Preferences appear not to be the same for everyone. People within the small business community cite the following reasons of their grievances: Tightening of credit and the impact of sanctions, but in the first place they point to the low efficiency of state support measures. According to information provided by small business owners, most often the new support measures are being cancelled shortly after they are announced, replaced by new laws, which increases the tax burden and requirements to report to the Pension Fund monthly. Certain benefits work only partially, for example in the granting of 10% quota on procurement from state-owned companies as well as the granting of 15% of public procurement from state and municipal entities. Wholesalers and IT companies often complain about non-transparency and complexity of the state procurement procedures.
It is for government to decide. In June 2016 the Ministry of Economic Development presented a strategy for SME development up to the year of 2030. In addition the Government Project office has announced a new national project «Small business and assistance for sole entrepreneurial initiative» (approved as of December 5, 2016). Earlier the Federal Corporation for the SME Development was established in order to support this sector with a strategy to ease the access to finance and reduce administrative burden.
The strategic objective is to double the share of SMEs within the GDP to 40%, similar to the level in developed countries. According to government plans, the project is to be implemented by March 2019. The growth of SMEs numbers as well as the increase in the share of credit supplied by Russian banks to small & medium size businesses will be the main criteria of success.
Facilitating access to procurement from the largest buyers may increase the annual volume of procurement placed with the SME sector to no less than 17.5% in 2018. Within the projected implementation it is also planned to introduce a system of staff training for sole proprietors and small businesses. It should increase the skills in starting and developing a new business.
Survival today is prosperity in future. Based on future plans of the Russian government for the small business community, their contribution to overall economic growth should eventually materialize. However due to current stagnant economic conditions the SME community is fighting for survival for the following reasons: Increasing competition, the sagging demand is forcing the SME community to cut cost, reducing staff and adding working hours as well as diversifying the business. SMEs have high hopes for a successful implementation of state initiatives to propel the SME community from its current survival mode to achieve pre-crisis indicators of 2013, perhaps already in 2017.
Who’s who in the small business environment? Russian companies with less than 100 employees and with annual revenue up to 12.5 million USD are defined as small business. The Unified Register of small and medium-sized business entities (SME Register), which was launched in August 2016, maintained by the Federal Tax Service, was highlighted by Credinform in the recent publication https://2018.biia.com/russia-launches-unified-register-of-small-and-medium-sized-businesses.
It is expected that the new register will help to receive the state support by simplifying the process of SMEs participation in state procurement: Earlier companies and IPs needed to provide various certificates to confirm they meet the SME criteria, and, from now on, the listing in the register is sufficient to apply for a state tenders.
Today the SME Register contains 5.7 million companies (including 3 million sole proprietors). Besides small business entities, data is available on medium- (less than 250 employees, annual revenue up to 31 million USD) and micro-enterprises (less than 15 employees, annual revenue up to 1.8 million USD). Basically the small business community is focused in the trade and services sectors. The SME share in the Russian GDP amounts to around 20%.
The Information and Analytical system Globas-i® https://globas.credinform.ru/en-GB/home/auth can assist in identification and risk assessment of your Russian counterparty including also from the SME sector.
Source: Credinform Russia