FDI in Russia

Overview by Globlatrade.net:

FDI in Figures

Even though FDI flow increased considerably at the beginning of the millennium years (tripled between 2002 and 2007), its level (1.5% of the GDP) remains relatively low in terms of growth of the country and of the Russian economy's potential. They dried up due to the global crisis and have been recovering slowly since 2010. This trend should continue.
The low FDI performance reflects an investment climate which is still widely perceived as unfavorable abroad. Although, over the last few years, Russia has implemented positive economic reforms, the state's administrative problems and the uncertainties of the rule of law remain significant.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 55,07375,46138,722
FDI Stock (million USD) 491,232213,734252,456
Performance Index*, Ranking on 141 Economies 796257
Potential Index**, Ranking on 141 Economies 79-
Number of Greenfield Investments*** 381574399
FDI Inwards (in % of GFCF****)
FDI Stock (in % of GDP) 38.212.720.3

Source: UNCTAD

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.


FDI Inflows By Countries and Industry

Main Investing Countries 2009, in %
Cyprus 18.3
Netherlands 18.1
Luxembourg 13.9
United Kingdom 8.8
Germany 7.2
China 3.9
Irland 3.4
Japan 3.1
British Virgin Islands 2.9
United States 2.7
Main Invested Sectors 2009, in %
Wholesale, maintenance 27.8
Manufacturing industry 27.1
Transport and communications 16.8
Mining sector 12.6
Mining sector 9.7
Real estate, rent, business 9.7
Financial intermediation 3.3

Source: Federal Statistics Service. The figures by country are those of total investment (the Statistics Service does not publish these statistics any longer for FDI only).

Form of Company Preferred By Foreign Investors
Closed Joint-Stock Company (AOZT)
A partner's know-how and knowledge of the market can be taken advantage of while keeping a certain control of the company.
Form of Establishment Preferred By Foreign Investors
Investors generally open a branch office first (or a representative office) before creating a subsidiary.
Main Foreign Companies
TNK-BP, Shell, Total, General Motors, Renault, Phillip Morris, Auchan, Nestlé, Cadbury, Carlsberg.
Sources of Statistics
Federal Statistics Service
Bank of Russia
Ministry of Economic Development and Trade

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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.
Since May 2008, majority foreign ownership is subject to authorization in many sectors, particularly those linked to raw materials, heavy industry and aerospace.

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