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  • Russia: holding under pressure

    Economic reforms in Russia had been an ongoing process. Russia had since been working to improve its business environment for several years. By 2014, the World Bank announced that Russia had advanced 49 places in three short years from 111st in 2013 to 62nd position in its 2015 Ease of Doing Business index. This made Russia the fastest improver in its peer group. Some of the reforms implemented include making it easier to start a business by eliminating the requirement to deposit charter capital before company registration, and simplifying property registration procedures. Companies also do not need to notify authorities before opening a bank account, speeding up the overall business formation process. These regulatory simplifications ranked Russia today above Vietnam (78th place), China (90th place), Indonesia (114th place), Brazil (120th place), India (142nd place), Myanmar (177th place) in ease of doing business.

     

    In addition, Russian corporate tax rate has been steadily decreasing from 43% in 2001, to 20% today, ahead of the 25% of Myanmar, Vietnam, Indonesia and China, and the 34% of Brazil and India, making Russian corporate tax the lowest of all BRIC and emerging ASEAN economies. To promote dynamic industry development across industries and regions, various forms of incentives are available and profit tax rates can be reduced to as low as 0% in certain sectors like medical, R&D, high-technology activities and agricultural goods producers. Investments in regions like the Russian Far East can enjoy reduced profit tax rate of 0% for the first five years and 10% for the next five years.

     

    In the last decade, Russia’s key economic reform programmes of import substitution and modernisation of key industrial and manufacturing sectors with capital and labour intensive heavy models have produced upward trends. According to Russian Federal Statistic Service:

    // Industrial production index rose more than 50% from 2000 to 2012

    // Total structure of exports diversified more than 50% from 2000 to 2013, with marked increase in diversification in non-energy exports

    // Non O&G exports grew 250% from 2000 to 2013, from US$50.4 billion to US$176 billion (Figure 2)

    // Within imports, there is a clear growth over the same period of machinery and equipment needed for domestic industrialisation.

     

     

     

    Russian Asian Business Union

     

     

    Source: IE Singapore

     

     

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