ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 1 LAND AND REAL ESTATE PROCEDURES IN RUSSIAN REGIONS – A CASE STUDY

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 2

3 Statement: Land Market in Russia is almost monopolistic….. Note: Not rebased

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 4 Statement: Land Market in Russia is almost monopolistic and controlled by “friends” of local authorities Note: Data have been rebased, to exclude from the total those respondents who responded either DK or NA.

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 5 (source: Survey of new companies; excluding “don’t know”) LAND RIGHTS OF NEW COMPANIES, % Nizhny Novgorod Region Samara Region Saratov Region Republic of Tatar- stan Ownership 5306 Lease (direct or sub-lease) 8349 No land LAND AND REAL ESTATE PROCEDURES

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 6 (Source: Survey of new companies) Share of new companies who applied for ownership rights, % Nizhny Novgorod region Samara region Saratov region Tatarstan republic Applied Did not apply LAND AND REAL ESTATE PROCEDURES

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 7 (Source: Survey of new companies; base = those who applied for land ownership) Results of Application for Land Ownership % Nizhny Novgorod region Samara region Saratov region Tatarstan republic Obtained a land lot for ownership Obtained a land lot for lease Obtained a land lot for use-right 6000 Failure (refusal of authorities) Procedure is not over Illegal registration No answer Total 100 LAND AND REAL ESTATE PROCEDURES

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 8 Procedure for administrative allocation of a land plot for a designated business use (Nizhny Novgorod) Application to the Department of Economy and Planning Head of Municipal Administration Construction Passport Head Directorate for Architecture and City Planning Preliminary technical specifications for preliminary approval of project design and connection to engineering infrastructure State Fire Inspection Head Directorate for Architecture and City Planning Sanitary-Epidemiological Inspection Preliminary lease contact Sketch of the location of the structure Department of Economy and Planning State Judicial Committee Committee for land resources and land use planning Project cost estimate Draft of the Approval of the Local Administration Head for the construction/reconstruction permit Lease agreement for the land plot for the period of construction/reconstruction Document Head of Municipal Administration Department of Economy and Planning Issuing Authority Approving authority Registration of the land lease contract in the Book of Land Registry Draft of the Approval of the Local Administration Head for the Leasing contract on the Lease of land plot Obtaining of the proof of lease and the lease contract (a.k.a. registration of the lease in the Book of Land Registry) Committee for land resources and land use planning Total time: 273 days Flowchart of the procedure

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 9 Procedure for administrative allocation of a land plot for a designated business use Nizhniy Novgorod Obl. Samara Obl.Saratov Obl. Republiс Tatarstan Total number of steps required for completion of the procedure) Total number of Gov. offices issuing documents required for completion of the procedure 4376 Total number of Gov. offices whose approval is required for completion of the procedure 7114 Total time required for completion of the procedure (in days) Number of respondents (base) n=1 n=9n=6 Total cost of the procedure depends on the plot size. For example, total reported administrative cost for acquisition procedures for a 1,100 м 2 plot was 16.2 thousand Rubles; while for a plot of 18,000 м 2 this cost was 2,160 thousand rubles. Correlation coefficient between total time required for completion of the procedure and the number of required steps is 0,9

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 10 Head of Administration3,0 Land Cadastre Service2,5 Republic of Tatarstan Ministry of Land and Property Affairs1,8 Administration1,3 Main Architecture and Planning Directorate1,2 Republic of Tatarstan State Committee for Sanitary-Epidemiological Control0,8 Land Development Organization0,8 Republic of Tatarstan Ministry of Internal Affairs State Directorate for Fire Prevention0,8 Republic of Tatarstan Ministry of Justice State Register0,7 Republic of Tatarstan Ministry of Construction and Housing –Communal Economy0,7 Republic of Tatarstan Ministry of Ecology0,3 Bureau of Technical Inventorisation0,2 Total14,2 Republic of Tatarstan Average number of interactions with different Gov. offices required for completion of the procedure Procedure for administrative allocation of a land plot for a designated business use

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 11

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 12 Share of respondents in Tomsk who are dissatisfied with quality of services of regulatory authorities

ADMINISTRATIVE BARRIERS TO INVESTMENT: PILOT STUDY OF BUSINESS INTERMEDIARIES 13 CONCLUSIONSCONCLUSIONS Access to Land and Construction Permits are significant barriers to investment in the Russian Federation Municipalities own most of the land of interest to business, and behave as monopolist land-lords Administrative procedures, among other things, deter land privatization and development of a secondary market in land More progressive regions/municipalities have taken steps to improve administrative procedures for land privatization and related issues: greater transparency greater consistency of treatment improved efficiency