Russia's ranking in the World Bank's latest "Doing Business" survey has leapt from 92nd place to 62nd place out of 189. The jump was almost entirely thanks to improvements made by the World Bank in its ranking method, rather than anything Russia did to its business climate, but moving into the top third of the ranking will give President Vladimir Putin's beleaguered country a much needed image boost.
The new ranking in the report, "Doing Business 2015: Going Beyond Efficiency," places Russia for the first time in the top third of what has become a benchmark ranking of a jurisdiction's friendliness towards business. But it does not show radical improvement compared with the 2014 result, since according to the new methodology Russia would have been ranked 64th in that report.
The new ranking sees Russia placed between Moldova (63rd place) and Belarus (57th place), with Ukraine languishing at 96th place. But there is a long way to go to catch up with the most progressive former Soviet states: Georgia at 15th place, Estonia at 17th place, Latvia at 23rd place and Lithuania at 24th.
The top ten most investor-friendly countries in the 2015 report are: New Zealand, Hong Kong SAR, China, Denmark, the Republic of Korea, Norway, the US, the UK, Finland and Australia.
But while the Russian government can thus claim credit for the improvement, the new ranking more accurately maps the real state of affairs with regulations and bureaucracy, says the World Bank. With the 2015 report called "Going Beyond Efficiency," the new methodology aims to reflect more qualitative factors. “Doing Business is by and large about the efficiency of regulations, how fast, how cheap, how simple it is to get a transaction completed. But now we’re branching out to also measure the quality of regulations," the World Bank's Rita Ramalho said.
One feature of the new ranking that directly affects Russia is that in economies of over 100m population such as Russia, the "Doing Business" researchers have also surveyed the second largest business city, in Russia's case St Petersburg.
The new methodology also adds data on the strength of legal rights and depth of credit information, on minority shareholders' rights, on the strength of the legal framework for insolvency. This is intended to assess the overall quality of the legal system beyond just measuring red tape.
According to the survey, over the last year Russia has enacted two significant reforms that make it easier to start a business: entrepreneurs don't need to deposit charter capital before company registration or to notify tax authorities when opening bank accounts. Russia also made it easier to transfer property by eliminating notarization and cutting the time required for property registration. In 2013, Russia also created a unified electronic land and property registry.
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