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Russia’s regions: an investor's view

June 03, 23:39 UTC+3
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KEY CONCLUSIONS:

  • At the SPIEF 2017, the Leaders’ Club introduced Business Agent Rating

“I think it complements the national ranking very well specifically in terms of metrics which are not measurable by surveys. This is what an entrepreneur or investor faces, when they arrive in a region,” said Artem Avetisyan, Director of the New Business Department, Agency of Strategic Initiatives; Chairman of the Non-Governmental Organization Leaders’ Club.

  • In 2017, business activity in Russia is on the rise

“According to our estimates, in Q2 2017, business activity of SMEs started to grow. <...> Only a year ago, in Q2 2016, the number of small companies investing in business development stood at as little as 11%. Just a year later, in Q2 2017, 26% of our respondents already started investing in their business,” said Alexander Kalinin, President, All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses Opora Russia.

  • Investors’ interest in Russia is growing

“Today, investing in Russia has become the fashion,” said Andrei Belousov, Aide to the President of the Russian Federation.

“It is a good entry point now. Real estate prices have fallen, and the labour market environment is favourable,” said Alexander Kalinin.

  • Investors search for reliable projects

“Today, investors are looking for structured, packaged, thoroughly designed projects with clear business case, organisational and legal parameters and comprehensive risk assessment,” said Sergei Kelbakh, Chairman of the Board, Russian Highways.

CHALLENGES:

  • Inadequate efficiency of investor relations in the regions

“I am certain that now in a vast majority of regions people sometimes just don’t know how to do it, but they are eager to,” said Andrei Belousov.

“You can hardly find professional teams able to develop a project, stand up for it and support it in some of the regions,” said Sergei Kelbakh.

  • Lack of required infrastructure

“Many regions lack their own infrastructure to offer to investors,” said Maksim Reshetnikov, Acting Governor of Perm Territory.

“There is little attention paid to developing the regional network [of roads]. <...> You can’t achieve a desired result without an established transportation infrastructure, road infrastructure in the regions in particular,” said Sergei Kelbakh.

  • Sweeping combat against corruption

“What we expect from the governor is combat against corruption. <...> You need to introduce really tough anti-corruption measures,” said Philippe Pegorier, President, Alstom Russia; Member of the Board, Association of European Businesses (AEB).

SOLUTIONS:

  • Development of infrastructure in the regions

“Accommodation is essential, they just can’t find where to live <...> And here the governor can help us, starting to build accommodation for people,” said Philippe Pegorier.

“Develop regional roads taking into account the investment growth zones the region has planned mid-term,” said Sergei Kelbakh.

  • Lower burden on businesses 

“Streamline the tax policy and try to lessen the administrative pressure in terms of excessive audit,” said Agnessa Osipova, President, Russian Franchise Association (RFA); President, Baskin Robbins Production International.

  • Regulating investor relations

“All services should be standardised,” said Svetlana Chupsheva, Chief Executive Officer, Agency for Strategic Initiatives.

  • Customer-oriented approach as a foundation of investment hospitality

“It is people that work with investors, not institutions. For people to work, they should first be willing to, and then, they should know how to do it. <...> we should incentivise people to be customer-oriented,” said Andrei Belousov.

“When an investor contacts us, a key point here, we should promptly respond,” said Taliya Minullina, Head of the Investment Development Agency, Republic of Tatarstan.

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