Russia seeks to reverse sliding competitiveness

Russia slipped down the global business competitiveness ranking in the years President Vladimir Putin touted economic modernisation as Kremlin chief and premier, a closely-watched survey shows. Now his government concedes that the annual World Economic Forum poll is showing up its failures to address the baneful business climate and vows to work with more dedication to repair the shortcomings. Russia fell one step down the ladder from the previous year's study and four off its 2010-2011 finish to stand a middling 66th out of 144 nations listed by the Forum's Global Competitive Index. This wedges Russia and its $2 trillion energy export-driven economy between sanctions-hit Iran and Sri Lanka -- an island nation emerging from the throes of civil war. "No matter how painful it is to admit, we agree with the WEF assessment," Deputy Economy Minister Sergei Belyakov said in e-mailed answers to questions from AFP about this week's closely-watched results. "We admit all these factors and intend to do more to solve them," he added. Perhaps the biggest problem for Russia is that its competitiveness remains poor despite an effort to improve it that was intensified after the financial crisis hit in 2008. One in five business respondents said they suffered most in Russia from corruption that analyses show may swallow between 20 and 30 percent of gross domestic product every year. Putin this month called the problem "self-evident" but also blamed businessmen for paying the bribes to begin with. "They are trying get a jump start on their competition," said Putin without commenting on officials' Soviet-era readiness to accept money under the table. The Forum also found one in 10 complaining about government bureaucracy and the same number pointing to poor access to financing and unpredictable tax policies. "State-run capitalism, as established in Russia, limits the opportunities for future development and thus should be further liberalised," the World Economic Forum said in one of its most recent reports. Belyakov said the government was fully aware of the problem's extent. "These are the very difficulties we identified a year ago" when current premier and former Kremlin chief Dmitry Medvedev tasked a group of Russian and Western bankers with helping make Moscow into a global financial centre. "Now we are adopting specific measures that have to be implemented in specific timeframes," said the junior minister. Belyakov spoke as Putin hosted leaders from some of Asia's most transparent and dynamic economies at the Asia-Pacific Economic Cooperation (APEC) summit in Vladivostok. The lack of Russia's competitive edge shines through most at forums like these -- events at which nations such as Singapore and Australia discuss means of making the Far East into a lasting engine of growth. Russian officials admit that their current share of Asia-Pacific trade stands at a humbling one percent. And almost all of that figure is accounted for by China. Belyakov said the government's big idea for the moment involves getting the business and civil communities to start evaluating their officials and presenting the findings for regular government review. "We will be graded by the business sector and the people. They will judge us based on how we alter the way they live and conduct their business -- and not by the number of laws we pass," the minister said. Some sectors have almost no road to follow but improvement: world investors found only four other countries in which minority shareholders' interests were protected less.