Russia for investors

The Ministry of Economic Development of the Russian Federation

2015

Russia for investors:the key points

2

2010 г. 2011 г. 2012 г. 2013 г. 2014 г.

Doing Business WEF Bloomberg

Russia and Other Countries: International Rankings

The World bank’s Doing Business ranking

World Economic Forum’s Global Competitiveness Index

Bloomberg’s Best for Doing Business

2010 DB 2011

2011DB 2012

2012 DB 2013

2013 DB 2014

2014 DB 2015

Russian Federation 124 120 (4↑) 112 (8↑) 92 (20↑) 62 (30↑)

Measures regulations affecting 10 areas of the life of a business across 189 economies: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across boarders, enforcing contracts and resolving insolvency.

2010 2011 2012 2013 2014

Russian Federation 63 66 (3↓) 67 (1↓) 64 (3↑) 53 (11↑)

The analysis of economies by the following criteria: macroeconomic environment, complexity of business, development of the financial markets, infrastructures, health care, education, ect.

2010 2011 2012 2013 2014

Russian Federation - - 48 56 (8↓) 43 (13↑)

6663

6764

53

Ranking progress of Russia

Defines the best countries for doing business. The ranking is based on an assessment of an overall business activity, commercial activity and condition if the trade. Estimates 157 economies.

For the last 2 years Russia shows POSITIVE DYNAMICS in the rankings estimating a business environment

4856

43

124 120

112

92

62

3

Public debt % of GDP

International reserves of Russia increased more than 31 times. $ bn

Total value of assets of Russian banking System rose 23 times. $ bn

January, 2015

January, 2015

1999

Capitalization of the Russian Stock Market grew almost 14 times.$ bn

January, 2015

Sources: IMF, Cеntral Bank of Russia, Russian Federal Treasury, Rosstat, Moscow Exchange, UNCTAD, World Economic Forum Global Competitiveness Report, http://www.finanz.ru/indeksi/MICEX

11,1%

99,0%

$ 378 Bn

$ 12 Bn1999

$ 1, 381 Bn

$ 59 Bn1999

$ 546 Bn

$ 40 Bn1999

The dynamics of financial indicatorsJanuary, 2015

4

2015Created in 2014, started up in 2015

replaced Eurasian Economic Communion

Members:Russia | Belarus | Kazakhstan

Armenia | Kyrgyzstan (since May 29, 2015)

Applicants:Tajikistan

Eurasian Economic Union

176 mln people 3,6% world exports

2,6% world GDP 2,3% world imports

25% world gas reserves 11% world raw exports

9% world oil reserves 14% world energy exports

REGIONAL MARKET FACTS:REGIONAL MARKET FACTS:

5

Measures to Improve the Investment Climate

Road maps of National Business Initiative

Access to Infrastructure

• Enhancement of the availability of the energy infrastructure

Demand for Production

• Support of the access to foreign markets and supporting export

• Expansion of medium business access to procurement of infrastructure monopolies and publicly owned companies

Tax and Customs Regulation

• Improvement of customs administration

• Improvement of tax administration

Dealing with Construction

Permits

• Improvement of urban planning legal regulation

and business climate in the construction industry

Registration procedures

• Optimization of property registration procedure

• Optimization of legal entities and entrepreneurs

registration procedures

Regions’ Development

• Implementation of working Standard for executive bodies of the Russian Federation to ensure a favorable investment climate in the region

Institutional reforms

• Development of competition and improvement of antimonopoly policy

• Improvement of business regulatory• Improvement of valuation activities

11 adopted roadmaps 778 events

6

Structural reforms: Starting a BusinessRussia’s Doing Business Rank:

Changes of indicator’s data:

Dynamics of change of the rank in the ranking:

- abolishing the requirement to have the bank signature card notarized before opening a company bank account;

- eliminating the requirement to deposit the charter capital before company registration;

- eliminating the requirement to notify tax authorities of the opening of a bank account .

2010 DB 2011

2011 DB 2012

2012 DB 2013

2013 DB 2014

2014 DB 2015

Russian Federation 108 111 101 88 34 (↑ 54)

DB 2011

DB 2012

DB 2013

DB 2014

DB 2015 (compared to DB 2011)

Procedures 8 8 8 7 4,4 (↑ by factor of 2)

Time (days) 29 29 18 1511,2

(↑ by factor of 2,5)

Cost (% of income per capita) 2,6 2,3 2 1,3 1,2

(↑ by factor of 2)

Paid-in min. capital (% of income per capita) 1,9 1,6 1,4 1,2 0

108111

101

88

34

REFORMS WHICH AFFECTED A RANK IN THE DOING BUSINESS RANKING:REFORMS WHICH AFFECTED A RANK IN THE DOING BUSINESS RANKING:

The best dynamics of 2014 GROWTH ON 54 POSITONS

7

Structural reforms: Registering PropertyRussia’s Doing Business Rank: Dynamics of change of the rank in the ranking:

– reducing the term of the state registration and implementation of the state cadastral account from 43 to 18 days;

– possibility to file the application for registering property and for making amendments in Cadastral Register in electronic form;

– eliminating the requirement of the document confirming the payment of the state duty along with the application for registration and enforcing possibility of making the payment after submission of such application.

2010 DB 2011

2011 DB 2012

2012 DB 2013

2013 DB 2014

2014 DB 2015

Russian Federation 51 46 46 17 12 (↑ 5)

DB 2011

DB 2012

DB 2013

DB 2014

DB 2015 (compared to DB 2011)

Procedures 6 5 5 4 3 (↑by factor of 2)

Time (days) 43 43 44 2219

(↑ by factor of 2,3)

Сost(% of property value) 0,1 0,2 0,2 0,1 0,1

4146 46

1712


Changes of indicator’s data:

Russia shows ONE OF THE BEST world practices

8

DB 2011 DB 2012 DB 2013 DB 2014 DB 2015

Structural Reforms: Paying TaxesRussia’s Doing Business Rank:

Dynamics of change of the rank in the ranking:

– simplifying the methods of accounting;

– creating the form of cross function transfer;

– promoting the use of tax accounting software and electronic services;

– possibility of filing of the uniform adjustment invoice in case of changes of the cost of shipped goods

specified in two or more initial invoices

– unifying of codes of the reporting period in various tax declarations and calculations;

– creating the interactive service called Private office of the taxpayer – legal entity.

2010 DB 2011

2011DB 2012

2012 DB 2013

2013 DB 2014

2014 DB 2015

Russian Federation 105 94 64 56 49 (↑7)

105

94

64

56

49


Changes of indicator’s data:DB

2011DB

2012DB

2013DB

2014DB 2015 (compared

to DB 2011)

Payments (number per year) 8 7 7 7 7 (↑1)

Time (Hours per year) 320 290 177 177

168 (↑ by factor of 2 )

Total tax rate(% profit) 46,5 46,9 54,1 50,72 48,9

LOWESTcorporate income taxes among BRICS

9

Foreign Investment Advisory Council

THE KEY INSTRUMENT: in promotion of interests of the

companies at the government level

INCLUDES 51 INTERNATIONAL COMPANIES AND BANKS:INCLUDES 51 INTERNATIONAL COMPANIES AND BANKS:

10

Success stories of the Russian Business

Industry: Consumer FinanceRevenue ($Mln): 188Employees: >1,000

Industry: Consumer FinanceRevenue ($Mln): 1,100Employees: >6,000

Industry: RetailRevenue ($Mln): 18,202Employees: >230,000

Industry: RetailRevenue ($Mln): 750Employees: >2,400

Industry: Consumer GoodsRevenue ($Mln): 140Employees: >2,000

Industry: Consumer GoodsRevenue ($Mln): 100Employees: >700

Industry: High-TechRevenue ($Mln): 120Employees: >1,500

Industry: High-TechRevenue ($Mln): 80Employees: >300

Industry: High-TechRevenue ($Mln): 1,207Employees: >5,300




Industry: High-TechRevenue ($Mln):30Employees: >400

Industry: High-TechRevenue ($Mln): 30Employees: >650

Industry: TelecomRevenue ($Mln): 8,400Employees: >33,500

Sources: WEF Unkown Russia 2015

These companies exclusively focus on the Russian market and use innovative operational strategies

to successfully adapt global best practices.They have implemented operational models that have allowed them to adapt global business models to Russia’s specific local

conditions.

11

Think Tank Index 2014

Institute 2013 2014Brookings Institution (United States) 1 1Chatham House (United Kingdom) 2 2

Carnegie Endowment for International Peace (United States) 3 3Center for Strategic and International Studies (CSIS) (United States) 5 4

Bruegel (Belgium) 8 5Stockholm International Peace Research Institute (SIPRI) (Sweden) 4 6

Carnegie Moscow Center (Russia) 29 26Institute for World Economy and International Relations (IMEMO

RAS) (Russia) 34 43

Council on Foreign and Defense Policy (SVOP) (Russia) 99 98Moscow State Institute of International Relations (MGIMO) (Russia) 102 102

Sources: 2014 Global Go To Think Tank Index Report, 2013 Global Go To Think Tank Index Report

Rank CountryNumber of Think Tanks

1 USA 18302 China 4293 United Kingdom 2874 Germany 1945 India 1926 France 1777 Argentina 137

8 Russia 122

9 Japan 10810 Canada 99

TOP-10 Countries on the Number of Think Tanks

Global Distribution of Think Tanks

Think Tank Index Results

12

LOWER CONTROL OF BUSINESS• lifting restrictions for Russian business, freeing it from obsessive control• launch of special information register for transparency strengthening• supervising vacation within 3 years for small business proved to be law-abiding

OFFSHORE AMNESTY • Total amnesty for businesses returning capital to Russia.• They won’t face criminal and administrative prosecution.

TAX FREEZE • Existing taxes in Russia unchanged for next 4 years.

TAX INCENTIVES FOR SMEs• Small businesses starting from scratch should get a 2-year tax exemption

FAR EAST and ASIA• Vladivostok is granted free port status • Russia will work closely on economic integration with fast-growing Asian countries

President’s address to the Federal Assembly

“Freedom for economic development, social services and citizen initiatives is the best response to both external constraints and our internal problems.”

Vladimir Putin, December 4, 2014

MAIN POINTS ON ECONOMY AND LIBERALIZATION:MAIN POINTS ON ECONOMY AND LIBERALIZATION: