Nomura Research Institute compares Moscow and Tokyo economic support measures during the COVID-19 pandemic

Moscow, Russia, 2020-Dec-23 — /EPR Network/ — Experts of the Nomura Research Institute (NRI), the largest economic research and consulting firm in Japan, compared the economic support measures implemented in Moscow and Tokyo so far during the COVID-19 pandemic and came to the conclusion that the basic anti-crisis economic policy, while quite similar, has numerous features worth noting for comparison.

Japan experts emphasize that supporting small and medium sized enterprises (SMEs) is of strategic importance both in terms of ensuring social stability and preserving the national potential for economic development. Moscow has offered a comprehensive set of various support initiatives for the SMEs, namely interest-free loans, cancelation of rental rate for municipality real estates, deferred tax payments, etc. In Japan, the main measures were focused on interest-free loans to sustain current activities of SMEs, with some interesting cases. For example, Tokyo’s Shinjuku District has provided subsidies for the development of anti-crisis business plans, as well as for the implementation of recommendations for a safe trading environment in line with the guidelines for infection prevention in Tokyo.

“Initially, Japan was better prepared for the threats of a pandemic, thanks to the established practice of wearing masks during time periods with an increased risk of the spread of infections and viruses. However, this was more difficult for Russia and Moscow as a key metropolis. There was much less time to introduce new epidemiological rules, yet Moscow showed an example to all regions of how to quickly introduce anti-crisis measures to stabilize the situation,” noted Andrey Rodionov, the Head of the Moscow branch of NRI.

The Moscow government has relied on working with the main assets – leases, the costs of which are very significant for SMEs. In the case of urban real estate and land plots an obvious and simple method was used – the cancellation of rent for the period of suspension of activity. At the same time, a more interesting approach was applied to private real estate – if the rental rate was reduced by at least 50%, the owners could expect to be compensated for 100% of the property tax.

“During the period of severe restrictions, we managed to stabilize the economic situation in the city. The main instrument for supporting the economy were four packages of anti-crisis measures worth about USD 1.2 billion, which were developed on the basis of business community proposals. These include deferred tax payments, cancelation of rental rate, subsidies and grants, as well as concessional loans, which continue to remain in force until the end of this year. In particular, thanks to support measures, the city’s economy adapted to operating in the prevailing conditions, and at the moment most of the industries are showing signs of recovery. Thus, the total turnover of trade and service enterprises has stabilized, and even taking into account the deteriorating epidemiological situation at the end of October, it slightly deviates from the comparable period a year earlier and demonstrates growth to the pre-crisis level. We managed to maintain the production rate, comparable to that of last year, while the industrial production index also increased. Now, thanks to a well-prepared healthcare system and compliance with safety measures, we manage to avoid tough restrictions, while we closely monitor the epidemiological situation and, if necessary, consider the possibility of introducing additional support measures for enterprises,” said Vladimir Efimov, Deputy mayor of Moscow for economic policy and property and land relations.

Despite the budget losses in the form of lost taxes, fees and increased social burden, Moscow also did not stop the implementation of key economic programs.

The coronavirus pandemic and, as a result, the widespread restriction of social contacts, the mass transfer of employees to remote work, the transfer of many useful functions to digital – all of this once again confirms the importance of developing the IT industry and exchanging information and technologies with foreign partners. In this regard, the support measures outlined above are particularly valuable.

Another important aspect is that the aforementioned support measures were available online through various IT platforms, including public service portals, which is an innovative approach even by Japanese standards.

A more in-depth comparison of support measures in Moscow and Tokyo can be obtained upon request to msk@nri.co.jp

Founded in 1965, NRI is a leading global provider of system solutions and consulting services, including management consulting, system integration, and IT management and solutions for the financial, manufacturing, retail and service industries. Clients from all layers of these individual industries partner with NRI to tap NRI’s research expertise and innovative solutions across the organization to expand businesses, design corporate structures and create new business strategies. NRI has more than 13,000 employees in more than 50 offices globally including New York, London, Tokyo, Hong Kong, Singapore, and Australia. NRI reports annual sales above $4.8 billion. NRI is rated “A” by S&P Ratings Japan.