Investment portrait of Russia

The magazine "The Capital of the Country" has inquired 35 Russian regions (for inquire there are 83 regions in Russia) and studied the investment activities of these regions. As a result "The Capital of the Country" constructed the investment portrait of Russia. What are key Russian industries where most investments go? Of what does the real market demand of the regions consist? And what countries invest most in Russian regions?

Nowadays direct  investments have reduced all over the word especially it concerns developing countries.  Russia is not exception. We were interested in study investment activities of the Russia regions during such difficult time.  The questionnaire was filled out by the members of the investment departments of the local government.

This research has been carried out both by Chamber of Commerce and Industry, investment department.

The first of all I want to say a few words about key industries in Russia according to experts.

Main branches of industry

 

So, we can see that traditional branches create  the center  of region's economy. (For  Tomsk  fuel handling equipment composes almost quarter of the regions economy. For  Yakutia (the area where product diamond)- 80 percent of all economy are nonferrous-metals industry and fuel-energy complex).

Priorities  - branches need to invest. So we come to the conclusion that main branches of industry coincide with the branches' center. But the  area of the branches ' priorities is more than the center. It includes two directions:  transportation industry and tourism. 

The next slide demonstrates us pain spots and regions' requirements.



Ranked distribution shows us the next picture (in the order of reduction)

So, we can see visible connection between pain spots and regions' priorities. 

It's interesting that pain spots don't agree with regions' requirements (or real market demand).  For example undeveloped tourism is considered as problem area, but there isn't demand for this subject of sale.  Exception is sector of building materials, in this branch there is permanent demand for cement.

We draw a conclusion that pain spots aren't support by demand. So the government has to address the concerns of infrastructure and energy problems. Organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of Government of the Country, not local administration. And businessmen have never begun to invest without good foundation. I mean developed infrastructure.  It concerns foreign and Russian businessmen equally. For example in Sochi - the future capital of the winter Olympic game 2014 there aren't small ships which can go off the shore and solve a transportation problem. The first Government decides that businessmen are interested in this subject and they will organize public marine themselves. But nobody has done anything. Now moorages are built by administration.  Only after that private investors will buy some ships for public use.

The second  example.  Kaluga region is not far from the Moscow. The minister of economy of this district Maxim Shereikin told us about their strategy.  Five yeas ago  they didn't understand why the investors didn't want consider Kaluga region for business.  But then they had understood - investors don't want to solve the documents problems.  Execution of documents  for land is very bureaucratic process in Russia. In addition power supplies are needed for beginning business.  And the local administration decided to create industrial parks equipped by all necessary things - power and water supplies and typical building. In results the cluster of motor industry  exists in this region. A few weeks ago Lars Himmer - Deputy Managing Director of  the company Volvo Trucks Russia said us that they are very glad to choose Kaluga for business. They produced there Volvo Truck and want to increase output.

Many other districts pattern.  In Karelia  (this region is closed to  Finland) they try to create transport infrastructure and build deep-water port. Near Moscow logging and timber processing complex is organizing now.

Most investment projects that have been realized are produced by foreign investments. Companies from more than 25 countries work in Russia.

German companies work in 40 regions.

Belgium Holland Austria Italy Norway take part in investment process in Russia.  It should be added here that foreign investors take over the initiative from Russian businessmen according to real demands.

Foreign investments go for developing such branches as logging and timber processing complex (46% regions has realized such projects (Austria Sweden Germany Belgium USA Finland China). The market of the building materials divide into parts between different countries. The investment capital works in the market of food industry (production beer,  juice cold tea).

Investment in geological exploration and mineral deposit development is growing up. For example Canadian company worked in Yakytia for developing field of silver. Chinese  worked out deposit of metal in Tuva,  oil pool in Tomsk is worked out by British company.

So there are a lot of foreign companies which work in Russia with obvious success.

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