Russia moves up 11 Places in the Global Competitiveness Rating

Russia got 53rd place in the annual ranking of global competitiveness of the World Economic Forum (WEF), moving up 11 places in comparison to the last year. According to experts, the deterioration of the investment climate in other countries contributed to the improvement of the results.

Switzerland, Singapore and the USA are the leaders in the published report. In the Top-10 there are also Finland, Germany, Japan, Hong Kong, the Netherlands, the UK and Sweden. The Philippines and Bulgaria are found side by side with Russia, 52nd and 54th places as relevant. Totally, there are 144 countries represented in the ranking. Angola, Mauritania, Yemen, Chad and Guinea close this ranking list.

Competitiveness ranking is reported annually since 1979. The assessment is based on the following factors: the quality of institutions, infrastructure, macroeconomic stability, health and primary education, higher education, background, market quality of goods and services, labor market efficiency, financial market sophistication, technological development level, the size of the domestic market, the competitiveness of companies, innovative capacity.

It is noted in the present report that Russia managed to improve its position so greatly in this ranking due to the increasing of the market quality of goods and services, the competitiveness of companies and the development of information and communication technologies. The highest scores were got by the following factors: the size of the domestic market (7th place), macroeconomic stability (31st place), background (39th), infrastructure (39th place).

At the same time, according to experts the development of the institutional structure (97th place) puts the brakes on the national economy. This aspect should be upgraded fundamentally for the settling long-standing question, corruption and favoritism (92nd place). The level of confidence of the judicial independence (109th place) also causes experts concern. 

However, it should be noted that the data analysis within the rating was completed before the imposition of sanctions against Russia and Competitiveness rating can be significantly reduced afterwards. In this way, experts suggest that the imposed sanctions can have an impact not only on the investment climate, but also on the amount of financing for innovative projects, as these sanctions may have an adverse effect on the fiscal revenue.

The state Vnesheconombank will be forbidden to credit offshore companies

The Ministry for Economic Development has prepared a draft law, which forbids the state corporation Vnesheconombank (VEB) to conduct dealings, including credit transactions, with companies, which ultimate beneficiaries are legal entities registered in offshores. The same will be in relation to natural persons - non-residents of the RF, being the citizens of similar states and formations.

The idea to erode government support for enterprises, being out of our jurisdiction, but which fixed assets stem from Russia, has long been discussed and found support by the top management of the country.

The logic of such decision is visible enough – to rely upon the state for the support and participate in implementation of government and other contracts, the business should be registered in the country, directly where this activity is carried out. In other way all revenues fall out of taxation of the Federal Tax Service.

For participation in public procurement it is offered offshore companies in the draft law to disclose the information about location, equivalent of the tax number (in accordance with the law of that country, where an enterprise is registered), beneficiaries and management. It is also offered to create a special register of transactions. It is needed to prevent an unrecorded offshore contractor from conclusion of large government contracts (cost - above 1 bln RUB, if it is referred to the order for state requirements, and 100 mln RUB — for regional requirements).

There are no apparent errors by this measure. If a certain amount of offshore companies re-register their firms by standards of the RF, then it will be able to be considered only by the positive side.

See also: Ministry of Finance has begun to fight with offshore tax evasion schemes