BOFIT Viikkokatsaus / BOFIT Weekly 2021/29
Russia’s Commissioner for Entrepreneurs’ Rights (biznesombudsman), Boris Titov, submitted his latest wide-ranging annual report to the president this month. The annual reports include findings from surveys by Russia’s Federal Protective Service (FSO) that map the business environment as regards conduct by authorities. Besides various matters related to official oversight and corporate inspections, the surveys ask about perceptions of laws and their enforcement as well as safety of doing business.
The respondents to this year’s survey that addresses law and safety issues, conducted in March, included 830 persons representing 34 Russian administrative regions. Of that group, 215 were entrepreneurs, 250 experts (lawyers and legal scholars) and 365 employees from prosecutor offices (a new group included in this year’s survey). Due to different respondent pools, comparisons with previous years’ results are not perfect. For example, the 2020 respondent pool included 189 entrepreneurs and 279 experts representing 36 administrative regions.
The responses of entrepreneurs in particular to certain heavy questions are hardly encouraging for Russia’s economic prospects. Representatives of prosecutor offices, in contrast, mostly held opposite views. In this year’s survey, nearly 80 % of entrepreneurs and 64 % of experts said that they did not consider it safe to conduct business in Russia (even if last year’s numbers were worse: 86 % and 74 %, respectively). Only slightly more than 20 % of prosecutor office respondents felt that way while over 70 % gave positive responses.
Nearly 80 % of entrepreneurs and over 60 % of experts felt that the law failed to provide adequate protections for businesses against unfounded criminal charges. A very similar question in another FSO survey was put to small firms (fewer than 15 employees), where 57 % of nearly 3,400 entrepreneurs and firm leaders gave negative responses. In the survey of the narrower pool, just 20 % of employees in prosecutor offices gave negative responses and nearly 80 % said yes.
Likewise, some 80 % of entrepreneurs and over 60 % of experts said they did not trust authorities enforcing laws, order and security (nearly 90 % and 65 %, respectively, in 2020). Only 12 % of prosecutor office respondents had such reservations, while 84 % said they trusted those authorities. This year’s survey report did not include the question of trust in the judiciary. In the two previous years’ surveys, over 55 % of experts said they did not trust the Russian court system.
Russian firms and business experts consistently report low trust in the safety of Russian business environment
Sources: Annual Reports to the President from Russia’s Commissioner for Entrepreneurs’ Rights and BOFIT.