#7
BBC Monitoring
Russian minister says World Economic Forum pleased with
recent reforms
Source: NTV, Moscow, in Russian 1900 gmt 29 Oct 01
Russian Minister of Economic Development and Trade German Gref has said that although the country's ability to absorb foreign investment has grown, its levels are not sufficient to sustain present growth rates. He added that the main obstacles for inward investment were red tape and uncompetitive tax regime. Commenting on the World Economic Forum in Moscow, Gref said that foreigners have been impressed with the reforms of the last six months. The following is excerpts from report by Russian NTV on 29 October, subheadings have been inserted editorially.
[Presenter] What can Russia hope for and what are the prospects of the flow of foreign investment into Russian economy increasing? I will ask Minister of Economic Development and Trade German Gref this question.
Good evening, German Oskarovich, what can the Russian government hope for, what would be the desirable volume of investment in the country's economy.
[Gref] Good evening, Aleksandr. I have to say that at present the Russian economy and Russia as a whole are much more capable of absorbing foreign investment, although the volume that is needed for supporting the growth rate of Russian economy and bringing about an increase of that rate is not yet there.
I will give you two figures: say, foreign companies invest in the economy of China every year exactly as much as we have received in total during eight years of reform. Thus, we have plenty of room for growth.
ExxonMobil gas project in Far East largest ever investment in Russia
Now about the attitude of foreigners to what is going on in Russia and how they react to this. Your report showed that the [gas] project Sakhalin-1 was announced today as the beginning of investment in Russia. This is the largest investment in the last 10 years and I think that even before that Russia did not receive investment of such magnitude.
The volume of investment in the Sakhalin-1 project by a consortium headed by the ExxonMobile company is envisaged 12-15bn dollars over seven to eight years. The total cost of the project will be 30bn dollars. The budget of the Russian Federation and the budget of the constituent parts of the federation will receive about 30-40bn dollars over the life of the project. The cumulative and multiplier effects will be great, and it will benefit Russian businesses. They will receive orders in the process of the implementation of this project and roads, gas pipelines, social facilities will be built in the Sakhalin Region. Also, thousands of jobs will be created during the implementation of this projects, and hundreds of Russian enterprises and plants will receive orders and this is, of course, a very significant development in Russia's investment situation or recent years.
Russia needs to cut red tape and taxes to attract sufficient investment
[Presenter] There was a great deal of talk today about the need to improve investment climate in Russia. What does this mean? What should be done and what steps the Russian government is prepared to proposed and foreign partners recommend?
[Gref] ... Now, what has to be done. Today we discussed the measures that need to be taken by the government and by the president in the economic sphere. There are very many tasks here. To start with, they are divided into two components.
First, it is a so-called de-bureaucratization of the economy, removing unnecessary barriers on the path of investors, so that investors coming into the country could very quickly receive all necessary permits and that the rules were simple and transparent for them, so that they would not have to spend years in between the cabinets of officials and that they could very quickly create the final products of their investment project.
Secondly, this is, of course, easing the tax burden, creating such conditions that it would be beneficial to do business in the Russian Federation and that this would more beneficial than doing business in the neighbouring states.
[Presenter] German Oskarovich, but as long as I am aware, the regime is particularly favourable, 13 per cent is a rate that is close to a record.
[Gref] You are right, 13 per cent is a very low rate but at present this only concerns income tax. We have about 10 more types of taxes, in respect of which such steps have yet to be taken, or they have been taken this year and will come into effect next year.
Therefore, all investors today noted a very positive movement forward in the Russian Federation and it was said that during the last six months they have seen a real progress, which they would like to see for years ahead...
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