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Russia and Ukraine in the Rankings of the World Bank Doing Business – 2012

14.06.2012 The World Bank and International Finance Corporation in the ninth time ranked Doing Business 2012, which covers economies of 183 countries. It investigates regulations that contribute or impede business development. The authors analyzed these regulations relating to the 10 stages of the life of companies. It includes starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and, new this year, getting electricity.

According to this rating Russia occupies 120th place in terms of business climate in 183 countries (last year - 124 place). And Ukraine in this rating falls lower and lower.

The increase of Russia’s position in the rating of the World Bank confirms that the authorities in their efforts of development the investment climate are moving in the right direction. However, according to the Deputy of Economic Development Minister Stanislav Voskresensky, there is no satisfaction on the results. According to him, much of what has been done over the last year, was not been considered in this ranking, many measures are effective much later they formally start to operate. For example, since the 1st of January, starts the provision of law, which should reduce by the 50 % the tariff n technological connection to electricity organizations. In addition, Act of customs regulation came into force; the number of procedures and terms of procedures to obtain a permit for construction of facilities in the capital were reduced.

As for Ukraine, now people who wish to build their business or invest money there will be much less.

Ukraine ranked 152 out of 183 economies, which is lower than last year, when the country was on the 149 line rating.

So Ukraine made the amendments to the legislation in terms of the settling of commercial disputes and the increase the effectiveness of the implementation of contracts. Also tax system has been simplified - has become less expensive for companies with the revision and harmonization of tax laws, reducing tax rates on income, as well as harmonization of social security contributions. Amends in bankruptcy legislation and enforcement of judgments gave more guarantees to the lenders. Ukraine has also abolished the requirement for a permit to acquire a new corporate print, simplifying the procedure of opening the company. At the same time, several procedures of international trade have been complicated due to the introduction of additional checks at the customs clearance.

In terms of 10 topics the overall ranking of the ease of doing business, Ukraine holds the following positions from 183 countries: Starting a Business - 112 place (118th in 2011), dealing with construction permit - 180 place (182), connected to power supply systems - 169 place (169), registering property - 166 place (165), getting credit - 24 place (21), protecting investors- 111 place (108), paying taxes – 181 (181), international trade - 140 (136), enforcing contracts - 44 (44), closing a business - 156 place (158).

The rankings for all economies are benchmarked to June 2011.

Indicators are used to analyze economic outcomes and allow to understand what reforms have been effective in which areas and countries, and why.

Expert’s opinion

Russia’s position in the ranking is increasing, Ukraine is falling down.

Let’s see who’s around these countries on the list.

Take three countries above and below. And that’s what we see:
Russia is surrounded by such countries:

117 – Kosovo
118 – Nicaragua
119 – Cape Verde
120 – Russian Federation
121 – Costa Rica
122 – Bangladesh
123 – Uganda.

Ukraine is surrounded by the following countries:

149 – The Gambia
150 – Burkina Faso
151 – Liberia
152 – Ukraine
153 – Bolivia
154 – Senegal
155 – Equatorial Guinea.

Apparently, in Russia it’s better and more correct to reform economics, than in Ukraine. These two countries have different conditions of existence. Russia is rich in energy, but Ukraine is to the south of Russia. Russia is rich in raw materials, but Ukraine has advanced technological capabilities, which remained from the Soviet Union. Russia, in the end, is much bigger, than Ukraine.

But note: Ukraine was preparing for a long time to the UEFA EURO 2012. Russia is preparing for Winter Olympic Games. Russia has replaced the president and the Ukraine is expected next election. Both countries are in constant stress. Both are actively playing the game in the world geopolitical space and with each other. Every year Europe is watching the ups and downs of gas warfare.

Nevertheless, Russia becomes more attractive for doing business, and Ukraine is getting worse and worse.

The conclusion is obvious and sad. I suggest everyone to do it for themselves.

By the way, on the top of ranking is Singapore, and Chad summarizes this ranking.

If the dynamics of counties will be the same, Russia after 5 years (still with Mr. President Putin) will be released in the first hundred! Well, while Ukraine will remind Burundi, Djibouti and Zimbabwe ... Bananas are the main source of Ukraine's GDP?

Intrigue.

We are looking forward to the data for 2012.

On the basis: http://www.doingbusiness.org

Yaroslav Lomakin ( Managing Partner of Honest & Bright Company Ltd )

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