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18 Sep, 2009 08:47

International Investment Forum kicks off in Sochi

The southern Russian resort city of Sochi is hosting the Eighth International Investment Forum. Around eight thousand delegates from across the world will discuss investment, tax policy and energy efficiency.

Prime Minister Vladimir Putin, opened the forum’s first session. Businessmen expect him to outline new economic recovery mechanisms that are to be included into the second package of anti-crisis measures.

Prime Minister Putin will also meet heads of several multinational companies, including Jeffrey Immelt – the General Electric Chairman and CEO, Morgan Stanley Chairman John Mack, and founder and President of Texas Pacific Group Investment Fund David Bonderman.

The Russian Prime Minister made it clear that, as the world moves away from the credit crisis of the last year, it was vital for create better investment conditions, adding that he was looking to reduce bureaucracy to promote investment into Russia. He added that the Russian economy is ‘totally underinvested’ and that State spending alone wouldn’t drive an economic recovery.

“The era of cheap money is over. In the future competition for resources will be tight. And the country that offers the best conditions for the investor and future prospects will get all the benefits.”

The Prime Minister emphasized that there was no possibility of Russia acting to regulate foreign exchange, noting that over the longer term remaining a liberal market economy and pushing market reforms was vital for investment into Russia.

"All investors who enter the Russian Federation and the Russian market should understand clearly and concisely that today and in the future that we will maintain a liberal system for everything, which, in my view, is one of the fundamentals for wide-scale investment in the Russian economy,"

John Mack, in his opening address noted that Russia was well placed to benefit from what he described as a tremendous amount of capital waiting to come into the markets.

“No matter where you go in the developed world there is a tremendous amounts of capital, saving, I believe is on the sidelines, waiting to come into the markets. I believe Russia could be a huge benefactor of that capital. And what investors need to see – they need to see transparency, they need to see government support of new business, especially a development of an entrepreneurial spirit, where people are allowed to take risk, and when they are right they are allowed to benefit from it. I think there needs to be a whole section focused on the housing market.”

Speaking with RT, Dennis Nally, Global Chairman of PriceWaterhouseCoopers, said he sees opportunites as the economy moves into new sectors said he sees government commitments to innovation and diversification as opening up great potential for investors in Russia.

“There is a clear acknowledgement by the government here that there is a real need to diversify its economy, and move away from the dependency on energy and natural resources, which has really driven this economy for years. And that’s all positive. That means to me that there will be, in fact, incentives, priorities, placed on moving in a number of different directions – technology, innovation is clearly cited as one of them. And when you have that type of a mindset coming from a fiscal standpoint – that’s encouraging, that’s positive in terms of how investors look at the opportunities here. As I mentioned earlier you have a highly educated workforce here, so the access to talent is a real positive here. So, when I look at those plusses I think it bodes very well for Russia vis-a-vis the other developing territories.”

Sberbank President and CEO, Herman Gref, added to the theme noting that Russia needed to attract more direct investment and could not continue to rely on commodities.

“We believe prices for main commodities will grow this year, but next year they may be volatile and we may see serious declines. There are 3 factors which brought Russia to a lower level than many other countries. The first is the fall in prices for our export products. The second is a slump in demand and the third is a dramatic capital outflow. For Russia it means significant changes in model of development. We should fight for direct investment to Russia.”

The annual event has been established by the Russian government and the country's Chamber of Commerce and Industry. Sochi became Russia's investment hotspot after winning the bid to host the 2014 Winter Olympic Games.