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In this page: FDI in Figures | Why You Should Choose to Invest in Russia | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

For the first time in its history, Russia has become the third largest global recipient of FDI flows according to the UNCTAD Global Investment Monitor. In 2013, FDI flows into Russia reached a record of 94b USD, which represents an 83% increase compared to the preceding year. This boom was mainly caused by the British company BP aquiring a 18.5% stake in Rosneft as part of Rosneft's acquisition of TNK-BP for the sum of 57b USD. In 2013, Russia gained 20 places in the yearly Doing Business Report of the World Bank, becoming one of the most dynamic coutries among the BRICS.

Although FDI flux had considerably increased since the beginning of the 2000s, their share in the GDP (1.5%) remains small given the country's growth and the potential fo the Russian economy. For the most part, these are circular investments. Although over the last few years, Russia has implemented positive economic reforms, the state's administrative problems, corruption and the uncertainties of the rule of law remain significant.

 

Country Comparison For the Protection of Investors

  Russia Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 6.0 7.0 7.0 5.0
Index of Manager’s Responsibility** 2.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 4.7 5.9 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 55,08450,58879,262
FDI Stock (million USD) 454,949496,396575,658
Performance Index*, Ranking on 181 Economies 19--
Potential Index**, Ranking on 177 Economies 6--
Number of Greenfield Investments*** 384319266
FDI Inwards (in % of GFCF****) 13.411.317.0
FDI Stock (in % of GDP) 24.024.527.2

Source: UNCTAD - Last Available Data.

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. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Russia

Strong Points
Significant natural resources, investment potential largely under-utilized and a qualified workforce.
Weak Points
Unstable investment climate, complicated and sometimes contradictory accounting regulations and legislations, infringement of intellectual property, many sectors closed to foreign investment as considered strategic.
Government Measures to Motivate or Restrict FDI
The establishment of investment assistance in Russia is still in its infancy, despite many declarations of intent. The government prefers to improve the general investment climate by tax reductions and economic reforms.
Majority foreign ownership is subject to authorization in many sectors, particularly those linked to raw materials, heavy industry and aerospace.
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.

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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.

Learn more about Foreign Investment in Russia on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
National agency for direct investment
European Bank for Reconstruction and Development
The Federal Agency for Management of Special Economic Zones (RosOEZ)
Tenders, Projects and Public Procurement
Globaltenders, Tenders & Projects from Russia
Tenders Info, Tenders in Russian Federation
DgMarket, Tenders Worldwide
Other Useful Resources
Ministry of Economic Development and Trade
 
 

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Learn more about Investing in Russia on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: January 2015