Russian investor forum focused on beneficial partnerships for investors

Fostering better partnership between international investors and investment opportunities in Russia was the focus of the First Moscow International Foreign Investment Forum.

Foreign investors may be nervous of Russia, but they are still interested.

The First Moscow International Foreign Investment Forum attracted more than 1,000 delegates from across the world to discuss investment in the capital and the regions, the formation of a financial centre in Moscow, development of local legislation and protection for foreign investors. The emphasis of the forum was on forming a partnership between Russia and the West, as well as creating a new system to support Russian exports and investments abroad.

Russia’s deputy prime minister Arkady Dvorkovich, in an opening speech, said foreign investment flows into Russia are increasing. He expects regional investment activity to pick up, leading to increased competition between Russia’s regions. Many of these regions were represented at the forum, including the Republic of Tatarstan and the Kaluga Oblast. According to the fund organisers, follow-on meetings between investors and regional representatives are already on the cards as a result.

Regional importance

Bruno Balvanera, head of regional development at the European Bank for Reconstruction and Development (EBRD) in Russia, highlighted the importance of regions.

He told a panel session that the bank works with 55 of the 83 Russian regions and directs 75% of the capital allocated to Russian projects into regional developments. However, he noted that only 27% of the bank’s activity is through foreign investors; the rest is though local players.

To make the partnership with foreign investors work, changes are still needed, including the development of a solid investor protection system. Petr Fradkov, Vnesheconombank board member director general of the Russian Export Credit and Investment Insurance Agency, said: “Foreign investors are ready to go into Russia with the right partner and appropriate knowledge of the market.”

Boris Titov, presidential commissioner for entrepreneurs’ rights, revealed plans for a business ombudsman institute. “We are trying to develop a system of business protection, so that businessmen may operate comfortably in our country. Today we are preparing the legal framework for the institute,” he said.

The initiative is part of an effort to improve Russia’s place in the “ease of doing business” ranking of the World Bank. Currently in 120th place of the 183 countries ranked, it has already risen by four slots in this year’s ranking. According to the bank, Russia was among the 25 countries that made the most progress over the past year on changing the regulatory environment. President Vladimir Putin’s agenda includes an ambitious plan to lift Russia into the top 20 by 2018. This would involve creating a platform for business for everyone investing in the country, not just the foreigners, the forum delegates noted.

One challenge for foreign investors in Russia is the strict visa regime. Another is the judicial system, which suffers from a continued lack of trust from both Russian investors entering the markets of other regions and foreign investors coming to Russia.

Nikolay Nikiforov, minister of communications and mass media, said the government objective “is to develop equal conditions for all market players.” This is already happening, according to foreign investors and companies that were represented at the forum.

For example, Joseph Pühringer, head of government of Upper Austria, and Ulrike Wolf, director of the department of foreign economic relations and regional marketing of Bavarian Ministry of Economic Affairs, spoke of their positive experiences of working with investors in Russia. But to build up a truly strong position in the global market, Moscow needs to improve communications with its Western peers. This includes improving the image of the country in the eyes of potential foreign investors.

Cheremin said: “Compared with other emerging markets, Russia is already in a better position. There are such objective advantages as resource base, human potential and sustainable economic growth. But the information flow about our country is dominated by negative news, and only little attention is paid to positive changes.”

As the forum closed, the majority of delegates agreed an annual platform for foreign and local investors to meet and discuss opportunities that would benefit the local market.

 

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