Business in Russia easier, EBC says
Dec 17, 2001
Russia's European Business Club (EBC) has reported widespread progress when it comes to ease of doing business here, although the organization says some hurdles still lie ahead.
The EBC was formed in Moscow in 1995, but there was little - if any - link between its inception and the EU expansion that occurred the same year. European businessmen operating in Russia just wanted an organization that could help them lobby their interests in the then extremely unstable business environment, according to Seppo Remes, the EBC's chairman.
"The most difficult task was to find a format in which to organize ourselves," said Remes, who is Finnish. After two initial years as an informal organization, the EBC was registered as an NGO. "It was, and it is, very crucial that every member has a direct possibility to take part in and have an impact on the work of the EBC," said Remes.
"That's why the core of our structure is work in committees, which we today have 25, both sectoral and horizontal - like on taxation or customes - committees," he added. The organization has gradually gained new members, of whom there are now about 450. According to the EBC chairman, the U.K., France, Germany and Finland have been the biggest member providers for the organization.
Since the beginning, the EBC has focused on internal information exchange among members, information exchange with Russian authorities and direct lobbying of European business interests with officials.
Several areas were chosen as priorities, and all of them have seen improvements that could be in part attributed to the EBC's activities, Remes said. "Taxation is one of our top priorities, and the taxation situation in Russia has improved in the last couple of years."
"On customs, our most important achievement is the lowering of import duties on many product groups and the simplification of the product group classification," Remes said, adding that the latter measure has helped cut semi-legal imports by at least 50 percent.
Another area the EBC has focused on is deregulation of the economy, according to Remes. And there has been some progress on that, too, he said. "Now, fewer activities require licenses than before."
Overall, dealing with Russian authorities has become easier in the last few years, the EBC chairman said. "People at the Anti-Monopoly Ministry or at Gref's Ministry [of Economic Development and Trade] are much more efficient than the Soviet-type bureaucrats we had to deal with in the mid-1990s," he said.
But many problems affecting European businessmen operating in Russia still remain unsolved, such as the entire system of "customs brokers" - companies or private individuals who have close ties with customs officers and can guarantee a speedy and easy customs clearance for a fee, which makes a legal customs clearance a long and unpleasant enterprise.
Remes added that certification is another area in which progress has been slow. "In Russia, you need to obtain two-and-a-half to three times more certificates of various kinds than in the EU," he said.
While the EBC was initially formed mainly by those who wanted to sell goods here, there has been a shift in recent years toward local production.
Currently, about one third of the EBC's members have production in Russia, and this proportion is increasing, said the EBC chairman. "Many of our members have plans to produce goods here for Russian and C.I.S. markets," Remes said, adding that in five years at least one half of EBC members with production facilities here are likely to make products in Russia that will be sold on European markets.
The EBC chairman said he is generally optimistic about the prospect of Russia economy but its future will largely depend on the ability to make its intellectual capital work for it. "The question is if Russia can start to grow based on its human resources rather than natural resources," Remes said.
The EBC was formed in Moscow in 1995, but there was little - if any - link between its inception and the EU expansion that occurred the same year. European businessmen operating in Russia just wanted an organization that could help them lobby their interests in the then extremely unstable business environment, according to Seppo Remes, the EBC's chairman.
"The most difficult task was to find a format in which to organize ourselves," said Remes, who is Finnish. After two initial years as an informal organization, the EBC was registered as an NGO. "It was, and it is, very crucial that every member has a direct possibility to take part in and have an impact on the work of the EBC," said Remes.
"That's why the core of our structure is work in committees, which we today have 25, both sectoral and horizontal - like on taxation or customes - committees," he added. The organization has gradually gained new members, of whom there are now about 450. According to the EBC chairman, the U.K., France, Germany and Finland have been the biggest member providers for the organization.
Since the beginning, the EBC has focused on internal information exchange among members, information exchange with Russian authorities and direct lobbying of European business interests with officials.
Several areas were chosen as priorities, and all of them have seen improvements that could be in part attributed to the EBC's activities, Remes said. "Taxation is one of our top priorities, and the taxation situation in Russia has improved in the last couple of years."
"On customs, our most important achievement is the lowering of import duties on many product groups and the simplification of the product group classification," Remes said, adding that the latter measure has helped cut semi-legal imports by at least 50 percent.
Another area the EBC has focused on is deregulation of the economy, according to Remes. And there has been some progress on that, too, he said. "Now, fewer activities require licenses than before."
Overall, dealing with Russian authorities has become easier in the last few years, the EBC chairman said. "People at the Anti-Monopoly Ministry or at Gref's Ministry [of Economic Development and Trade] are much more efficient than the Soviet-type bureaucrats we had to deal with in the mid-1990s," he said.
But many problems affecting European businessmen operating in Russia still remain unsolved, such as the entire system of "customs brokers" - companies or private individuals who have close ties with customs officers and can guarantee a speedy and easy customs clearance for a fee, which makes a legal customs clearance a long and unpleasant enterprise.
Remes added that certification is another area in which progress has been slow. "In Russia, you need to obtain two-and-a-half to three times more certificates of various kinds than in the EU," he said.
While the EBC was initially formed mainly by those who wanted to sell goods here, there has been a shift in recent years toward local production.
Currently, about one third of the EBC's members have production in Russia, and this proportion is increasing, said the EBC chairman. "Many of our members have plans to produce goods here for Russian and C.I.S. markets," Remes said, adding that in five years at least one half of EBC members with production facilities here are likely to make products in Russia that will be sold on European markets.
The EBC chairman said he is generally optimistic about the prospect of Russia economy but its future will largely depend on the ability to make its intellectual capital work for it. "The question is if Russia can start to grow based on its human resources rather than natural resources," Remes said.