01/01/2018 |

What do foreign investors come to in Russia?


According to the RFPI, in the outgoing year, the inflow of foreign investment into the Russian non-financial sector exceeded $30 billion.

Many, but few

As the head of the Russian Direct Investment Fund (RFPI), Kirill Dmitriev, said, the inflow of foreign investment into the Russian non-financial sector in 2017 exceeded $ 30 billion. Earlier, the Bank of Russia reported that for the first three quarters of 2017 the total inflow of foreign direct investment into the non-financial sector of Russia amounted to $ 23 billion. This, recalls the agency TASS, is a record result for four years.

At the same time, it was previously reported that by the end of the year foreign funds began to withdraw money from Russian assets. However, it only touched the market. Thus, foreign investors did not appreciate Russian assets: the total outflow of investments from Russian funds in 2017 was $ 900 million. Only for incomplete December the total amount of withdrawn funds exceeded 161 million dollars.

Unfortunately, General Director of “Mani Fanny” Alexander Shustov points out that a country with a BB + rating according to S & P can not count on a massive influx of investments, so RFPI in its reports is based on the effect of a low base: when Russia was given a “junk” investment in 2014 rating with a “negative” outlook, foreign investment from the country went almost completely, and, of course, against this background, the inflow of FDI in $ 30 billion looks like a success.

But this figure, the expert notes, is absolutely incommensurable with the scale of our camp, with its role in international politics. For comparison, in the United States about $ 380 billion of foreign investment annually comes, Hong Kong receives about $ 160 billion, China – $ 130 billion. In many respects this is because in these countries conditions for the growth of these investments are created, the protection of investors’ interests is considered, there are simply basic principles protection of private property.

According to Alexander Shustov, the attitude to investors in the entire post-Soviet space leaves much to be desired, an administrative resource sometimes defeats the right of private property. But, he says, Russia over the past few years managed to rise in the Doing Business rating from 124 to 30th place, that is, we have certain successes in the fight against bureaucracy. Success in protecting private property will determine the inflow of FDI into Russia, he said.

From specific industries that can be called: now Chinese investors are actively investing in our oil and gas industry, Vietnamese – in agriculture and the production of agricultural products, Finns – produce processed cheese, that is, point investments that have developed historically.

The Far East as an object

Meanwhile, the managing partner of the Veta expert group Ilya Zharsky believes that the current growth of direct investments in the non-financial sector still can not reach the previous pre-crisis indicators, for example, according to the results of 2013, the volume of PPI was 79 billion dollars. But still to solve the problems of the Russian economy, attracting foreign investment is one of the highest priorities, where the authorities intend to invest both forces and funds.

In Russia, projects related to infrastructure have the greatest hunger in the inflow of investments, the expert notes. These are those projects that have a long payback period and an unattractive profitability, but they are necessary, therefore investments in these projects are largely formed by supporting large funds in whose capital the state participates. Actually, one of the most important roles of RFPI is the provision of such projects with investments. That is, if you answer the question, where the money is attracted, the central stream is directed to infrastructure projects, in particular, it concerns railways, highways, bridges and junctions.

Also priority is given to investing in certain regions that have a high potential for economic growth, among these regions the Far East stands out clearly, so now Primorye accumulates 26% of the total volume of foreign direct investment in the country. For four consecutive years, the region has been demonstrating a development rate twice as high as the national average – the total investment volume is 3.5 trillion rubles.

The main projects, where funds are most used, are the shipyard Zvezda, the project of the Eastern petrochemical complex, projects in the field of agriculture and fertilizer production, as well as the state program “Far Eastern hectare”.

It is also important to note that, according to the testimony of the RFPI itself, a positive signal is that about 80% of investments from the fund fall on projects located outside Moscow and St. Petersburg, which confirms the presence of attractive sites in the regions.

Investment transit

Also, funds from RFPI are sent to projects using innovative technologies. One example is the creation in October of this year of a joint project of the fund and Italian Enel on the organization in Russia of a network of fueling and renting electric vehicles – the pilot of the project will be launched in Moscow with further integration into the regions. It is also important to understand that investments from the fund are often directed to advanced joint projects abroad.

We are talking about such projects, which to some extent create in the future a springboard for the export of Russian natural resources, believes Ilya Zharskiy. It may be a mining joint venture in the territory of another state or oil and gas projects with the prospect of future deliveries, for example, returning to the topic of electric vehicles, in November this year, the Russian-Chinese investment fund, established by RFPI and the state China Investment Corporation, announced the next direction of investment in the Chinese developer of electric cars NIO, whose shareholders are already large investment funds.

Also, part of the inflow of investments into the non-financial sector is ensured by interest to venture funds – this year’s volume already amounted to 948 million dollars, where 80% of the funds from the RFPI, while the dynamics of growth is significant, in 2016 this figure was at $ 813 million. In general, the expected in the company Veta, the flow of investment in the non-financial sector of the Russian economy can be regarded as growing and promising, if the existing sanctions of the West against the Russian Federation continue and if the current policy of the authorities continues, the growth in FDI in 2018 Jet up to 10%.

But, the expert warns, much will depend on the situation in the political sphere – presidential elections in March can seriously affect the mood of investors. One of the most important drivers of FDI inflows from the economies of developed countries can also be called the development of special economic zones and territories of advanced development (TOR), these zones for their residents can offer favorable tax conditions, which for foreign investors is a good anchor.

Author: Anna Koroleva

Article in Russian: Expert.ru

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