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21 Oct, 2008 02:06

Foreign investors and Russia look to long term

Foreign investors have confirmed their intentions to launch multi-million dollar projects in Russia. The announcement was made by Prime Minister Putin after a meeting of the Foreign Investment Advisory Council in Moscow.

Nestle is among many established investors who appeared at the Foreign Investment Advisory Council meeting in Moscow on Monday. The firm has signed a $220 million contract with the Krasnoyarsk region administration to produce its famous Nescafe coffee there.

The company is already one of biggest foreign investors in the region and plans to increase coffee production, according to Luis Cantarell, Executive Vice president of Nestle

“If we were scared to invest in Russia we would not have made this decision today in the present circumstances. I think its a good signal that  we have decided to announce this on a FIAC meeting with Vladimir Putin and also in the light of the present circumstances we are very confident on the future of Russia.”

Nestle's commitment is just one example of the confidence investors still have in the Russian economy, despite the impact of the financial crisis.  During the meeting, Putin claimed Russia was well placed to withstand the impact of the world's economic problems.

He called for new powers for the Deposits Insurance Agency to help prop up failing banks and increase their stability, with an extra $7.6 Billion of additional funds.

But Jim Turley, Chairman and CEO of Ernst and Young Global, says the recent measures taken by the Russian government to intervene in the financial sector should be a temporary measure.

“While government investment in the financial sector has been needed in many parts of the world, this investment should be temporary, not permament. Market ownership of companies should remain the desired state.”

Putin acknowledged some of the problems of the Russian economy – like the absence of long money – and said the foreign investment advisory council will continue making the investment climate in Russia more attractive.

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