The state is not providing enough support to make Russia's small businesses competitive

Thursday, August 11, 2022

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The state is not providing enough support to make Russia's small businesses competitive, the country's economics and finance ministers said Wednesday. The government has recently been seeking to encourage small businesses - which currently employ only about one fifth of Russia's workforce, against figures of up to 80% in other G8 nations - to boost the country's economic development. "Investment in supporting small businesses is still a weak spot in our economy," Economic Development and Trade Minister German Gref told an international economic forum in Russia's second city. Finance Minister Alexei Kudrin echoed Gref's concern, and said that the government was spending too little on supporting innovation projects. Russia has recently been looking to diversify its raw materials exports, and in particular to leverage its high-tech and scientific potential to create an innovation economy. President Vladimir Putin in his May 10 state of the nation address praised the government for steps it had already taken in this direction. Kudrin said long-term support was crucial, and cited as an example the pharmaceuticals industry, where projects can take 15 years to yield results. "Projects cannot be implemented at a credit rate of 15%. A low interest rate on loans and a stable macroeconomic situation are required," he said, adding that the government should create an investment environment conducive to innovation and R&D projects. Gref said the government spends 3 billion rubles (about 110 million) on small business support annually. He said earlier that the number of small business in the country had increased by 100,000 from 1999 to 2005, to 979,000 as of January 1, 2006. Small businesses are expected to contribute up to 40% of Russia's GDP, Gref said, and will employ 50% of the workforce if the government implements its plans to support them.

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