New web site underlines commitment to investor clarity
Russia’s started an internet service for foreign investors to complain about their treatment in the country, which is a part of a big drive to clean up business in the country.
Public complaint is gaining popularity in Russia, where people are posting videos on YouTube and trying to overcome bureaucratic mayhem by addressing the President and Prime minister directly. Now with the internet site ModernRussia.com starting to work this week, any foreign investor might do the same.
Russia has seen a 10 year rally, coupled with a massive increase in global investment into what is still seen as an undeveloped market with great potential. And Alexander Ivlev, a partner at Ernst&Young, says many of those companies who have made their way in, have found it rewarding.
“Those companies which are already here know that it's possible to do good business here. It's a sound business opportunity here, they make good money here, good margins, good profits. I don't know many investors who left this market.”
But at the same time the risk attributed to Russia has had a downside. It is seen as a land of often high margins but also significant risks, with administrative and bureaucratic barriers often headlined.
Now the government is making the point – a stable political and economic environment is its focus, with clarity, predictability and a more overt approach to regulation. Aleksander Gerchik, the head of global markets at Prospect Investment Company, thinks the move is long overdue.
“You've got to be more open. The problem with foreign investors is that they get scared very fast. The government and the companies that attract foreign investors or foreign money should be very careful. As I said, the person from other country is getting scared of everything.”
The slump saw investors desert Russia in droves, in the wake of public criticisms of Mechel, the TNK-BP row, and Ikea’s problems in opening new stores.
The new service is a small step, but offering scope for more immediate complaint will help bring about a new investment environment. And the service will put pressure on all levels of government to account for themselves.