Global Trade Alert

Since May 2013, Russian SMEs enjoy facilitated access to public procurement.
On 29 May 2013, the Prime Minister of the Russian Federation, Mr Dmitry Medvedev, signed Order Nr 867 which extended "the access of small and medium-sized businesses to the procurement of infrastructure monopolies and state-owned companies."
 
Small and medium-sized enterprises (SME) in Russia will now be able to become a "full-fledged" suppliers of goods and services for government organisations. The government has decided to expand considerably SMEs participation in public procurement by requiring from the state organisation to order from them as a minimum 25 per cent of their total supplies.
 
The volume of public procurement in Russia is huge: currently it is not less than seven trillion Russian Rubles per year. SMEs account for less than 10 per cent of the total volume of public procurement. According to experts, this is due to the orientation of the procurement system in the interests of big business, their subsidiaries and affiliated companies. The present state order marks a tendency towards a policy change in favour of SMEs, with the following concrete targets to be met in 2018 in annual terms: an increase of the SMEs share in public procurement from 10 to 25 per cent; 2) an increase of the share of the direct purchases from SMEs from 2 to 10 per cent.
 
For the time being, this state order does not specify how will be achieved the intended SME participation targets in public procurement between 2013 and the set deadline in 2018. However, this state initiative may well create opportunities for small scale foreign investors, because currently the Russian government prepares amendments that foresee foreign nationals to be allowed to create a small and medium enterprise (SME) in Russia without a limitation of their stake in the authorised capital (see related GTA measure No. 4128 below). Once such foreign investment is allowed, this measure involves no preferential treatment of local firms.
 
According to the Chamber of Commerce and Industry of the Russian Federation, small and medium enterprises operate in the following main sectors: retail trade (46 %), immovable property transactions (19 %), construction (10 %), processing industry (7 %), and transportation (5 %).