences of economic sanctions has effectively shifted to the top of the government's priorities.
While the government is likely to focus back on 'cutting the red tape' target once the external environment becomes less turbulent, uncertain economic policy in general has become a larger constraint on business sentiment in our opinion. Lifting this uncertainty will require a comprehensive reassessment of budget priorities, tax, tariff, and trade policies as well as resolving long-standing issues related to corporate governance and a more efficient enforcement of the law.