Russia Needs to Loosen State Control to Attract Businesses – Ex

ST. PETERSBURG, May 23 (RIA Novosti), Daria Chernyshova — Russia needs to cut administrative barriers and cut costs of making business in the country to attract entrepreneurs, former Russian Finance Minister Alexei Kudrin told journalists on the sidelines of the St. Petersburg International Economic Forum (SPIEF) Friday.

“There are administrative barriers, tight control of enterprises, which leads to additional costs for them. They have exhausted businesses. The situation has become unbearable,” Kudrin said.

“We need lower the bureaucracy and the state control functions. This needs to be done prudently, but it absolutely needs to be done. We need to take the path of cutting costs for businesses and creating new conditions for them. Without that, no investment will come,” he said.

Among the main cost-inflating issues in Russia, the former minister mentioned high taxes and insurance premiums, as well as pension system.

“We need to figure out our pension system: whether to continue to support the pension system and raise insurance premium, which will be inevitable, or to push up retirement age. This is a structural problem. The problem is within the budget. Our social expenses grow, taking away from state expenses, including on infrastructure,” he said.

Poor infrastructure, including roads ports and pipelines, is a fundamental problem for local businesses, he said. It also stands in the way of relocating resources and power to the regions to help their economic growth and investment potential.

“Other steps (to improve business climate) include increasing the role of the regions, providing for their economic growth. That means more resources and power needs to be relocated. That would take off some load from the federal authorities. Step by step, this needs to be done,” he said.

Taking place for the 17th time in Russia’s northern capital on May 22-24 and attended by the state’s top authorities and businessmen, as well as dozens of foreign delegations, the annual economic gathering aims to attract foreign investors to Russia.

This year, however, the business climate worsened, with several Western companies withdrawing from the forum in a sign of strained economic and political relations between Russia and the West, mostly due to the crisis in Ukraine.

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