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Businessmen have enough of bribery
Number of businessmen complaining about corruption rises

Russian entrepreneurs said that corruption is a major hurdle for doing business in the country. A new poll released by UBS and Campden Research found that the number of large business owners complaining about corruption soared to 55% of respondents in 2012 from 4% in 2009. There has been no rampant growth in corruption over the past three years, therefore this result could be ascribed to the fact that those in power began talking openly about corruption.

Ivan Ninenko, deputy director of Transparency International Russia, commented that people started talking more about corruption. Doing business in a number of sectors is impossible without involvement into corruption schemes, and the situation has not changed over the last three years, he added. He named among the most corrupt areas the regulation of business, issuance of licenses and certificates, and customs clearance.

Corruption is not the only hurdle for doing business in Russia. The latest poll showed that 30% of businessmen complained about unaffordable loans, up from 5% in 2011.

Small and medium-sized enterprises (SME) find it especially hard to take out loans, because the interest rates for them stand at between 12% and 22%. The interest rates on ruble-denominated loans for large companies amount to 7%-10%. Furthermore, banks tightened their requirements to borrowers in the second quarter of the year. This move is attributable to the negative developments in the Eurozone and it affected mostly SME, Investment and Financial Company Metropol Head of Research Mark Rubinstein said.

Businessmen also pointed to the risk of state takeover associated with Russian banks, as the state owns shares in most of them. Besides, Russian lenders are more interested in whether a borrower has any clout in the government rather than in its business plan. For these and many other reasons Russian businessmen view foreign banks as more attractive financial service providers, UBS Executive Director Gregg Robins noted. In 2009, 60% of the polled businessmen used the services of foreign banks compared to 84% of entrepreneurs willing to do so this year.

Another problem revealed by the poll is that senior executives have no interest in corporate management reforms. The percentage of executives concerned about corporate management improvement plummeted to 9% this year from about 44% in 2009. Alexander Varvarin, managing director for corporate relations of the Russian Union of Industrialists and Entrepreneurs, commented that business executives have grown less interested in corporate management because few laws regulating this area have been passed recently. Amendments seeking to regulate corporate relations and liability insurance and introduce the standards of good faith actions for senior executives stalled in parliament, he went on to say.

Of all businessmen polled, 95% said that Russias business environment is not conducive to the development of innovations and entrepreneurship. Russian businessmen are not prepared to make long-term plans, Robins noted.

Meanwhile, Business Russia Vice President Andrey Nazarov opined that the countrys investment climate has not dramatically deteriorated. The reasons for these negative sentiments among businessmen are expectations of improvement and the result of election campaigns, which put the problems of business at the forefront, Nazarov, who co-chairs Business against Corruption center, said.

Research Department of RIA RosBusinessConsulting

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