The Association of European Business is mainly a lobbying organization, isn’t it? Can you describe the main targets of its lobbying efforts? We now have 560 companies in the Association, mostly fromthe European Union and Switzerland, but also from the US and some fromRussia, India, etc. Themain aim of the Association is to monitor how the business environment is developing in Russia and to discuss how it can be improved with the Russian authorities at the highest level. We are currently discussing, for example, the question of migration – which is becoming a very serious issue for business people travelling between the EU and Russia. We also discuss problems of legislation, the general political framework and problems in the investment climate.
The EU is Russia’s main source of direct foreign investment and thus this dialogue is vitally important for all sides.
Do you have easy access to high-level officials in Russia? Gaining access to top governmental officials and the chairmen of key Duma committees is not difficult for us. Generally, Russian officials tend to be fairly open.
Furthermore, we organise regular business missions to the regions to give our members the chance to meet with regional administrations and businesspeople.
Our last mission was to Nizhny Novgorod.
According to the AEB annual report foreign investments in Russia are growing every year. What are the most attractive sectors of the Russian economy for European investors? The growth of European investments for the last 7-8 years represents solid proof of improving economic relations between Russia and the European Union. Russia’s annual growth rates of 6-7% make it a prime destination for European companies.
As long as businessmen see that the situation in Russia is stable they will continue to think about investing here.
Themost attractive sector is surely energy.
But there are other promising areas too: the automobile industry is an obvious example. As we have seen, recently Volkswagen opened a new plant in Kaluga, and Toyota in Saint Petersburg. Meanwhile, the consumer market in Russia is also growing and increasingly draws investors from Europe. Companies such as Nestle have dozens of factories here.
What obstacles do foreign investors have to overcome to realize their investment projects? The general mood among European investors in Russia is positive. Certainly there are some bureaucratic obstacles.
One businessman told me that to open his plant he had to obtain 120 stamps and signatures in order to come to a point where they could really pass on to the construction stage. Obviously, it takes a lot of time and money. There is also the problem of corruption. This may not be a huge headache for the big companies - they can always say “no” when they are put under pressure to pay bribes, etc. It is, however, a real obstacle for small to medium businesses in Russia.
Overall, I would say that corruption here is not such a grave problem as it is represented in the press – but it is still a problem. Taxation is also an issue: the Russian tax authorities rarely resolve tax issues in favour of foreign companies.
What is your advice for businessmen who are going to invest in Russia? First of all, you have to do your own market research and know for sure where you want to go. A few years ago I would have advised businesspeople to invest in Moscow. But now, given the difficulties in recruiting and retaining staff in the city, together with the high prices for real estate and so on, I’d advise them to take a serious look at the regions. And it is also good to have a Russian partner, who can make it easier to navigate the Russian business environment. Finally, I would say to European businessmen that they should not hesitate to invest in Russia.
