Small businesses development is unprofitable for municipal authorities

27 november 2014

The Ministry of Economic Development and Trade of the Russian Federation report project on supportive measures realization in SME in 2010-2013 and trends in SME development for short-term and mid-term outlook was discussed in the Analytical Center.

During the discussion experts noted that in the resent few years there were negative trends in SME development in Russia – number of small and medium-sized businesses decreases, population employment in this sector drops, mandatory payments to the budget and non-budget funds increase. Conditions’ arrangement for business operation and elaboration of development trends in short-term and mid-term outlook are among the key aspects of modern social and economic policies, according to the experts.

Experts face a challenging task: they should try to consider all comments and suggestions but leave the report functional and readable,said the Head of the Department for Competition Policy opening the discussion.

The report is addressed to general public, said the Deputy Head of the Department of Small and Medium Business and Competition of the Ministry of Economic Development of the Russian Federation ALeksey Shestoperov. "On the one hand these are the experts of the business community, on the other - government officials. Moreover, the report will be public on the Internet. We are trying to harmonize the report for various audiences", said Mr.Shestoperov. He also noted that this is one of the first public discussions of the report project, which is planned to be finished by the end of December.

"We are trying to formulate a set of proposals upon which a mission will be set, and the report consists of 5 key sections", noted the official talking about the project objective, structure and description. In the first section SMEs dynamic is under study. Tendencies are diverse, according to the expert. "Last year we observed compression: small businesses amount decreased by 7%, although earlier an annual rise by 1-3% had been observed. Sector sizes decreased as well. Generally it is presented by micro-businesses - 90% of businesses with resource up to 60 million rubles. Employment index decreased by 1,9%", considered Mr. Shestoperov. On the other hand, financial and economic activity increase was observed, and it was expressed in the rise of transactions and fixed investments in nominal terms.

SMEs in Russia play an inferior role in general economic indicators, sector is almost undeveloped. "Continuous research testified that employment rate in this sector accounts for 25% of the total number of employed in economy sector, within transactions - 33%, within investments - 9%", said Mr. Shestoperov. Concerning regions, irregularity in the businesses distribution is high: 70-80% of the total are situated in 10 regions. Russia has a potential for these rates increase. "According to the sector projected growth for the short-term outlook, there is a potential for agribusiness industry, some sectors of machine building, construction companies, hotel and business services sector. In the long-term outlook - pre-school institutions, housing and communal services, public health services, passenger traffic", considers the official.

During the discussion experts made proposals on key measures and public policies for SMEs baking. Small businesses development is unprofitable for municipal authorities, that is why the state should motivate municipal corporations. Experts pointed out the budget infirmity, lack of good municipal development program, non-financial development barrier. Experts extreme vigilance was turned to statistics quality and their unification necessity for in-depth analysis and inter-regional comparison of SMEs development.