The Government decided to double the SMEs share in Russia by 2030

31st July 2015

The government decided to double the share of small and medium business in the economy by 2030. In order to achieve this goal, according to entrepreneurs, it is necessary to give public services to outsourcing, limit benefits for municipal unitary enterprises and support freelancers.

By 1 October 2015 the Ministry of Economic Development of the Russian Federation will prepare the Strategy for the development of small and medium business up to 2030. The Ministry prepares the document following the results of the State Council on the development of small and medium business, which took place in April 2015. As the first version of the plan says, the number of employed by small and medium business should grow to 40 million people (today it is 17.8 million today).

According to the Ministry, the Strategy will include the entire range of initiatives in the field of small and medium business prepared by the Ministry and other organisations, - measures to reduce the fiscal burden, the optimization of regulation, access to procurement of large state-owned companies, increasing the availability of loans. The work plans of the new Federal Corporation for Development of Small and Medium Business will be written separately.

Although the share of small and medium business in the GDP is 20-21%, small and medium companies account for only 5-6% of the total assets and about 6% of the total investment in fixed assets, according to the report to the State Council. In 2013-2014 the government allocated more than 135 billion rubles to support small business, but no tangible targets were achieved. The work of development institutions is poorly coordinated and generally is "not effective" but "in recent years SMEs activity shows a negative trend".

In order to increase the efficiency of public policies it is necessary to pay attention to the target groups: micro, small and medium-sized enterprises play different roles in the economy and require different approaches, says the Strategy's plan. "The role of small business is to create a comfortable environment for citizens and provide employment. Medium-sized enterprises contribute to economic development. But in Russia small business - is primarily micro business. There is a tendency of going intothe shadow and reducing the size of companies,"- the authors of the Strategy say.

According to the Executive Director of All-Russian Non-Governmental Organization of Small and Medium Business "OPORA RUSSIA" Andrey Shubin there is a significant bias towards trade in the structure of Russian small business.

"The share of small and medium business in Russian trade is two times more than in Germany and the United States. In the service sector the situation is reversed - more than eight-fold gap compared to the US. Sectoral structure should be changed in order to fully unlock the potential of these sectors,- says the Executive Director of "OPORA RUSSIA".

According to the representative of the Russian Ministry of Economic Development, this proposal will be considered during the development of the Strategy, although he notes that is hardly possible to change the structure only with the help of administrative methods. According to him, it is necessary to stimilate SMEs to occupy respective market niches or make these niches available (now they can be occupied by government organizations).

According to "OPORA RUSSIA", growth in the share of small business can be achieved by involving self-employed workers. In the US freelancers amount to 7.5% of all labor market, but in Russia they are even not accounted, there are no programs to attract specific groups of the population, says Andrey Shubin. For example, in Finland there is a special loan program for women entrepreneurs, in the United States - for a retired military there are benefits to participate in public procurement, and in Canada there are programs to support young entrepreneurs (18-34 years old), he notes.

"OPORA RUSSIA" also proposes to give public services to outsourcing. According to Rosstat, Russia has 23.7 thousand municipal unitary enterprises with 20% working in the municipal sector (generation, transmission and distribution of gas, steam and hot water), 18% are engaged in real estate activities, mainly intermediary, 13% - in wholesale and retail trade.

"Their activities distort the competitive environment due to their access to the system of benefits and preferences," - says the proposals of "OPORA RUSSIA" to the Strategy.

To avoid this, it is necessary to restrict the right of municipalities to create and maintain enterprises in such competitive types of economic activity as transport, public services, food and garbage removal.

"Business Russia" also proposes to limit the rights of state and municipal unitary enterprises. The organization proposes to grant priority to small and medium-sized companies in competitions for state and municipal procurement. To facilitate the participation of small business in major contracts, state programs and tenders of state corporations and natural monopolies entrepreneurs suggest splitting large tenders and competitions into small lots.

Other suggestions of "Business Russia" examined by RBC concern tax breaks. This is about an increase in the thresholds for the right to use a simplified tax system. Annual income from sales - up to 120 million rubles (for certain types of activities - up to 400 million rubles), the cost of fixed assets - up to 500 million rubles, the use of the patent system - from 60 to 120 million rubles.

The strategy will include activities to stimulate the legalization of entrepreneurs engaged in the informal sector, says the representive of the Ministry of Economic Development. He admits that now there is no program of action in this area. It also considers the issue of benefits for the unitary enterprises to be one of crucial.

Source: RBC


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