Annual Regional Investment Congress "Key Factors Of Investment Success In The Russian Regions"

(16-17 November 2005, Moscow, Baltschug Kempinski Hotel)

The Annual Regional Investment Congress 'Key Factors of Investment Success of the Russian Regions' (Moscow, 16-17 November 2005) was organized by the Foreign Investment Advisory Service (FIAS), a joint service of the International Finance Corporation (IFC) and the World Bank, together with the leading Russian business magazine 'Expert' and the 'Expert RA' Rating Agency. Expert RA announced the results of the 10th investment rating of the Russian regions at the Congress. A special focus of the Congress was an assessment of progress in removing administrative barriers to investment and creating a better investment climate in the Russian Federation. FIAS presented the results of the work it has been doing in Russia in this area since 2000, and facilitated the discussion of achievements and further reforms.

Three break out sessions at the 2nd day of the Congress were devoted to:

1. Business locating procedures, i.e. regulation of business access to land/real estate and construction permits;
2. Establishment of Regional ‘Practitioners’ Network’ to reduce administrative barriers to investment; and
3. Monitoring and evaluation of the impact of reforms

Representatives of the Russian regions, key government officials from the RF President’s Administration, State Duma, relevant ministries, agencies and services as well as representatives of the World Bank Group participated and spoke at the Congress, including Andrei Sharonov, Deputy Minister of the Ministry of Economic Development and Trade, Viktor Pleskachevksy, Head of the State Duma Committee for Property, Michael Klein, WB-IFC Vice President on Private Sectors Development and IFC’s Chief Economist, Kristalina Georgieva, Country Director of the World Bank in Russia, Edward Nassim, Country Director of the IFC in Russia, and Jacqueline Coolidge, FIAS’ Regional Program Coordinator for Europe in FIAS.

The break-out sessions at the Congress produced a number of recommendations for future direction of policy reforms, including, e.g.,

• A "network of practitioners" should be developed to share good practice examples in removal of administrative barriers to investment in all spheres, to include representatives from all levels of government, business associations, civil society, international donor organizations, and media.
• Prices for privatization of land under privatized buildings should be only a nominal price, to encourage private ownership of land and development of a competitive market in land; the benefits of this strategy in terms of growth and future tax revenues vastly exceed the short term revenues from higher prices
• Federal legislation should establish minimum standards of transparency for all land privatization transactions, including tenders and alternative mechanisms;
• Administrative procedures for land privatization should include statutory time limits and other mechanisms to reduce "administrative barriers";
• Streamlining of construction permit procedures should be high priority to encourage business expansion;
• The Government of the Russian Federation should continue to monitor the impact of reforms to remove administrative barriers to investment, and to make use of the resulting data to guide the path of future reform efforts.

Summary of Discussions in Sections on November 17, 2005:

Section 1. Business locating procedures: regulation of business access to land/real estate and construction permits. Current reform proposals

Section 2. Establishment of the Regional Practitioners

Section 3. Monitoring and evaluation of the impact of reforms