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Sanctions have dealt a severe blow to the most vulnerable segment of small and medium-sized businesses

Sanctions have dealt a severe blow to the most vulnerable segment of small and medium-sized businesses

RSBI rating level (index of business activity of small and medium-sized businesses) Russia has been declining for the second month in a row, there is a decline in business activity of SMEs.


Wide view image of businessman hand stopping collapsing dominos with his finger. Conceptual of business strategy and solution.

Member of the General Council of Business Russia, Head of the Expert Center for Criminal Law Policy and Execution of Judicial Acts Ekaterina Avdeeva expressed her opinion, noting the strong impact of sanctions pressure on the economic system and the state of business:

“Unprecedented anti-Russian sanctions dealt a serious blow to the most vulnerable segment of small and medium-sized businesses: in many areas of activity, revenue has fallen sharply, but entrepreneurs retained the obligation to pay salaries, repay loans, deal with contractors. There was a serious cash gap, the number of companies is increasing, allowing late payments. The government is taking important and large-scale support measures, however, not all of their potential is realized by business - out of ignorance, due to distrust of the state, small amounts of support and excessive reporting. Government assistance to SMEs will have a beneficial effect in the long term, however, there are risks, that the fiscal and credit burden will increase, as well as administrative costs after the end of external pressure on Russia. Thus, Measures need to be envisaged already now to overcome the long-term negative effects of the economic crisis and adapt SMEs to the new conditions.

SMEs are less resilient to macroeconomic shocks and, in this regard, have chosen a wait-and-see attitude. Besides, it is often difficult for a small company to receive funds, especially if she started working recently or does not work completely officially.

Here we return to the question of the vector of business behavior, which should be exclusively in the legal field, for that, to, First of all, minimize legal risks and, Secondly, rely on government support measures.

But that's not the only factor.. Entrepreneurs fear fluctuations in the geopolitical arena and do not fully understand, how to protect and structure your assets. In this regard, when analyzing and implementing measures to stimulate economic development, it is necessary to return to the issue of ensuring the proper administration of support measures and stimulation of investment activity simultaneously with the verification of critical factors, including those, that impede the development. For entrepreneurs, this can become a universal scheme for protecting assets from prohibitions and restrictions., and for the state - the key to a reliable favorable business climate.

Much has already been done in this direction., especially in terms of control and supervision activities, which refocused on the prevention and prevention of offenses by both parties of legal relations, choosing a vector for a risk-based approach. However, there are threats in some areas: one side, violations of guarantees of observance of the rights of entrepreneurs during the investigation of crimes, on the other hand, insecurity of business from illegal actions of unscrupulous players.

In particular, the Expert Center and the media regularly receive information about the use of the bankruptcy tool to carry out a raider takeover. Usually, about corporate disputes., disputes between counterparties using formally civil law instruments, when the intent to seize assets and business was initially formed. Most commonly used collusion with key employees, accumulation of debt obligations, conceptual arrangements, that weaken the vigilance, use of administrative resource, and then - tough and uncompromising actions. Separate egregious cases go to the federal level, how, for example, the story of the Vasyurinsk MPK in the Krasnodar Territory that was reported to the media, or require our Expert Center to conduct field meetings in the region for an in-depth analysis of the situation on the ground with the participation of the government and law enforcement agencies of the region, for example, in the Saratov region. People suffer as a result of the redistribution of business (job loss), agricultural grounds, revenues to the economy of the region and the federal budget. Participants in the conflict, who consider themselves victims and lose their property and company, subsequently subject to colossal subsidiary liability, transferring assets for a significantly larger amount. In almost all cases, they complain about the corruption factor from the local judiciary. Increasingly frequent information of this kind actually gives reason to believe, that the new format of asset acquisition, which falls under the concept of "raiding", is a systemic problem, which needs close attention.

Together, all these factors indicate a decline in business activity.. At the same time, it is obvious, that they require attention and competent management by the state, to ensure activity in the SME segment due to the fact that, that it is he who has high hopes for a creative approach. Despite less stability, SMEs are often more creative due to the absence of many complicated bureaucratic procedures, that are inherent in big business. It is more mobile and responsive to suggestions and new challenges. It is possible to unlock the potential of SMEs through proper administration, informing businesses about existing support measures and improving their financial and legal literacy.

Maybe, in-depth analysis will identify other factors and indicators, which will make the process of investment activity more manageable”.


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