The World Bank Group BEEPS At-A-Glance 2011 Russia January 2013 1 Table of Contents Introduction ............................................................................................................................................................. 2 Sample Summary .................................................................................................................................................... 2 1. Problems Doing Business ................................................................................................................................ 4 2. Unofficial Payments and Corruption .................................................................................................................. 6 3. Crime................................................................................................................................................................... 8 4. Regulations and Red Tape .................................................................................................................................. 9 5. Customs and Cross Border Trade ..................................................................................................................... 10 6. Taxation ............................................................................................................................................................ 11 7. Labor and Workforce Development ................................................................................................................. 12 8. Firm Financing .................................................................................................................................................. 13 9. Legal and Judicial Issues .................................................................................................................................. 15 10. Infrastructure ................................................................................................................................................... 16 11. Innovation ....................................................................................................................................................... 17 12. Specific Government-Business Interactions ................................................................................................... 18 13. State Capture ................................................................................................................................................... 20 Annex I. Problems Doing Business Response Summary, 2008 and 2011 ........................................................... 21 Annex II. Methodological Notes........................................................................................................................... 23 BEEPS-at-a-Glance Russia 2 Introduction The EBRD-World Bank Business Environment and However, special caution should be taken while comparing Enterprise Performance Survey (BEEPS) is a joint initiative the 2008 and 2011 data with earlier rounds, particularly of the European Bank for Reconstruction and Development 2005. In 2008, some modifications in sample frame and and the World Bank. The BEEPS has been carried out in methodology were introduced that made 2005 round data five rounds: in 1999, 2002, 2005, and 2008; the 2011 is slightly different. Therefore, care should be taken when currently under implementation. The survrey covers comparing current results to earlier versions of BEEPS-at- virtually all countries of Central and Eastern Europe and a-Glance. The sample adjustment process for 2005 is the Former Soviet Union, as well as Turkey. The BEEPS briefly described in Annex I. covers a broad range of issues about the business environment, and this note presents some simple indicators Sample Sizes for Indicators for key areas. For a number of indicators, the number of firms that responded to a question is smaller than the overall country The Instrument sample size. In most cases, the difference is attributable to There were some changes on 2011 questionnaire that preceding filter questions. Questions for which the smaller made it slightly different from 2008 – mostly due to new number of respondents is due to filtering are marked with a 1 questions added to the 2011 questionnaire. In some cases, superscript indicator ( ) in Annex II. Other questions have a the questions were modified in terms of wording or smaller number of respondents due to the survey response options, thus care should be taken in comparing instrument, e.g. manufacturing or service modules. Sample the results. BEEPS at-a-Glance is deducted primarily to sizes for each indicator are also located in Annex II. questions that are comparable across periods. The Annex to the BEEPS at-a-Glance document provides additional Data Notes information on the comparability of indicators, specific This note focuses exclusively on the Main BEEPS differences and methods of calculation, if any. questionnaires for 2008 and 2011 and presents [weighted] averages or frequency distributions over all firms with non- The Sampling Frame and Sampling Methodology missing data. Many apparent changes over time may not The sampling frame and the sampling methodology were be statistically significant. See the Annex for descriptions kept the same between the 2008 and 2011 cycles. Both and definitions particular questions and indicators. rounds used stratified sampling methodology that ensured comparability of the sample frame. Key criteria for sampling Citation were firm size, age, primary area of activity, and ownership Please refer to the data in all uses as the “EBRD-World of the firm. In addition, the 2011 survey sampling for Bank Business Environment and Enterprise Performance Russian Federation was also expanded to the sub-national Survey (BEEPS)�. The standard practice is to use this level and provided representative samples for 37 regions of lengthy citation the first time the BEEPS is referenced in the Russian Federation to allow for richer region level the document and the shorthand “BEEPS� thereafter. representation and comparison. Sample Summary The sampling approach used in 2011 differs from the one Sampling Frame used in1999, 2002, and 2005. However it is fully consistent Sector: the 2008 and 2011 samples were composed based with 2008. This fact eliminated any need for adjustments, on six main sectors: manufacturing, construction, retail and other than the use of sampling weights. The raw data is wholesale, other services and IT, transportation, and hotels available from http://www.enterprisesurveys.org/. and restaurants (see next page for details). Size: following breakdown of the sample by the size of firms Sampling Methodology was used in sample construction: small – 5 to 19 The sampling methodology is consistent between 2008 and employees; medium – 20 to 99 employees; large – 100 and 2011 cycles. For both years, stratified random sampling more employees. was utilized. Core criteria for stratification of the sample Region: The 2008 survey is a representative national used for 2008 and 2011 surveys were size of the firm, and survey. In 2011 the sample was also stratified by region. sector. For the 2011 survey, a new stratification level - Thus, the 2011 round covers 37 regions of Russian region was added. This does not affect consistency of the Federation. See next page for summary of the samples for overall sampling methodology between the 2008 and 2011 2008 and 2011 surveys. rounds. BEEPS-at-a-Glance Russia 3 2008 Sample for Russia 2011 Sample for Russia Whole sale construction & Retail 10% 14% construction 3% transport, Whole sale & storage and transport, Retail communication storage and 41% main 6% communication manufacturing 3% hotels and 76% restaurants main 3% other manufacturing services, hotels and other services, 35% IT restaurants IT 3% 1% 5% 2008 2011 n (%) n (%) Total 1004 (100%) 4220 (100%) Sector Manufacturing 763 (76%) 1464 (34.7%) Wholesale and Retail 135 (13.5%) 1744 (41.3%) Construction 31 (3.1%) 396 (9.4%) Transportation 34 (3.4%) 255 (6.0%) Hotels and Restaurants 14 (1.4%) 142 (3.4%) Other services, IT 27 (2.7%) 219 (5.2%) Size of firm Small (5-19 employees) 429 (42.7%) 1475 (35.0%) Medium (20-99 employees) 340 (33.9%) 2315 (54.9%) Large (100+ employees) 235 (23.4%) 430 (10.2%) Industry sample composition “Construction�, “Hotels & Restaurants�, “Wholesale & Retail�, “Transport, Storage & Communication “, and “Other Services & IT� are defined identically in 2008 and 2011. “Manufacturing� is composed of different sub-sectors in 2008 and 2011 as follows:  2008 Manufacturing - Food, Textiles, Garments, Plastics and rubber, Chemicals, Non-metallic mineral products, Basic metals, Metal fabrication, Machinery and equipment, Electronics, Other manufacturing  2011 Manufacturing - Precision instruments, Furniture, Tobacco products, Textiles, Garments, Tanning & leather, Paper & paper products, Coke & refined petroleum, Basic metals, Office machinery, Communication equipment, Motor vehicles, Other transport equipment, Recycling Sampling weights To account for the apparent differences in the distribution of the different sectors between the 2008 and 2011 samples, with the exception of the charts and table above, in the remainder of the report all frequencies and means reported in this document are weighted. The weighting variable in both data sets is named wmedian. BEEPS-at-a-Glance Russia 4 1. Problems Doing Business 1.1 Problems Doing Business 2008 and 2011. Percentage of firms indicating issues are not an obstacle to doing business 12 Tax rates 13 25 Access to finance 39 21 Corruption 40 20 Political instability 42 14 Inadequately educated workforce 43 24 Tax administration 51 36 Transport 53 21 Telecommunications 55 46 Practices of Competitors in Informal Sector 58 30 Electricity 59 22 Crime, theft and disorder 61 37 Access to land 65 59 Customs and trade regulations 68 30 Business licensing and permits 69 52 Labor regulations 71 35 Courts 77 - 25 50 75 100 2008 2011 BEEPS-at-a-Glance Russia 5 1.2 Ranking of Problems 2008 and 2011 Relative severity of problems measured by the mean score. The most severe problem ranks number 1, the least 16. Obstacle 2008 rank 2011 rank Tax rates 2 1 Corruption 3 2 Access to finance 8 3 Political instability 4 4 Inadequately educated workforce 1 5 Telecommunications 9 6 Transport 10 7 Electricity 5 8 Tax administration 11 9 Practices of informal competition 14 10 Access to land 6 11 Customs and trade regulations 15 12 Crime, theft and disorder 7 13 Business licensing and permits 12 14 Labor regulations 16 15 Courts 13 16 BEEPS-at-a-Glance Russia 6 2. Unofficial Payments and Corruption 2.1 Problems Doing Business: Corruption 2.2 Bribe Frequency Percentage of firms indicating corruption is not a problem Percentage of firms saying unofficial payments are frequent 50 50 40 40 40 30 30 27 21 21 20 20 10 10 - - 2008 2011 2008 2011 2.3a Bribe Tax 2.3b Bribe Tax - All Firms 2.3c Bribe Tax - Firms Reporting Percentage of firms reporting Bribes as a share of annual sales Payments 1 unofficial payments Bribes as a share of annual sales 40 10 10 29 8 8 7.3 30 6 6 20 4.6 13 4 4 10 1.7 2 0.9 2 - 0 0 2008 2011 2008 2011 2008 2011 2.4 Unofficial Payments: Taxes 2.5 Unofficial Payments: Customs 2.6 Unofficial Payments: Courts Percentage of firms stating bribery is Percentage of firms stating bribery is Percentage of firms stating bribery is frequent in dealing with taxes frequent in dealing with customs frequent in dealing with courts 15 15 15 10.0 10 8.8 10 10 8.4 7.4 5.9 5 5 5 2.6 0 0 0 2008 2011 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 7 2.7 Participation in Government Procurement 2.8a Unofficial Payments: Government Contracts - All Percentage of firms that secured or attempted to secure Attempted Firms government contracts Percentage of contract value typically paid to secure a 1 government contract 60 10 8 45 36 6 30 27 4.6 4 3.5 15 2 - 0 2008 2011 2008 2011 2.8b Unofficial Payments: Government Contracts - Firms that Paid Something Percentage of contract value typically paid to secure a 1 government contract 20 15.2 15 11.5 10 5 0 2008 2011 BEEPS-at-a-Glance Russia 8 3. Crime 3.1 Problems Doing Business: Crime Percentage of firms indicating crime is not a problem 100 80 61 60 40 22 20 - 2008 2011 3.2 Payments for Security 3.3a Security Costs - All Firms 3.3b Security Costs - Firms Making Percentage of firms that pay for Percentage of annual sales used for Payments security, e.g. equipment, personnel, or security payments, for all firms Percentage of annual sales used for 1 professional security services security payments 100 4 4 78 3.1 80 3.0 65 60 1.9 2 1.6 2 40 20 - 0 0 2008 2011 2008 2011 2008 2011 3.4 Losses as a Result of Crime. 3.5a Losses as a Result of Crime: 3.5b Losses as a Result of Crime: Percentage of firms that suffered from Percentage of Annual Sales - All Percentage of Annual Sales - Firms losses as a result of theft, robbery, Firms Estimated losses due to theft, Experiencing Losses vandalism or arson over the previous robbery, vandalism or arson, for all Estimated losses due to theft, 1 12 months firms robbery, vandalism or arson 40 4 4 3.7 35 2.9 30 20 16 2 2 0.8 10 0.5 0 0 - 2008 2011 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 9 4. Regulations and Red Tape 4.1 Problems Doing Business: Business Licensing 4.2a Time Tax: Distribution of Firms Percentage of firms indicating business licensing and Percentage of firms that spent no time, 25% or less, or permits are not a problem more than 25% of senior management's time dealing with public officials or public services 100 20 27 80 69 60 63 40 64 30 20 17 - 9 2008 2011 2008 2011 no time 25% or less >25% 4.2b Time Tax - All Firms 4.2c Time Tax - Firms Spending Time Percentage of senior management's time spent dealing Percentage of senior management's time spent dealing with public officials or public services, for all firms with public officials or public services 30 30 25 22 21 20 17 20 10 10 - - 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 10 5. Customs and Cross Border Trade 5.1 Problems Doing Business: Customs Regulations 5.2 Unofficial Payments: Customs Percentage of firms indicating customs regulations are not Percentage of firms stating that bribery is frequent in a problem dealing with customs/imports 100 15 80 12 68 10 59 60 9 6 40 6 20 3 - - 2008 2011 2008 2011 5.3a Direct Exports: Distribution of 5.3b Direct Exports - All Firms 5.3c Direct Exports - Firms with Firms Percentage of firms that had no Percentage of total sales coming from Sales from Exports sales, 50% or less, or more than 50% direct exports, for all firms Percentage of total sales coming from of annual sales from exports (Y axis direct exports begins at 75%) 3 40 2.5 2 30 4 30 2 24 7 20 1.2 1 10 95 91 - 0 2008 2011 2008 2011 2008 2011 more than 50% 50% or less no direct export sales BEEPS-at-a-Glance Russia 11 6. Taxation 6.1 Problems Doing Business: Tax 6.2 Problems Doing Business: Tax 6.3 Unofficial Payments: Taxes Rates Administration Percentage of firms stating bribery is Percentage of firms indicating tax Percentage of firms indicating tax frequent in dealing with taxes rates are not a problem administration is not a problem 60 80 15 60 51 40 10 8.4 8.8 40 24 20 13 5 12 20 - - 0 2008 2011 2008 2011 2008 2011 6.4 Tax Inspections 6.5 Frequency of Tax Inspections Percent of firms visited by tax officials in the last year Average number of times firms were inspected by tax officials in the last year 75 8 63 48 6 50 4 3.2 2.6 25 2 - 0 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 12 7. Labor and Workforce Development 7.1 Problems Doing Business: 7.2 Problems Doing Business: 7.3 Professionalism of Labor Labor Regulations Skills and Education of Workers Percentage of employees that have a Percentage of firms indicating labor Percentage of firms indicating skills university degree or higher regulations are not a problem and education of available workers is not a problem 100 100 100 80 71 80 80 57 60 52 60 60 43 40 40 36 40 20 20 14 20 - - - 2008 2011 2008 2011 2008 2011 7.4 Provision of Formal Training 7.5 Percent of Employees Trained 1 Percentage of firms offering training for employees Percentage of employees participating in training 41 2011 46 2011 43 2008 52 27 2008 30 - 20 40 60 80 - 20 40 60 % of non-production full-time permanent employees trained % of production full-time permanent employees trained BEEPS-at-a-Glance Russia 13 8. Firm Financing 8.1 Problems Doing Business: Access to finance 8.2 Adequacy of Firm Finances Percentage of firms indicating access to finance is not a Percentage of firms stating they did not apply for a loan 1 problem because it was not needed 100 100 80 80 68 58 60 60 39 40 40 25 20 20 - - 2008 2011 2008 2011 8.3a Credit Extensions to Clients: 8.3b Credit Extensions to Clients - 8.3c Credit Extensions to Clients - Distribution of Firms All Firms Firms Extending Credit Percentage of firms that had no sales Percentage of sales to customers sold Percentage of sales to customers on credit, 50% or less, or more than on credit, for all firms sold on credit 50% of annual sales made on credit 80 80 29 57 37 60 60 53 45 39 40 40 45 41 20 20 - - 26 22 2008 2011 2008 2011 2008 2011 more than 50% 50% or less no sales on credit BEEPS-at-a-Glance Russia 14 8.4 Sources of Firm Financing 2008 and 2011 1 Percentage of firm financing coming from sources other than internal funds or retained earnings Borrowed from banks: private and 7.7 state-owned 6.3 Purchases on credit from 8.9 suppliers and advances from 2008 customers 3.2 2011 Borrowed from non-bank financial institutions which include 1.5 microfinance institutions, credit cooperatives, credit unions, or 0.9 finance companies 0 5 10 15 20 25 8.5 Loan Applications 2008 and 2011 1 Percentage of firms indicating the following options as the main reason the firm did not apply for a loan 12.2 Unfavorable Interest rates 21.9 Too complex application 5.1 procedures 9.4 6.6 2008 Too high collateral requirements 6.8 2011 7.1 Other 2.3 0.1 Did not think it would be approved 1.5 0 5 10 15 20 25 BEEPS-at-a-Glance Russia 15 9. Legal and Judicial Issues 9.1 Problems Doing Business: Courts Percentage of firms indicating courts are not a problem 100 77 80 60 40 35 20 - 2008 2011 9.2 Use of Courts Percentage of firms that have been to court in the past three years 60 43 40 32 20 - 2008 2011 9.3 Unofficial Payments: Courts Percentage of firms stating bribery is frequent in dealing with courts 10 8 7.4 6 4 2.6 2 0 2008 2011 BEEPS-at-a-Glance Russia 16 10. Infrastructure 10.1 Problems Doing Business: 10.2 Problems Doing Business: 10.3 Problems Doing Business: Electricity Telecommunications Transport Percentage of firms indicating Percentage of firms indicating Percentage of firms indicating electricity is not a problem telecommunications is not a problem transport is not a problem 100 100 100 80 80 80 59 60 60 55 60 53 40 36 30 40 40 21 20 20 20 - - - 2008 2011 2008 2011 2008 2011 10.4 Experienced Power Outages 10.5a Sales Lost Due to Power 10.5b Sales Lost Due to Power Percentage of firms experiencing Outages - All firms Outages - Firms Experiencing power outages over the last 12 months Losses due to power outages as a Losses percent of total annual sales Losses due to power outages as a 1 percent of total annual sales 60 1 6 4.3 40 4 29 27 0.4 2.5 20 0.3 2 - 0 0 2008 2011 2008 2011 2008 2011 10.6 Use of Email Communication Percentage of firms using email to communicate with clients or suppliers 100 95 86 80 60 40 20 - 2008 2011 BEEPS-at-a-Glance Russia 17 11. Innovation 11.1 New Product/Service Development 11.2 Research and Development Activities Percentage of firms that have developed new products in Percentage of firms that have spent funds on research and the past three years development in the past one (2008 respondents) or three (2011 respondents) years 100 40 80 30 64 25 60 20 40 13 26 10 20 - - 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 18 12. Specific Government-Business Interactions 12.1 New Electrical Connection 12.1a Electrical Connection Wait Percentage of firms that applied in the Time Percentage of firms indicating that an 1 1 last two years Average number of days informal payment was expected 150 100 100 120 80 120 80 60 90 60 59 40 60 40 16 16 19 20 9 30 20 - - - 2008 2011 2008 2011 2008 2011 12.2 New Water Connection 12.2a Water Connection Wait Time 12.2b Water Connection - Bribes 1 Percentage of firms that applied in the Average number of days Percentage of firms indicating informal 1 last two years payment was expected 60 90 60 40 60 54 40 36 20 30 20 10 11 11 4 - 0 - 2008 2011 2008 2011 2008 2011 12.3 Construction Permits 12.3b Construction Permit - Bribes Percentage of firms that applied in the Percentage of firms indicating an 1 1 last two years Average number of days informal payment was expected 100 150 100 130 80 120 104 80 60 90 60 40 37 60 40 22 21 20 10 30 20 - - - 2008 2011 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 19 12.4 Tax Inspections 12.4a Number of Inspections / 12.4b Tax Inspections - Bribes Percentage of firms indicating they Meetings with Tax Officials Percentage of firms indicating an 1 1 were inspected Average informal payment was expected 80 10 80 63 8 60 60 48 6 40 40 4 3.2 2.6 20 20 15 2 3 - 0 - 2008 2011 2008 2011 2008 2011 12.5 Import License 12.5a Import License Wait Time 12.5b Import License - Bribes 1 Percentage of firms that applied in the Average number of days Percentage of firms indicating an 1 last two years informal gift was expected 10 100 100 8 80 80 6 60 60 47 43 4 2.9 40 30 40 2.6 2 20 20 5 0 - - 2008 2011 2008 2011 2008 2011 12.6 Operating License 12.6a Operating License Wait Time 12.6b Operating License - Bribes 1 Percentage of firms that applied in the Average number of days Percentage of firms indicating an 1 last two years informal gift was expected 100 100 100 80 80 80 57 57 60 60 60 40 40 40 40 27 19 20 20 20 10 - - 0 2008 2011 2008 2011 2008 2011 BEEPS-at-a-Glance Russia 20 13. State Capture 13a Private payments/gifts or other benefits to public officials to gain advantages have no impact, 2005 and 2011 (percentage of respondents) 90 83 2005 2011 81 80 77 76 76 75 70 60 50 Parliamentarians Government officials local/regional officials 13b Private payments/gifts or other benefits to public officials to gain advantages have moderate or higher impact, 2005 and 2011 (percentage of respondents) 20 2005 17.2 16.9 16.6 2011 15 12.3 10.3 10 9.0 5 0 Parliamentarians Government officials local/regional officials 13c Private payments/gifts or other benefits to public officials to gain advantages have major or decisive impact, 2005 and 2011 (percentage of respondents) 10 2005 2011 8 7.4 7.2 6.7 6 4 3.5 2.3 2.4 2 0 Parliamentarians Government officials local/regional officials BEEPS-at-a-Glance Russia 21 Annex I. Problems Doing Business Response Summary, 2008 and 2011 AI.1 Problems Doing Business Percentage of firms indicating issues is a “moderate�, “major�, or “very severe� obstacle to doing business 77 Tax rates 81 65 Corruption 51 61 Access to finance 47 63 Political instability 45 74 Inadequately educated workforce 42 57 Telecommunications 35 50 Transport 32 42 Practices of Competitors in Informal Sector 32 59 Electricity 31 53 Tax administration 30 28 Customs and trade regulations 26 59 Access to land 26 47 Business licensing and permits 24 60 Crime, theft and disorder 23 25 Labor regulations 18 42 Courts 16 - 25 50 75 100 2008 2011 BEEPS-at-a-Glance Russia 22 AI.2 Percentage of firms indicating each response option Obstacle to current operations: Year No Minor Moderate Major Very severe obstacle obstacle obstacle obstacle obstacle Tax rates 2008 12.4 10.3 28.5 27.3 21.6 2011 12.7 6.4 21.8 30.9 28.2 Corruption 2008 21.4 13.8 14.8 23.1 26.9 2011 39.8 9.5 17.7 18.9 14.2 Electricity 2008 30.3 11 12.5 19.9 26.2 2011 58.9 10.5 7.5 14.4 8.8 Inadequately educated workforce 2008 14.1 12 17.3 36.4 20.3 2011 43.5 14.1 17.1 17 8.4 Access to finance 2008 24.6 14.8 25.7 20.1 14.9 2011 39.5 13.9 18.6 16.9 11.2 Crime, theft and disorder 2008 22 17.5 22.3 24.5 14 2011 60.7 16.3 10.7 8.7 3.7 Tax administration 2008 24.3 22.9 32.8 15 5.1 2011 51.2 18.8 15.9 9.4 4.8 Telecommunications 2008 20.7 22.6 24.6 22.6 9.5 2011 54.7 10.4 10.2 16.7 8 Courts 2008 35.2 22.7 20.7 15.7 5.7 2011 76.8 7.4 8.4 5.6 1.9 Access to land 2008 36.6 4.7 10.9 20.2 27.7 2011 65.3 8.3 8.3 10.9 7.2 Business licensing and permits 2008 30.2 22.9 23.4 14.2 9.3 2011 69 7.2 8.2 9.5 6.1 Transport 2008 36 14.5 17.3 18.9 13.3 2011 53 15.1 12.9 12.1 6.9 Labor regulations 2008 52.2 22.7 14.4 7.8 3 2011 70.7 11.3 12 4.7 1 Customs and trade regulations 2008 59.2 12.4 9 12.6 6.8 2011 68.1 5.8 10.1 11.1 5 Practices of Informal Competition 2008 46.5 11.8 19.9 11.4 10.4 2011 57.7 10.6 17.5 8.7 5.5 Political instability 2008 19.5 17.8 23.3 20.3 19 2011 41.9 12.9 19.6 16.8 8.8 BEEPS-at-a-Glance Russia 23 Annex II. Methodological Notes This note presents some key comparisons from the Main BEEPS module. The 2011 round of the BEEPS consisted of four parts: the Main BEEPS sample was drawn from a universe of eligible firms in manufacturing and retail/wholesale industries with five or more full time employees located in major urban centers. The Manufacturing Module refers to additional questions asked only of firms in the manufacturing sector. The Services Module refers to additional questions asked only of firms in the services sector. The Innovation Module refers to additional questions asked of firms indicating that they have conducted certain type of innovation activities. Missing values: The 2011 and 2008 instruments included coding for Don’t Know (DK), Not Applicable (NA), and Refuse to Answer (REF). In this report, these responses were transformed to system missing values and were removed before performing any analyses presented in this report. Changes in the Survey Instrument: Some questions used in prior versions of BEEPS at-a-Glance were dropped from the survey. Some new questions were added to the 2011 questionnaire. In some cases, the questions were modified in terms of wording or response options, thus care should be taken in comparing the results as although questions address the same issues, slight changes in wording and/or response options may apply. Explanations of differences in the questions asked between 2008 and 2011 [if any] are provided below in this Annex for each separate chart such differences apply, c and are also flagged in table AII1 with ( ). In this document, minor wording changes apply only to questions K5 (sources of firm financing) and O3/H6 (R&D activities). Branching / Filtering Questions: For a number of indicators, the number of firms that responded to a question is smaller than the overall country sample size. In most cases, the difference is attributable to preceding filter questions. Questions 1 for which the smaller number of respondents is due to filtering are marked with a superscript indicator ( ). Module- and Sector-Specific Questions: Other questions have a smaller number of respondents due to the survey instrument, e.g. manufacturing or service modules. If a question applies to different subset of firms based on BEEPS module, this is explicitly indicated in the corresponding note for each particular chart and also flagged in table AII.1 with a a b superscript indicator: ( ) if the question applies only to the 2008 Service Module and ( ) if the question only applies to the Manufacturing Module for both 2008 and 2011. In this report, such discrepancies apply only to questions C30 (a) (telecommunications as an obstacle to doing business, asked only of Service Module respondents in 2008) L10 (provision of formal training to employee, asked only of Manufacturing Module respondents in 2008, and all respondents in 2011), and L11 (a, b) (Employee training, asked only of Manufacturing Module respondents both in 2008 and 2011. Notes for individual charts Chart 1.1 2008 and 2011 used scale with five points including: “no obstacle�, “minor obstacle�, “moderate obstacle�, “major obstacle� and “very severe obstacle� as valid responses. The values in this chart represent the proportion of respondents indicating that an issue is “no obstacle� to doin g business. The questions on telecommunications as obstacle was only asked of the service sector respondents in 2008, but of all sectors in 2011. Chart 1.2 The rankings of problems in both years are based on the mean score across all firms in each country for each indicator for the respective year. The 5 response options (“no obstacle�, “minor obstacle�, “moderate obstacle�, “major obstacle�, and “very severe obstacle�) are coded with values “0�, “1�, “2�, “3�, and “4� respectively in the data sets for bo th years. These values were averaged at the country level for each separate issue, whereas a higher mean indicates relatively greater severity of an issue. Thus, for each year, the most severe problem, or that with the highest mean score is ranked number 1, the least severe, or that with the lowest mean score is ranked 16. Chart 2.2 In both years, the respondents were asked to estimate how often is the statement “ It is common for firms in my line of business to have to pay some irregular “additional payments or gifts� to get things done with regard to customs, taxes, licenses, regulations, services etc� true on a 5 point LIkert scale: “never�, “seldom�, “sometimes�, “frequently�, “very� and “always�. This chart represents the set of respondents answer ing “frequent�, “very frequent�, or “always�. BEEPS-at-a-Glance Russia 24 Chart 2.3 (a-c) Respondents in both years could indicate the cost of unofficial payments/bribes either as a percent of annual sales (question J7 (a)) or as an absolute amount (question J7 (b)). For those respondents who indicated a specific value (i.e. total cost of bribes), the percentage of annual sales was obtained by dividing the reported total cost of bribes by the firm’s total annual sales (question D2, total firm sales for the preceding year). The resulting proportion of sales spent on bribes was then combined with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the proportion of annual sales expended on bribes for all firms (Chart 2.3b), firms reporting no payments are recoded into firms spending 0% of annual sales on bribes (for these questions, J7 a &b, no actual recoding needed to be made as the codes for “no payments were made� are already set as “0�). To calculate the averages for firms reporting payments (Chart 2.3c), only observations reporting payments higher than “0� are included. Chart 3.3 (a-b) Respondents in both years could indicate the cost of security payments either as a percent of annual sales (question I2 (a)) or as an absolute amount (question I2 (b)). For those respondents who indicated a specific value of security cost, the percentage of annual sales was obtained by dividing the reported total security costs by the firm’s total annual sales (question D2, total firm sales for the preceding year). The resulting proportion of sales spent on security was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the average security payments as a percentage of annual sales for all firms (Chart 3.3a), respondents who had indicated that they have not paid for security (question I1) were recoded into firms spending 0% of their annual sales on security. To calculate the security costs as a percentage of annual sales for firms making security payments, the averages only for firms answe ring “Yes� to question I2 were computed. Chart 3.5 (a-b) Respondents in both years could indicate the estimated losses as a result of crime either as a percent of annual sales (question I4 (a)) or as an absolute amount (question I4 (b)). For those respondents who indicated a specific value, the percentage of annual sales was obtained by dividing the reported total losses as a result of crime by the firm’s total annual sales (question D2, total firm sales for the preceding year). The resulting value of crime-related losses as a percentage of annual sales was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the losses of crime as percentage of annual sales for all firms (Chart 3.5a), respondents who had indicated that they have not experienced any losses as a result of crime (question I3) were recoded into firms experiencing 0% losses as a result of crime. To calculate the losses as a consequence of crime as a percentage of annual sales for firms experiencing losses (Chart 3.5b), the averages only for firms answering “Yes� to question I3 and reporting mire than 0% in losses in question j4 were computed. Chart 7.4 The question regarding formal training provided to employees was only asked in the Manufacturing Module in 2008, while in 2011 the question is present in all modules. Chart 7.5 For both years the question is only asked in the Manufacturing Module. Chart 8.4 The response options changed slinghtlyacross cycles on the question regarding sources of firm financing. In 2008 and 2011 six response options were presented, but the composition of the response options has changed. Due to the structure of the question and multiple response options, the total value of the responses does not equal one hundred percent. The question focuses on sources of financing other than internal funds or retained earnings. In order to compare responses across cycles, some 2008 response options were combined to match as closely as possible the 2011 responses. Specifically, Borrowing from Banks, private or state owned is provided as a single answer option in 2011, while the 2008 questionaiire lists private and state owned banks as separate answer options. Accordingly, to compute this variable in the 2008 data set it is necessary to combine the responses to questions K5 (b) and K5 (c), while in the 2011 data set the variable values are stored in a single column (ECAk5bc). Similarly, borrowing from money lenders, friends and relatives, or bonds were provided as separate answer options in 2008 and as a single answer option in 2011. Chart 10.5 (a-b) Respondents in both years could indicate the value of losses as a percent of annual sales or as an absolute amount. For those respondents who indicated a numeric value, the percentage of annual sales was obtained by dividing the reported BEEPS-at-a-Glance Russia 25 losses due to power outages by the firm’s total annual sales (question D2, total firm sales in preceding year) . The resulting proportion of sales lost due to power outages was then combined in a single variable with the observations that had directly provided a percentage estimate, and the average percentages reported here are thus a composite of the two response options. To calculate the percentage of sales lost for all firms (Chart 10.5a) all valid values – including “0� were used, and firms who did not experience power outages (i.e. a nswered “No� to question C6) were recoded into firms experiencing 0% losses. To calculate the average percentage of sales lost for firms experiencing losses (Chart 10.5b), only non-“0� values for firms who had experienced power outages were used. Chart 11.1 The question regarding new product/service development was modified slightly in its wording from 208 to 2011. In 2008, firms were asked if they introduced new products or services, whereas in 2011 they were asked if they introduced new or significantly improved products or services. Chart 11.2 In 2008, firms were asked if they spent funds on research and development activities during last financial year ; in 2011 were asked the same question but reference period was during last three years. Chart 13 (a-c) The questions on “state capture� were not asked in 2008, thus a comparison with the 2005 data is provided. To make the 2005 sample at least approximately comparable with the 2011 sample, observations meeting the following criteria must be excluded from the 2005 data: a) firms with less than 5 employees, b) ISIC codes not included in the 2008/11 samples, and c) 100% state-owned firms. After these adjustments the sample size for 2005 is n=392. Chart AI.1 n 2008 and 2011, all questions pertaining to ‘Doing Business Indicators’ used a 5 -point LIkert scale (“no obstacle�, “minor obstacle�, “moderate obstacle�, “major obstacle� and “very severe obstacle�). The data shown above is a sum of the responses indicating an individual issue as a “moderate obstacle�, “major obstacle� and “very severe obstacle�. The question regarding telecommunication as an obstacle was asked of all respondents in 2011, but only of service sector respondents in 2008. Variable Names, Survey Questions and Sample Sizes for Corresponding Charts The ‘Survey Question’ columns represent the survey question number as it appears on the actual survey protocol used . The different response options (if any), are provided in the same column, in the parentheses following the question number (the letter label may or may not appear on the actual survey protocol, but it always appears whenever an actual variable name is provided in the BEEPS 2011 codebook – in red and bold). In vast majority (but not all) of cases, the actual variable names in the data set consist of a combination of the survey question number (e.g. ‘ J30’), in lower case, and the label of the specific response option (e.g. (e), which combined becomes ‘ j30e’. For example, the actual variable name in the data set corresponding to survey question ‘E30’ (“Practices of Competitors in the Informal Sector “ as an obstacle to doing business is ‘e30’, while the variable name corresponding to question ‘J6 (a)’ (“Over the last year, had your establishment attempted to secure a government contract?�) will be found in the data set as ‘ j6a’. In some cases (e.g. ‘K5’ – Sources of firms financing), a single variable is denoted through a combination of letters (e.g. ‘hdej’). In these cases, the same logic applies (e.g. the matching variable name in the data set will be ‘ k5hdej’). The reason for such exceptions is to ensure compatibility between the two years. For example, in this case, ‘k5hdej’ indicates that previously separate answer options in 2005 (e.g., ‘k5h’, ‘k5d’, k5e’ etc.) in the 2008 data set have been combined into single variable so that the responses are comparable with 2011 (in this case, ‘k5f’ in 2011 is inclusive of all these response options that were asked separately in 2008). The only exceptions to the above convention are the ECA-related questions (e.g., K17, Q39), the variables names for which are prefixed by ‘ECA’ in the data set. For example, ‘K17’ will correspond to ‘ECAk17’. In the table below, the survey d items this applies to are flagged with a superscript indicator ( ). BEEPS-at-a-Glance Russia 26 AII.1 Sample sizes (valid n) and question numbers for the survey items in this report Chart Chart Title n n Survey Survey 2008 2011 Question 2008 Question 2011 1.1 Problems Doing Business Tax Rates 1002 4171 J30 (a) J30 (a) Corruption 961 3969 J30 (f) J30 (f) Electricity 993 4182 C30 (a) C30 (a) Skills and education of workers 978 4166 L30 (b) L30 (b) Access to finance 976 4081 K30 K30 (a) Crime, theft and disorder 983 4096 I30 I30 Tax administration 997 4174 J30 (b) J30 (b) a a Telecommunications 147 4173 C30 (b) C30 (b) Courts 932 3952 H30 H30 Access to land 893 3718 G30 (a) G30 (a) Business, licensing and permits 923 3803 J30 (c) J30 (c) Transport 979 4119 D30 (a) D30 (a) Labor regulations 998 4186 L30 (a) L30 (a) Customs and trade regulations 708 3420 D30 (b) D30 (b) Practices of informal economy competitors 859 3642 E30 E30 Political instability 981 4090 J30 (e) J30 (e) d d 2.2 Bribe Frequency 944 3839 Q39 Q39 1 2.3 Bribe Tax 756 3357 J7 (a, b) J7 (a, b) d d 2.4 Unofficial Payments: Taxes 931 3741 Q41 (c) Q41 (c) d d 2.5 Unofficial Payments: Customs 798 3499 Q41 (a) Q41 (a) d d 2.6 Unofficial Payments: Courts 862 3577 Q41 (b) Q41 (b) 2.7 Participation in Government Procurement 1000 4190 J6 (a) J6 (a) 1 2.8 Unofficial Payments: Government Contracts 222 870 J6 J6 3.2 Payments for Security 1001 4194 I1 I1 1 3.3 Security Costs 861 3629 I2 (a, b) I2 (a, b) 3.4 Losses as a Result of Crime - Incidence 995 4195 I3 I3 1 3.5 Losses as a Result of Crime - Sales (all and firms w/ losses) 924 4042 I4 (a, b) I4 (a, b) 4.2 Time Tax 877 3760 J2 J2 5.3 Direct Exports 1003 4202 D3 (c) D3 (c) 6.4 Tax Inspections 996 4162 J3 J3 6.5 Frequency of Tax Inspections 625 1934 J4 J4 d d 7.3 Professionalism of Labor 974 4042 Q69 Q69 b b 7.4 Provision of Formal Training: Permanent Employees 601 4178 L10 L10 1, b b b 7.5 Percent of Employees Trained: Production 291 528 L11 (a) L11 (a) 1, b b b Non-Production 286 521 L11 (b) L11 (b) 1 d 8.2 Adequacy of Firm Financing 504 2982 K17 K17 8.3 Credit Extensions to Clients 968 3933 K2 (c) K2 (c) 1, c d d 8.4 Sources of Firm Financing in 2008 and 2011 1004 1509 K5 (b , c , f, hdej) K5 (bc, e, f) 1 d 8.5 Loan Applications in 2008 and 2011 504 2982 K17 K17 d d 9.2 Use of Courts 1001 4191 Q31 (e) Q31 (e) 10.4 Experienced Power Outages 997 4192 C6 C6 1 10.5 Sales Lost due to Power Outages (all and firms w/ losses) 892 3576 C9 (a, b) C9 (a, b) 10.6 Use of Email Communication 1004 4215 C22 (a) C22 (a) c d 11.1 New Product/Service Development 1002 4200 O1 H1 d 11.2 Research and Development Activities 997 4185 O3 H6 12.1 New Electrical Connection 995 4195 C3 C3 1 Average wait time - number of days 119 308 C4 C4 1 Informal gift or payment was expected 143 407 C5 C5 12.2 New Water Connection 1002 4208 C12 C12 1 Average wait time - number of days 72 185 C13 C13 1 Informal gift or payment was expected 84 220 C14 C14 12.3 Construction Permits 997 4197 G2 G2 1 Average wait time - number of days 129 277 G3 G3 BEEPS-at-a-Glance Russia 27 1 Informal gift or payment was expected 163 394 G4 G4 12.4 Tax Inspections 996 4162 J3 J3 1 Average number of tax inspections/meetings 625 2083 J4 J4 1 Informal gift or payment was expected 604 1948 J5 J5 12.5 Import License 999 4198 J10 J10 1 Average wait time - number of days 39 63 J11 J11 1 Informal gift or payment was expected 44 61 J12 J12 12.6 Operating License 995 4183 J13 J13 1 Average wait time - number of days 242 875 J14 J14 1 Informal gift or payment was expected 236 906 J15 J15 13.1 State capture NA 4200 Q44 Q44 d Parliamentarians (2005 n=344) NA 3230 Q44 (a) Q44 (a) d Government officials (2005 n=341) NA 3202 Q44 (b) Q44 (b) d Local/Regional officials (2005 n=342) NA 3324 Q44 (c) Q44 (c) NOTES: 1 Reduced sample size due to preceding filtering question. a Service module only (may apply to only one of the 2 years, check the survey question columns as well). b Manufacturing module only (may apply to only one of the 2 years, check the survey question columns as well). c Slight change in wording/response options between 2008 and 2011. See individual chart notes in Annex I d Prefix variable name with ‘ECA’. BEEPS-at-a-Glance Russia