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18 Sep, 2008 18:10

Investors remain optimistic as Sochi forum opens

The Seventh International Business Forum in Sochi is set to open amid great nervousness on the part of investors. However, according to Russian Prime Minister Vladimir Putin, the question is no longer whether to invest in Russia, the question is where in

The discussion between the prime minister and the world's top businessmen touched on the recent developments in the world's political situation. Putin stressed that any changes would have no effect on Russia's economy and its economic policy. According to Putin, Russia will not make any politically-motivated decisions in economic relations with its partners.

The global financial crisis was also mentioned, as well as the recent collapse of the Russian market. The prime minister assured investors that the fundamental indicators of the Russian economy remain unchanged, making it perfect for international investment.

“We can see tension on our trading floors, but we believe – and not without grounds – that this is caused not by our own problems. We don't have systemic problems in the Russian economy. All fundamental economic indicators are normal. I think it is obvious that the main reasons for the tensions are problems in the U.S. and European markets,” Putin said.

Friday will be the first working day of the International Investment Forum. Organisers expect contracts worth millions of dollars to be signed during the forum, striking a total value of over 12 billion euros. With over 8,000 participants from 40 countries taking part, the forum is expected to provide a backdrop to many investment deals.

“Russian economy – where to invest” is the main slogan of the economic forum in Sochi this year.

Russian regions will present numerous projects mainly in infrastructure, recreation and real estate. But such projects need long-term investment, which is lacking in the market now.

Organisers of the forum say the global turmoil will affect Russian credit institutions but that investment interest is unlikelyto subside. Aleksandr Tkachev, Governor of Krasnodar Region expects the worst can be avoided.

“The pool of investors wanting to participate in building the Olympic infrastructure is growing. Of course the crisis will have a negative impact on our credit organisations but the measures taken by the Central Bank and the Finance Ministry are well-timed and will help to avoid serious consequences.”

Krasnodar Region alone will present projects worth $US 18 billion and is confident of success. Indeed, the Sochi Olympics seems to be a sacred cow – a priority project that Russian companies will finance no matter what. The Head of Russian Railways, Vladimir Yakunin, says that other projects are likely to be cut first.

“Of course, we are adjusting our investment programme according to the changing situation in the financial markets. We may have a feeling that we need a more conservative investment policy because the Russian financial system can't provide us with the necessary money. If so, we’ll cut other investment projects – but not Sochi.”

The business community is expecting not only attractive investment opportunities at the forum, but also wants to hear the government's decision on tax cuts. The main events will start on Friday with a plenary session headed by Vladimir Putin on investment opportunities in Russia.