Executive Guide to Doing Business in Russia

OVERVIEW OF RUSSIA HEALTHCARE IN RUSSIA DOING BUSINESS IN RUSSIA
Overview of Russia
Major cities
Population growth
Age structure
Life expectancy
Gross Domestic Product
Income per capita
Biggest imports/exports
Major trading partners
Health expenditures per capita
Medical device market size
Government expenditure on healthcare
Private expenditure on healthcare
Out-of-pocket expenditures
Physicians & hospital beds per 1,000 people
Doing business with Russia
Documents needed to import
Time to import into the Russia
Burden of customs procedure
Logistics performance index
Enforcement of contracts
Exchange rate history
Total tax rate

Overview of Russia

GENERAL STATISTICS
Capital: Moscow
Language: Russian
Currency: Russian ruble
Population: 143.6 million (2013 est.)

Officially known as the Russian Federation, the country of Russia is the largest country in the world, covering one eighth of the world’s habitable land, and the ninth most populous nations. It functions as a federal semi-presidential republic, extending across nine time zones from the north of Asia to the east of Europe. Income from extensive mineral and energy resources have helped the country become the eight largest economy by nominal GDP and sixth largest by purchasing parity. Since the breaking of the USSR in 1991 into 15 states, Russia shifted its focus to acting as a market-based centralized state with a globally integrated economy. Current challenges for the country include large capital outflows, as well as a diminishing workforce and corruption. [1][2]

Major cities in Russia

LARGEST CITIES (millions)
Moscow – 11.5
Saint Petersburg – 4.8
Novosibirsk - 1.4
Yekaterinburg – 1.3
Nizhny Novgorod – 1.2

Russia’s population is the densest in the European part, near the Ural Mountains and in southwest Siberia. 74% of the population resides in urban areas, Moscow and St. Petersburg being the country’s biggest cities. In 2010, Russia had 13 cities that had a population of more than 1 million.

Population growth in Russia

Russia’s population was at an all-time high in 1991 (148.6 million), right before the breakup of the Soviet Union. After this, the country experienced a decade-long population decline of around 0.5% per year caused by emigration, low birth and high dead rates. Following an improved healthcare system and more child births, population started to increase in 2010 and continues to do so, at a rate of 0.4% on average per year. In 2012, Russia’s population increased by 292,400 people.[3]

russia population growth

AGE STRUCTURE
Age 0-14 - 15%
Age 15-64 - 72%
Age 65+ - 13%
Median age - 38

Age structure in Russia

Between 1959 and 1990, the number of people aged 60 and over almost doubled in Russia, being estimated that by 2015, one out of almost three people in this age group will be over 75. Russia’s current population of seniors (aged 65 and over) is 13%, considered by international standards an old population. The number of people above the working age has increased from 2006 to 2012 to about 22.7% of the population or 32.4 million. [4]

russia age structure

LIFE EXPECTANCY
Male/female: 63/75
Globally: 68/71

Life expectancy in Russia

In 2011, Russia’s life expectancy indicator was the highest it had ever been (75 for females and 63 for males. Preliminary results from 2012 showed a downward trend, with average life expectancy for both males and females dropping from 69.83 years in 2011 to 69.70 years. Over the course of 20 years, from 1990 to 2010, there was no considerable increase in life expectancy compared to over 100 countries. These statistics are mostly due to 60% of men smoking, half of the population being overweight and consuming high amounts of alcohol. [6]

russia life expectancy

INCOME
GDP
US$ 1,542 trillion (ranked 8th)

Russia's Gross Domestic Product

The Russian economy was one of the hardest hit by the 2008-09 recession after 10 years of growth. This decline stopped mid-2009 and the economy started the grow again in the third quarter of 2009. Russia achieved a 7% growth during Putin’s first two terms as president (2000-2008), a growht that is expected to drop at 2.5% a year to 2030 as Russia’s economy grows more slowly than the world average. [7]

russia GDP

Income per capita in russia

GDP PER CAPITA
US$ 14,247 (ranked 47th)

Russia’s per capita income, according to 2012 data from the World Bank was USD 14,937, the highest of the BRIC countries, exceeding that of Brazil (USD 11,340), India (USD 1,489) or China (USD 6,188). It increased by 528% in the past 10 years, one of the highest growth among the world’s largest economies. [8]

russia GDP per capita

Biggest imports/exports in Russia

Russia is the world’s leading oil producer after it surpassed Saudi Arabia in 2011; it also holds the second largest reserves of coal and gas reserves. The most exported goods are petroleum and its byproducts, gas, metals and wood while the most imported are machinery, vehicles, pharmaceuticals and metal products. Around two thirds of the medical device market is supplied by imports from Germany, the USA and Japan. Among the most imported medtech products are diagnostic imaging devices, neurosurgery, cardiosurgery and telemedicine devices.[9] [10]

MAJOR TRADING PARTNERS
Imports come from:
China – 15.5%
Germany – 9.5%
Ukraine – 5.5%
Exports go to:
Netherlands – 14.4%
China – 6.4%
Italy – 5.3%

Major trading partners for Russia

Russia is part of CIFTA, a free trade agreement with several former Soviet republics: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Republic of Moldova and Ukraine. A free trade agreement has also been signed with Serbia in 2000 while FTAs are currently being discussed between Russia and Israel, New Zealand and India. [11] [12]

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Healthcare in Russia

Russia provides all its citizens with free healthcare through the Mandatory Medical Insurance law introduced in 1996. The structure of the Russian healthcare system changed dramatically, from a highly centralized one inherited from the Soviet Union to a decentralized one, divided on a federal, regional and municipal level. Apart from a guaranteed package of free services covered by the government, a Voluntary Medical Insurance (DMS) is typically offered to employees by their companies and covers additional services.

Prompted by a health decline of the Russian population since the collapse of the Soviet Union, mainly due to high alcohol consumption, smoking or stress, the Russian government injected through the National Priority Project (NPP) more than USD 12 billion between 2006 and 2009 in the healthcare system. This lead to an increase in salaries for physicians, equipped hospitals and clinics with advanced equipment, built new medical centers and launched nation-wide vaccination programs. A new healthcare reform that aims to improve access to medical services and boost the purchasing of diagnostic equipment has been signed, aiming to invest up to USD 15 billion from 2011 to 2014. [13] [14]

TOTAL HEALTH SPENDING:
US$ 140 billion (2011)
Health spending per person:
US$ 5,939
Growth from 2006 to 2011: +78%
Total health expenditure on health as % of GDP: 9%

Health expenditure per capita

Health care spending per capita in Russia has grown by 120% from 2006 to 2011, but still remains low compared to other world economies. It is one of the highest of the world’s emerging economies, but remains low compared to the European Union average ($2,908) or the USA ($8,607). [15]

health expenditure capita russia

Government expenditure on healthcare

59.72% of healthcare costs were paid for by the government in 2011, up one percentage, from 58.66% in 2001. Government expenditure on healthcare in Russia is similar to that of Brazil, being one of the highest of the BRIC group of countries; it is also higher than Mexico (49.45%) and the USA (45.94%). [16]

general expenditure health russia

Private expenditure on healthcare

In Russia, 40.28% of healthcare expenses were covered by private funding sources in 2011. Absolute private healthcare costs are expected to rise within the following years, a growth driven by inefficiency in public hospitals and low salaries given to doctors.

private expenditure health russia

Out-of-pocket expenditures

The burden of out-of-pocket expenditure for Russians has increased along the years, from 73.74% in 2001 to 87.85% in 2011. The out-of-pocket expenses as a percentage of private healthcare costs is similar to Mexico (92.02%), India (86.04%) and China (78.83%) but higher than the USA (20.89%) or Brazil (57.76%).

out of pocket expenditure health russia

MARKET SIZE
US$ 11.7 billion (2010)
Number of hospitals: 1,340
Growth Potential: 2 (1 - low; 5 - high)

The size of the Russian medical device market

Russia is one of the top 20 largest medical device markets, being valued at $6 billion. The country inherited a strong hospital infrastructure from the USSR that is currently being modernized under health care reforms approved by the government. The medical device sector is currently made up of 73% imports, mainly coming from Germany, the USA, Japan and China; the value of imports had a notable increase until 2008, when the country was hit by the global recession. Imports still make a large part of the market, as local producers suffer from lack of capitalization. The Russian medical device market is expected to grow six-fold by 2020, as two thirds of hospital equipment is obsolete and needs to be replaced. This growth will also be encouraged by the Ministry of Industry and Trade, which is planning to increase financing and encourage the medtech sector to develop and innovate. [17] [18] [19]

Physicians & hospital beds per 1,000 people

There are 4.3 physicians and 8.5 nurses available for every 1,000 people in Russia. The number of doctors is one of the highest for the BRIC countries, and exceeds the EU average (3.3 for every 1,000 people), as well as the USA (2.42 physicians per 1,000). [20] [21]

physicians russia

According to the latest World Bank data, Russia had 9.7 beds available for every 1,000 people in 2006, a number above the European Union average of 5.8 and that of the USA, with 3 hospital beds. It is also the highest number of hospital beds in the BRIC countries.

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Doing business in Russia

Doing business in Russia

Russia is the eight largest economy in the world by nominal value, its power residing in its vast natural resources such as oil, natural gas or coal. In terms of competitiveness, the Russian economy ranks 64th out of 148 economies surveyed by the Global Competitiveness Index, up 3 positions from the previous year. This puts it behind India, Brazil, Mexico as well as the USA. Doing Business also ranks the Russian economy low on the ease of doing business, placing it below Mexico and the regional average for Europe and Central Asia, but ahead of other BRIC countries such as China or Brazil. [22] [23] [24]

ease of doing business russia

Documents Needed to Import

Manufacturers are required 10 types of documents to product into the Russian Federation. This number is above the average for the Europe & Central Asia region (8), as well as the OECD high income average.

  • Acceptance order (priemo-sdatochnii order)
  • Bill of Lading
  • Commercial invoice
  • Certificate of conformity (sertifikat sootvetstviya)
  • Customs import declaration
  • Consignment note (tovaro-transportnaya nakladnaya)
  • Document of warehouse (dokument ucheta skalda)
  • Letter from the bank certifying opening of letter of credit (izveshenie/dokument banka)
  • Packing list
  • Sales purchase contract

documents to import russia

Time to import into Russia

It takes 21 days to import a product into Russia, 5 less than the Europe & Central Asia average and 11 more than the OECD high income average. By contrast, it takes 5 days to import into the USA, 13 into Brazil and 11 days into Mexico.

time to import russia

Burden of customs procedure

Russia joined the World Trade Organization in 2012, thus agreeing to bind all tariffs on medical equipment; after the implementation of WTO commitments, Russia’s average tariff for medical equipment will amount to 4.3% (ranging from 0 to 7%), down from the current average of 15%. [25]

Logistics Performance Index – 3.73

The Logistics Performance Index (LPI) is the average score for a country reflected by the efficiency of custom procedures, trade and transport related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments and timeliness of shipments in reaching their destination. Russia has an LPI of 2.56 and is ranked 95th, behind all the other BRIC economies. [26]
1 = Low; 5 = High

Enforcement of Contracts

Russia stands at 10 on the ease of enforcing contracts, out of 189 countries surveyed by Doing Business. This puts it ahead of the BRIC economies, as well as ahead of the regional average for countries in Europe and Central Asia. Enforcing a contract in Russia takes 270 days, costs 13.4% of the claim and involves 36 procedures.

russia enforcement contracts

Exchange rate history

For a detailed overview on how the the Russian ruble has moved in recent years, please see the graphic below. [27]

Total tax rate (% of commercial profits)

A Russian company pays 50.7% of its profit to tax authorities every year. 7 tax payments and 177 hours a year are required for filling taxes. This numbers put Russia in the 56th position in terms of the ease of paying taxes, ahead of Brazil, China, India or Mexico.

russia tax rate

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Data compiled January 2013. Updated yearly

If you see inaccurate data in this summary, please helps us by reporting outdated or missing documents.