Page 14 - RusRPTMar19

Digital Economy
1.63 trillion
Housing and urban environment
1.066 trillion
International cooperation and exports
956.8bn
Education
784.5bn
Science
636bn
Support for SMEs and entrepreneurship
481.5bn
Culture
113.5bn
2.5 Kiosks are back as SMEs come into focus
In the first years following the collapse of the Soviet Union kiosk sprouted up in cities across Russia like mushrooms after the rain. With most of the big Soviet stores bankrupt the kiosk became the main conduit of retail, stocked by the “suitcase traders” (individuals that flew abroad and filled their suitcase with hard-to-find products in Russia that they sold through a kiosk).
However, as pavements became ever more crowded by unregulated kiosks that of course never paid a penny in tax eventually the authorities turned on them. Mayor Yuri Luzhkov took the first swipe at kiosks in the 90s and even the new mayor Sergey Sobyanin was still bulldozing kiosks only last year.
However, on February 11 Russia’s Deputy Minister of Production and Trade Victor Evtukhov made upbeat comments on the rollout of smaller formats retail formats as part of the government drive to encourage the growth of small and medium-sized enterprises (SMEs). It seems that the kiosk is back.
The government is hoping making it easier to get into retail easing the restrictions on kiosks will increase retail trade turnover, lead to a diversification of distribution channels for suppliers, an increase in taxes, and could create up to 250,000 new jobs, Evtukhov said.
The explosive growth of Russia’s supermarket chains has come to an end as organised retail starts to run up against structural constraints. The leading chains have switched from expansion to grab more market share to improving profitability and have even begun to close some of their more unprofitable stores.
2.6 New round of US sanctions looms
Sanctions are back. There were four rounds of sanctions in 2018 that clearly did a lot of damage to Russia’s business and investment case, but ultimately
14 RUSSIA Country Report March 2019 www.intellinews.com