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18 Sep, 2009 16:06

Sochi sentiment buoys investors

Business and political leaders meeting at the Sochi International Investment Forum have heard that Russia will be looking to encourage greater foreign investment.

From crisis sorrow – to the optimism of recovery. Major global investors, such as Morgan Stanley Chairman, John Mack , say the world has accumulated a lot of cash which needs to be put to use.

”The amount of capital available for investment around the world is the largest I’ve seen. In the U.S. our best estimates are there are $5 trillion in households, that’s been saved and at some point will come into the investment market. If you go to Japan the number of savings of yen in dollar terms its close to $7 trillion. I believe Russia could be huge benefactor of that capital.”

Russia needs both cash and expertise to invest in infrastructure, telecoms, and high-tech industries. Investors want more transparency, consistent application of law and no double standards for foreign and domestic firms. Prime Minister Putin’s optimism encouraged investors.

”I think, in the nearest future, and I would like this to happen, and the government is issuing such challenge, the interest rate in our banking system will be about 6%.”

His comments drew a storm of applause. But in order to achieve this, he says, Russia needs to tackle its Achilles’ heel – double digit inflation.

As for practical, immediate measures – Russian ministered pledged to cut red tape and offered state guarantees to encourage the building of infrastructure.

At the international investment forum in Sochi Prime Minister Putin said Russia has every chances to become one of the main investment targets for foreign capital and that the crisis may even help. Forum participants agree – this could happen, especially if all the measures promised become reality.