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Analysis & Opinion
06.05.10 Foreigners’ Paradise
By Tai Adelaja

Since the “perestroikan” days of Mikhail Gorbachev, modernizing Russia has become a thankless job. But President Dmitry Medvedev has decided to give it another try, even if it means shrugging off approval ratings and rumor mills. Through a number of eye-catching new laws and pet projects, the president has tried to lure foreign nationals to help bolster his modernization program, a sharp turn-around from the patriotic self-interest and self-reliance pervasive under his predecessor.

At Medvedev’s bidding, legislators will debate and probably ram through a raft of amendments on Friday to the “Law on Legal Status of Foreign Citizens in the Russian Federation” that experts say could turn Russia into “a safe haven” for highly qualified expatriates.

Last week, the State Duma's Committee on Constitution and State Affairs approved a series of amendments to article 13.2 of the Law after the president pushed hard to see some activity on the planned Skolkovo high-tech innovation hub, Kommersant wrote on Wednesday.

While article 13.2 initially set out broad outlines for the employment of foreign workers at all levels of the labor market, it has now been amended to regulate the employment of highly qualified foreign specialists.

Under the changes, expected to be adopted by the more-than-compliant legislature on Friday, skilled foreign workers will be able to obtain Russian work permits without going through the quota system set by Federal Migration Service (FMS) as long as there is a written request or an invitation from the host. The bill says that immigration authorities cannot legally deny such requests.

However, nonresidents or guest workers that do not fall under the “highly-skilled specialists” category will continue to be hired to work in any given region after going through a complicated quota system which grants rights to invite foreign workers and issue them with work permits.

The legislative shake-up also significantly reduces the time limit for processing applications for work permits to 14 days for skilled specialists. The process currently takes from 12 to 24 months to complete.

“Work permits for highly qualified foreigners would be granted for a period of up to three years, instead of the current one-year period and can be extended an unlimited number of times,” Vladimir Pligin, Chairman of the State Duma Committee on Constitution and State Affairs, said.

“Hired skilled foreign specialists and their families will be entitled to residence permits without preconditions under the new law.”

However, guest workers not covered by the law can only obtain visas valid for one year, which can be extended for another year on expiration, he said.

In addition, skilled foreigners hired under the modernization program would only pay the flat tax rate of 13 percent, less than half the 30 percent currently being paid by non-residents.

The bill also removes other pesky psychological problems that have long been the lot of guest workers in Russia.
Newly-arrived highly qualified workers will be exempted from having their mug shots taken at immigration centers and they don’t have to partake in the immigrant fingerprint program, the Kommersant business daily wrote on Wednesday. If passed, the law is expected to be effective starting January 1, 2011.

Proposals for a radical overhaul of Russia's immigration rules were first put forth by officials in the Ministry of Economic Development, with the aim of attracting the highly qualified workforce needed to jumpstart Medvedev's modernization program.

However, the new radical amendments were prepared by the Federal Migration Services. FMS spokesman Konstantin Poltoranin said the new law is modeled on German immigration laws which give preference to highly qualified specialists who make up just about 3 percent of the country’s foreign workforce.
How qualified are you?

For some inexplicable reason, the new bill describes a highly-skilled foreign specialist as one who earns at least 2 million rubles ($67,700) a year.

Pligin said the government reserves the right to reduce or increase this amount as it sees fit, but some state officials said the salary cap will most likely be reduced only for foreigners invited to work at Skolkovo.

Yevgeny Reyzman, a partner at law firm Baker & McKenzie, said the threshold was set deliberately high in order to deter companies from hiring expatriates for jobs that Russians could do.

“The government wants to apply these rules only to attract those considered to be highly qualified top managers, that is, those that earn an average salary of about $5000 a month."

However, other experts have said that the provision could give room for different interpretations and abuse.

"This [provision] is a bit odd and it also sets the stage for some sort of abuse because people can just state whatever salary there is," said Laura M. Brank, managing partner and head of the Russia practice at Dechert LLP. "Companies may also not really be getting potentially highly qualified people if they consider the salary to be too high."

So far most of the new government’s shake-up of immigration legislation appears to be directed at making a success of the planned International Innovation Centre in Skolkovo.

president Medvedev, who once chaired the International Advisory Board at Moscow School of Management Skolkovo, has consistently said that he is committed to making the planned science city – dubbed “Russia’s Silicon Valley” - a success story.

At a meeting on modernization last month, Medvedev offered big incentives for innovative firms to join the new hub.
“Tax breaks are a key issue for business. Skolkovo residents will pay no profit tax, VAT or property tax for ten years,” Medvedev said, as reported by Russia Today.

However, in order to remove any misapprehensions concerning the president’s modernization goals, the new law must have broader appeal so that other companies can benefit from its application, experts say.

“It is not clear if the law could be applied to other areas outside the high-tech sector, although theoretically the law could benefit not just scientists and engineers who work at Skolkovo but also top managers in other companies,” Reyzman said.

He said, however, that there is a serious flaw in the new bill which will prevent its beneficiaries from working in other regions even for the same company. “This bill seriously limits mobility because it only provides for foreign specialists to work in a particular region and for a particular company,” Reyzman, said.

Brank said that the main drawback of the law is how to define who qualifies as a highly qualified foreign specialist.
“If the goal is modernization, then the definition of a highly-skilled specialist is arguably very broad,” Brank said. "But it could also be interpreted narrowly because, as with all things in Russia, the law can look good in the book but when enforcement depends on discretion from the authorities, it is open to abuse."

Brank said it makes sense to make Russia more open not just in the high-tech sector but in other areas such as mining and oil extraction, “There are a lot of things to be done, including improving the regulatory environment, because what really scares many investors from coming into Russia are all the regulatory hurdles,” Brank said.

“There is a lot of expertise abroad but there is also a lot of nervousness about hiring foreigners to work in a challenging environment, because every year you have to renew the work permit. I do think that having a regime that recognizes that bringing in foreign specialists may help to develop an industry – no matter what that industry is – is a good thing.”
The source
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