Russia

Investing

FDI in figures

The flows of FDI were at 13.6 billion $ in 2006, a growth of 5%. Even if they have increased considerably over the last few years (multiplied by 3 in 5 years), their level (1.5% of the GDP) is lower than those registered by comparable countries and modest compared with the growth and the potential of the Russian economy.
This is due especially to the investment climate which is still widely perceived abroad as unfavorable. If, over the last few years, Russia has started up economic reforms, a step in the right direction, administrative problems and uncertainties concerning the constitutional state remain.
Moreover, a large part of the capital is, in reality, repatriation of Russian capital, often from tax havens.

Foreign Direct Investment	2004	2005	2006
FDI of inward flow (millions USD)	15,444	12,766	28,732
FDI inward stock (millions USD)	n.c.	n.c.	197,682.0
Performance Index*, world ranking	92	89	87
Potential Index**, world ranking	24	22	n.c.
Number of Greenfield investments	382	512	386
FDI inwards (in % of GFCF)	14.3	9.2	16.3
FDI stock (in % of GDP)	n.c.	n.c.	20.2

Source: UNCTAD, World Investment Report

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk.

Why you should choose Russia

Strong points: Very large natural resources, strong growth of domestic demand, strong investment potential still largely underexploited, qualified work force.
Weak points: Investment climate unstable, accounting rules and legislation complicated and sometimes contradictory, violation of intellectual property.
Government measures to motivate or restrict FDI: Setting up investment assistance in Russia is still in its infancy. The government prefers to improve the general investment climate by reducing tax and making economic reforms.
Bilateral investment conventions signed by Russia: Russia inherited 14 bilateral treaties with most of the European countries, China and Canada.
Since then, Russia has signed 34 treaties of which 20 have been ratified (especially with Central European countries, Japan, India, Egypt and South Africa). On the other hand, it has not yet ratified the bilateral investment treaty signed with the United States in 1992.
It has recently asked to renegotiate these contracts, fearing that they may not be compatible with its joining the WTO.
To see the complete list of the countries, click here.
To see the treaties, click here.

Administrative procedures relative to foreign investment

Freedom of establishment: Usually guaranteed.
Investment in certain domains which might affect national security may be limited.
Acquisition of holdings: The majority acquisition of holdings in the capital of a local company is authorized in Russia.
Obligation to declare: No obligatory declaration, except for banks.
Competent organization for the declaration: Bank of Russia
Requests for specific authorizations: Natural resources, energy, transport, communications, defense industry.