DUMA PASSES IN FIRST READING LEGISLATION SIMPLIFYING BUSINESS LICENSING.

Russia’s State Duma yesterday passed in its first reading the draft law “On making changes in and additions to the federal law ‘On licensing individual types of activities.'” The bill, which required 226 votes for passage, was passed 292 to 104, with two abstentions. According Minister of Economic Development and Trade German Gref, the draft law will reduce the number of activities subject to licensing to from 340 to 104, which last he called “the maximum figure.” The ministry originally wanted to reduce the number to forty or fifty, but encountered strong bureaucratic resistance from inside the government (see the Monitor, April 23). It is pushing other measures aimed at debureaucratizing the economy, including legislation that would change the time it takes to register a firm from three months to five days. By law, the legislation must pass three Duma readings, be approved by the Federation Council and then signed into law by President Vladimir Putin.

Gref himself noted that Russia ranks third among all other countries in terms of the number “administrative barriers” blocking enterprises from entering the marketplace and that in Russia, unlike in most countries, mandatory licensing and certification affects 90 percent of the market. His comments echo the complaints that the heads of small- and medium-sized businesses have been making in Russia for nearly a decade. “By the middle of the 1990s, the masses of bureaucrats and the people close to them realized that all of these barriers were an extremely attractive quasibusiness,” Aleksandr Auzan, president of the International Confederation of Consumer Societies, recently told Profil magazine. “Any inspector can drop by any enterprise and is guaranteed to find violations and leave with money in his pocket” (NNS, Polit.ru, June 7).

THINGS WILL ONLY GET WORSE FOR SMALLER BUSINESSES.