Russian Small and Medium-sized Enterprises Forum
On June 15, 2016, the second Russian Small and Medium-sized Enterprises Forum was held at ExpoForum Convention and Exhibition Centre as part of the 20th anniversary St. Petersburg International Economic Forum.
More than 500 delegates attended the event, including representatives of government agencies from Russia, Finland, Latin America, Republics of Haiti and Suriname, Argentina, and top managers of major Russian and foreign companies.
The participants addressed the most critical challenges facing small and medium-sized business.
The panel session ‘Working with Small and Medium-Sized Businesses’, moderated by Dmitry Sazonov, Vice President of All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses OPORA Russia, addressed ways to ensure that small and medium-sized businesses have access to procurement by state and municipal agencies, as well as by major companies; integration of SMEs into the industrial chain; and state protectionist measures.
The discussion was opened by Iliia Dimitrov, Executive Director at the Association of Electronic Trading Platforms. It is so hard for SMEs to get involved in state procurement that many businesses simply give up on these possibilities, Mr. Dimitrov said. The package of amendments to Federal Laws 44 and 223, which regulate state procurement, were submitted to the State Duma months ago. Work on these amendments should be expedited, as they are expected to considerably simplify the procurement procedure.
Alexander Braverman, CEO at the Federal Corporation for the Development of Small and Medium-Sized Businesses, cited statistical data that confirm the active involvement of small and medium-sized business in state procurement. He said that SMEs provided up to 98,000 various commodities within the framework of state procurement contracts.
Infrastructure monopolies, corporations, and state companies have already placed more than RUB 520 billion worth of orders, and the figure is projected to reach RUB 1 trillion by the end of the year. Contracts worth a total of RUB 445 billion have been made with SMEs – this money is already being disbursed to several thousand SME suppliers.
Mr. Braverman believes “the problem is the lack of information for small and medium-sized business, as well as excessive numbers of online trading platforms, of which many cannot operate properly.” He noted that the Federal Corporation for the Development of Small and Medium-Sized Businesses was working on building up SMEs’ awareness. To this end, many of the online resources of support infrastructure organizations post announcements and alerts of available state procurement contracts on a regular basis.
Commenting on the applicable legislation, Victor Stepanov, Vice President of All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses OPORA Russia and General Director at RTS-Tender, said that the laws were missing norms and requirements applied to electronic trading platforms. Furthermore, Mr. Stepanov noted insufficient competition within the state procurement process, with some 95% of procurement contracts under Law 223 concluded with a single bidder.
Yury Zafesov, Director of the Purchasing Department at Rosseti, pointed to the involvement of SMEs in Rosseti’s procurement contracts. Small and medium-sized companies accounted for 29% of procurement during the first five months of the year. Rosseti is interested in having more suppliers, Mr. Zafesov said, adding that procedures should be simplified for less expensive contracts worth less than RUB 500,000. Specifically, a single online store should be established to represent all companies on the register of the Federal Corporation for the Development of Small and Medium-Sized Businesses. The initiative was supported by Iliia Dimitrov, who cited the positive experience of this practice in South Korea.
When commenting on the low competition in state procurement, Аnatoliy Meshheryakov, State Secretary, Vice President at Russian Railways, noted that the number of rail and locomotive suppliers would hardly increase, because only “one or two companies” manufacture them. SMEs do not appear to be excited about possibilities to supply to Russian Railways. In order to improve this situation, Russian Railways has posted comprehensive information, hotline numbers, and video lessons on its website. Besides, workshops are organized for prospective suppliers on a regular basis; however, these measures do not seem enough to encourage SMEs, Mr. Meshheryakov said.
“Why did large corporations fail to nurture good suppliers during the two decades when we had no Law 223? There are no suppliers, but we have corruption instead. Corporations were not encouraged to cut their costs; they included their costs in tariffs. These issues have brought about Law 223,” said Andrei Tsarikovsky, State Secretary, Deputy Head of the Russian Federal Antimonopoly Service. He went on to say that Law 223 is largely artificial and imperfect.
