Elvira Nabiullina briefed the prime minister on the early results of the monitoring of business oversight bodies and the enforcement of regulatory documents intended to remove administrative barriers.

Ms Nabiullina said the largest number of company inspections has been carried out by agencies such as the Emergencies Ministry (fire safety and fire monitoring), the Federal Service for Supervision of Consumer Protection and Welfare (Rospotrebnadzor), the Federal Service for Supervision of Environmental, Technological and Nuclear Management (Rostekhnadzor), the Federal Migration Service and the Federal Service for Labour and Employment. To ensure that such inspections are warranted and to fight abuses in this sphere, a procedure for prosecutorial oversight has been introduced. However, better monitoring of violations is needed. Currently violations are only uncovered when businessmen subjected to unreasonable inspections file a complaint. Ms Nabiullina also said that it is necessary to expand the list of monitoring agencies that are obligated to clear their schedule of inspections with the Prosecutor General's Office.

Another topic of discussion was law enforcement practices regarding the notification procedure for starting new businesses. The minister said that the notification procedure currently applies to 20 types of business. This has been welcomed by entrepreneurs and therefore the procedure should be extended to other types business.

Transcript of the beginning of the meeting:

Vladimir Putin: We've been discussing the need to prepare a report on the measures we are taking to remove excessive administrative barriers so that we can gauge the effect of the measures we have been introducing as of late.

Elvira Nabiullina: We have prepared such a report, and we will continue to prepare one every year starting this year. It is indeed very important to monitor the effect of these measures, to see what the law enforcement practice is and how our laws work. I have some early results of our monitoring to report to you.

Our monitoring has spanned three quarters - half of 2009 and the first quarter of 2010. During this period a total of 1.6 million inspections of all types of business - small, medium-sized and large and public-sector institutions - were carried out. That does not include inspections by tax and law-enforcement agencies. The trend so far has been erratic. There were 595,000 inspections in the third quarter of 2009, 613,000 in the fourth quarter and 405,000 in the first quarter of this year. So we can already see that there has been some decline in their number.

We have taken a look at which agencies carry out the largest number of inspections, and we've found that five agencies account for 80% of all inspections.

Vladimir Putin: Which agencies?

Elvira Nabiullina: The Emergencies Ministry, which checks fire safety and fire monitoring, accounts for about a third of all inspections. Next comes Rospotrebnadzor, which is also very active. Also Rostekhnadzor, the Federal Migration Service and the Labour and Employment Service. These services account for the largest number of inspections. About half are scheduled inspections and half are unscheduled. What's more, about 54% of inspections target small businesses. Last year we introduced prosecutorial oversight over small business inspections, and now unscheduled inspections can only be carried out with the approval of the Prosecutor General's Office. We believe this measure has made a difference. Fifty-four percent seems a large figure for small businesses. However, the share of small enterprises and individual entrepreneurs make up 68% of all businesses. In other words, inspections of small businesses have become less frequent.

The Prosecutor General's Office has reported that it rejects about half of the inspection requests from supervisory bodies as ungrounded. But we discovered during the course of our monitoring...

Vladimir Putin: Half of the inspection requests are turned down?

Elvira Nabiullina: Half are turned down.

Vladimir Putin: That's a lot.

Elvira Nabiullina: It is a lot indeed. It is a good figure. Otherwise there would have been more inspections. But our monitoring has turned up an alarming figure. Only 3.8% of the audits are cleared with the Prosecutor's Office. The rest of the audits do not go through the clearance procedure...

Vladimir Putin: 3.8%?

Elvira Nabiullina: 3.8%. There are two reasons for that. First, forms of monitoring not subject to clearance with the Prosecutor's Office have been removed from the law. These include tax audits, customs audits, finances and budget, transport, anti-monopoly, labour inspection, and so on -- a fairly long list of exemptions. That is reason number one.

Number two: the requirements established by law are not met. In other words, not all the agencies coordinate their supervisory actions with the Prosecutor's Office, as required by law.

We have some agencies that we call disciplined. Rospotrebnadzor practically always clears its inspections with the Prosecutor General's Office. But, as the monitoring has shown, there are some agencies that do not comply with the procedure.

Unfortunately, we only become aware of violations when complaints are filed. In other words, we still do not have a proper monitoring system. We must create one if we are to uncover all violations.

Another of our proposals is to reduce the number of exemptions from this procedure. We have prepared amendments to the law requiring that transport monitoring, anti-monopoly monitoring and labour inspection go through the approval procedure.

Vladimir Putin: Draw up your proposals and give them to me, please. I will look into them. We have to be careful with anti-monopoly oversight. We are aware of the problem of market monopolies, especially in the regions. We need to take a careful look at the extent to which the anti-monopoly service should be limited in its activities. That said, restrictions mandated by law should be imposed on all supervisory agencies.

Elvira Nabiullina: Perhaps restrictions should not apply to those forms of supervision that call for rapid intervention and are connected with investigative activities. All other agencies should be obligated to get the approval of the Prosecutor's Office.

Vladimir Putin: Make a summary of your proposals and we will look at them together.

Elvira Nabiullina: The second aspect of the monitoring was intended to assess how the notification procedure for starting a business works in practice. We introduced a legal provision that allowed a new business to be started in certain industries without waiting for approvals and permits.

Initially the procedure applied to 13 types of business, but at the end of the year we added seven more business categories to the list. These are 20 common types of business such as public catering and retail trade. That procedure is in effect.

As of June 1 this year - the procedure has been in force since July 2009 - we had 33,000 notifications. That is the number of enterprises that were opened without going through the burdensome approval procedure.

A survey is also being conducted by the business association Opora (Opora Rossii, a national non-governmental association of small and medium-sized businesses), and Opora thinks the new procedure is effective. Ninety-seven percent of respondents say they haven't had any problems with subsequent inspections by supervisory bodies.

Vladimir Putin: In other words, the process of starting a business has been liberalized to a significant degree.

Elvira Nabiullina: But only for twenty types of business so far. We are going to increase the number of businesses covered.

Based on the findings of the monitoring, we have prepared an action plan to further improve the system of monitoring and oversight, especially law-enforcement practices.

The problem is that not all the ministries and agencies have brought their departmental rules into compliance with the law. A review should be made and all these rules should be brought up to code immediately. We have a finished plan for this, and we also have a plan to expand the notification procedure for starting a business.

We would like to move forward in 2010 and 2011, periodically reporting on the success of these measures. It is very important to make progress at the law enforcement level because this is the second package of anti-bureaucratic measures. The first package was enacted in early 2000 and yielded some results, but there were problems with enforcing the law. That is why we believe that the current monitoring provides grounds for moving forward.

Vladimir Putin: All right, let's see.