Photo: Itar-Tass The road leading to foreign investment in Russia – investment which is constantly being called for by the nation’s leaders – is solidly blocked by three main obstacles. The first is the country’s overwhelming level of corruption.
Medvedev spoke of it openly and categorically in his statement, “corruption remains a factor that impacts the economic situation as a whole. Corruption’s stranglehold is not loosening but holds the entire economy by its throat”.
The Russian investment climate’s second flaw lays in the unpredictable and spontaneous decisions or actions of various government agencies. Existing legislation, regulations and orders can be arbitrarily terminated or modified, thereby breaking down the entire structure of streamlining business activities.
One might even say that such arbitrary behaviour on the part of the authorities interferes in any orderly co-operation with foreign partners and often instigates the investors in question to close down their businesses.
The third major obstacle in the list of investment issues is the poor quality of services government agencies provide for investors, which leave much to be desired.
Considering that Russia, its economy and infrastructure lack foreign investment and that top officials encourage foreign businessmen to channel funds into various Russian industries, the necessary official services to investors should be firstrate.
But this is nowhere near the case at this point in time.
The aforementioned negative aspects of Russia’s investment climate hamper and even block interaction with foreign business communities. Therefore, the current situation should be changed.
“We must do everything possible to persuade the Russian government to urgently change the situation”, said Dr. Klaus Mangold, the Chairman of the Committee on Eastern European Economic Relations.
Russian leadership heard many similar appeals made by foreign businessmen who – once having decided to cooperate with Russia – faced corruption and bureaucracy in both the nation’s capital and its provincial regions. Nevertheless, it now appears that the Kremlin didn’t turn a deaf ear to their appeals for reform.
Dmitry Medvedev recently announced the implementation of a special programme to generally improve the national investment climate, promising due regard and consideration to advice or criticism from those foreign business circles concerned. The programme envisages ten priority measures aimed at establishing favourable conditions for businessmen, entrepreneurs and bankers who are invited to set up businesses in Russia.
The document specifies the Russian President’s instructions that government agencies promptly enact special means to provide proactive consideration of corruption complaints.
The programme furthermore proposes taking necessary steps to repeal laws and regulations issued by the Ministry of Justice in cases where they unnecessarily obstruct investment activities.
Starting in May, each Russian Federal District will also be assigned a special investment department, whose role will primarily consist of assisting companies in their dealings with Russia’s executive authorities and to help them carry out private investment projects.
The programme also envisages establishing a Russian direct investment fund, whose primary purpose would be to attract direct foreign investment.
The fund would act as a co-investor for foreign investment funds and large companies launching important investment projects in the Russian economy.
The state wouldn’t participate in managing the fund but would be willing to contribute to the fund’s capital in conjunction with other partners.
The document is also focused on improving the quality of services most commonly used by the foreign investment community.
Therein lie the outlines of a plan to carry out measures for generating more active involvement on the part of foreign investors in the Russian economy. The main objective is to now fully implement the programme and make it a reality – a move that the foreign investment community has been long awaiting.
