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Russian govt. highlights small business growth, pledges support

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MOSCOW, September 20 (RIA Novosti) - Small business has experienced dramatic growth in Russia, senior government officials said Wednesday, also promising further state support for the sector.

Speaking at a meeting of the Opora small and medium business association, Russian Economic Development and Trade Minister German Gref said: "Small business is the main provider of jobs. Today, 16.7 million people, or 25% of the overall employed population in the country, work in this sphere."

Gref said 1.03 million small enterprises and 2.6 million individual entrepreneurs were registered in Russia as of April 1, 2006.

He said small business has demonstrated considerable growth, adding that productivity in the sector has outpaced salary growth sevenfold in the last five years. Gref also said that in the first half of 2006, small business outpaced other sectors of the economy on all indicators.

Deputy Prime Minister Alexander Zhukov, in turn, promised maximum government assistance to the sector.

"The government will work to ensure utmost support for small and medium business," Zhukov told the non-governmental organization, which declared the promotion of small business interests and the middle class its main objective.

Zhukov said 3.5 billion rubles ($130.7 million) will be allocated from the budget in 2007, compared with 2.6 billion rubles (more than $97 million) last year. He said assistance will also come through improvements in credit policy.

The growth of small business has been slower in Russia compared with other transitional economies, above all the Czech Republic and Hungary. Factors hampering its development include business-averse legislation, widespread corruption, instability, high interest rates, and low incomes.

In June, Gref said promoting small business and keeping monopolies in check was crucial, since "every monopoly nurtures poverty in the country."

The share of large businesses and corporations half-owned by the state is very high in Russia, particularly in the energy sector, the country's main source of revenue, which is to some degree a legacy of the planned Soviet-era economy.

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