ENJOY RUSSIA TO EARN TODAY
I. WELCOME TO THE RUSSIAN FEDERATION!
Russia is a located in different nature conditions, in 4 climatic zones 17 125 407 km2 home for 146,4 million multinational people (in 2015) with more than a thousand years of history.
It contains of 85 subjects of federation, located on both – European and Asian parts of Eurasia. The length of the territory from the west to the east is about 10 000 km and more than 4 000 km from the north to the south. Russia is washed by 4 seas and it borders with 18 neighbors, including by the land and the sea.
So I think the shown huge scopes quite clearly demonstrate the matchless potential for economical prosperity, and, first of all, in industries related to natural resources: the country is rich for various minerals, including hydrocarbons – oil (13% of world reserves) and natural gas (34% of world reserves), it is favorable for agriculture, animal husbandry, forestry and fishing etc., which to a great extent forms Russian GDP.
I’d like to pay special attention to the talented people able to manage it all. Russia takes the 1st place in the world in the number of people with higher education. Russia is successful in science-intensive industries, including manufacturing, engineering, mechanical engineering, constructing, military-technological industry etc.
Some other sectors of the economy might be seen from the GDP structure.
In 2014, according to the Federal State Statistics Service http://www.gks.ru/bgd/free/b04_03/Isswww.exe/Stg/d05/63.htm.
II. WHAT ARE INVESTMENTS
Due to economic, geographic and other reasons, certain regions or projects lack capital, or human resources, or wise business strategy, or all of it. Investment is a great tool able to satisfy these needs. But not just this needs.
Investment is a mutual benefit tool to make your money work, by giving it to economy, business, development and other spheres in order to obtain a regular income or a big sum of money.
Foreign investments in a narrow sense concern those regulated by, mainly, the Federal law “About the foreign Investments in the Russian Federation”, adopted on July 09, 1999 N 160-FZ. It gives guarantees to foreign investors provided that they follow the given rules of investing. So it can be realized in these forms:
• ‘direct investments’ (38,7 %) – according to the legal definition, it’s an acquisition of at least 10% of shares (contribution) in the authorized (share) capital of the commercial organization in the form of company or a partnership; also investment into assets of a branch of a foreign legal entity, created in Russia; also in financial rent (leasing) it’s being a lessor of equipment specified in Sections XVI and XVII Single Commodity Nomenclature of Foreign Trade of the Customs Union within the EurAsEC, of the customs value of not less than 1 million rubles. This type is the easiest to get statistics about;
• portfolio investment (3,0 %) – other investments into securities of companies (stocks, bonds, others), etc. in order to make profits. The main difference from direct ones is that here investing into companies’ shares are either so small, or so scattered among other investors, so that you don’t get a real control over the company’s capital. For diversification of risks, it’s better to get securities of different companies.
• other returnable investments (58,3 %) – e.g., trade credits, bank deposits etc.
Investments in a broad sense are not only in a business sphere, it can be made by anybody in different forms, just for example:
• Start-ups – can be beneficial to both parties – a talented team with innovative idea and an investor. They can find each other on special start-ups e-markets, e.g. http://planeta.ru/ , http://boomstarter.ru/ https://www.kickstarter.com/ http://smipon.ru/ https://simex.bz/projects, …;
• Real estate – gives a special benefit to purchase in crisis time;
• Construction – price for an object increases dramatically after construction is finished;
• Bank deposits – a credible way, but in fact it helps more to save, than to multiply, as an average interest rate on deposit in credible banks is 6-10% per year, which might compete with inflation, and the governmental deposit insurance is only given for deposits up to 700 000 rubles;
• Mutual funds – long term large investments;
• Buying metals – rather a very long term investments. E.g. Gold (has risen in price is 6 times for the last 10 years), palladium;
• Stock market – trading securities through a broker, e.g. Moscow Interbank Currency Exchange (MMВБ), Russian Trading System (РТС) (http://moex.com/);
• Options – require being able to make prognosis in business or dealing through a trust management. Profit is not guaranteed, but might happen in a very short time, etc.
So start making your money work today. Contact me for more information and advice.
II. WHO CAN INVEST
Foreign citizens and persons without citizenship, foreign organizations (legal entities and those who don’t have the status of legal entities), international organizations, foreign states.
III. WHAT CAN BE INVESTED
Foreign capital, including money, securities, other property, property rights, intellectual property as well as services and information.
IV. THE PLACE AND TIME FOR INVESTMENTS
Now let me give you a view from inside and answer the main question that must interest you. Sanctions. So no, some GDP decline in 2015 is NOT a result of economic sanctions in light of geopolitical confrontation between Russia and the West, – this is rather a result of the worldwide drop in oil prices, which had its influence on ruble’s fall.
I do not support the idea of sanctions as restrictions that business might have due to mismatch of political interests. Economic sanctions are a double-edged sword. Exclusion of the biggest country as an economic partner can’t be imperceptible. It has been already admitted that sanctions against Russia do harm the economy of its authors. Thus, due to Russia’s huge role in economies of the sanctions-supporters, they just make their enterprises bear losses. And I strongly believe that this ineffective in all senses instrument will not live long. Explore more about sanctions effect in my article ‘Sanctions, thank you’.
I would especially like to point that sanctions against Russia in fact do NOT and will NOT bring any bad effect on Russian investment climate, it will not eliminate the shown potential for investors. I’ll tell you more, effect of sanctions happened to be opposite to what was expected, sanctions will even make Russia stronger than it has already been.
Importation reduce brought changes in Russian politics: inner politics took a course to import substitution – replacing some foreign imports with domestic production among the country, combined with modernization of the ‘traditional’ industries. For example, agriculture, which turned out to be greatly grateful to sanctions, has shown unprecedented growth in 2015.
And also, as the goal for modernization disclosed a backwardness of some domestic branches, whereas import substitution is needed straight away, it has given a huge push to:
– innovative development of industry,
– development of high technologies,
– technological industries development.
So sanctions lead to a rise and development in our own inner economy.
And ruble’s fall in 2015 in its turn made Russia more attractive for foreigners.
2015 showed unprecedented growth in tourism: the number of tourists in Russia increased by 13%, according to Federal State Statistics Service.
Lower prices, especially for real estate, make it easier and more profitable to buy and to rent.
“The weakening of the ruble allows foreign investors to buy Russian assets at lower prices, and many take advantage of this”, said the Prime Minister Dmitry Medvedev at the Asia-Pacific Economic Cooperation (APEC) Summit on November 18, 2015.
I am quite sure that the moment is the best for foreign investments and for doing business in Russia.
V. SUPPORT OF INVESTORS FROM THE GOVERNMENT
What is more, the set goal for inner economy development also exposed the need for additional foreign capital and well educated human resources. So now the government is especially interested in attracting foreign investments to Russia. And it is providing a whole complex of measures for attracting foreign investments:
• plans for import substitution;
• government subsidy;
• privileges for investors (e.g. regions might provide privileged prices on rent of regional property, etc.);
• direct federal subsidies to enterprises (e.g. programs of Ministry of Industry and Trade);
• Government Awards;
• “single windows” for investors;
• movement towards transparency of the government (http://open.gov.ru/);
• the government is ready to help the foreign investments at a legislative level, including:
– special customs regulation for investors,
– tax reduce,
– the special economic zones,
– simplification of business registration and licensing system etc.,
• creation of different “investment aid agencies” and databases, e.g.:
– ‘Invest into Russia’ (http://invest-rf.com/ru/ob-agentstve/regiony/),
– ‘Investregions’ – electronic database of investment projects in certain regions of Russia, Investment areas, containing info on Special economic zones, territories of priority development, technology parks, industrial parks, business incubators (http://www.investinregions.ru/map/),
– ‘Investment Russia’ («Инвестиционная Россия») has an electronic database of investment projects in Russia (http://investros.ru/o-nas/o-proekte.html).
To attract investments to specific regions they make free official governmental sites that show in details investment tools, projects and advantages of the certain regions, e.g.:
• Moscow (http://investmoscow.ru/), investments map of Moscow (http://investmoscow.ru/investment/investment-map/),
• Saint Petersburg (http://www.spbinvestment.ru/),
• Leningrad region (http://lenoblinvest.ru/), and on maps http://map.lenoblinvest.ru/,
• Kaluzhskaya oblast (http://www.investkaluga.com/),
• Nizhegorodskaya oblast (http://www.mininvest.ru/),
• Krasnodar krai (http://www.investkuban.ru/, http://guide.investkuban.ru/).
The Government is exploring ways to create zones with special tax regime on Russian territory, especially in the Far East, which will turn into a “domestic offshore zone”. This will help to reduce the outflow of capital and attract additional investments to Russia.
As the Prime Minister says, “We are interested in making the Russian Far East and Siberia our national priority of the 21st century, because these are vast territories with a large number of natural deposits, and here we, actually, cannot do without foreign investment. We launched a special mechanism for priority development territories with preferential tax and administrative regime”. Currently there are 9 such advanced development territories.
VI. WHERE TO INVEST IN 2016
Investments are especially waited by undeveloped, or distant, or the old cities with an economic growth potential.
Just imagine Saint Petersburg with its more than a 300-years old history, which reasonably needs huge financial investments for preservation of cultural heritage, construction, historical buildings restoration, reconstruction, overhaul, renovation of its infrastructure, such as public transportation (which is sometimes quite battered and does not match the status of the city), etc.
Other priority investment spheres are health care, education, transport infrastructure, sport infrastructure, urban environment, etc.
Most direct foreign investments are being realized in Moscow, St. Petersburg, Nizhegorodskaya oblast and Kaluzhskaya oblast.
Information according to the Bank of Russia // http://www.cbr.ru/statistics/?prtid=svs&ch=itm_12726#CheckedItem.
I would like to mention some more quick facts, why Russia is the very right place in your interests:
1. Russia, the biggest country in the world with 146,4 million citizens, is a large, growing consumer market.
2. More than 74 millions of Internet users – the biggest online-services audience in Europe.
3. Western companies in Russia sell 6-12 times more of goods and services per capita, than they sell in China and India.
4. 7th place in the world in the labor force.
5. 2nd place in Europe for number of jobs created due to direct foreign investments.
6. The standard rate of value added tax in the countries of the world, %:
18% – Russia, 19% – Cyprus, 19% – Germany, 20% – France, 20% – United Kingdom, 22% – Italy, 24% – Finland.
7. The maximum personal income tax rate by country,%:
13% – Russia, 15% – Czech Republic, 25% – Slovakia, 35.8% – Turkey, 41.8% – South Korea, 46.3% – USA, 47.5% – Germany.
8. Russian attractiveness for investors has risen with Russia’s WTO accession (since 2012), creation of Eurasian Tax Union (EACU, 2010) for nowadays Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan and Tajikistan, creation of Eurasian Economic Space (single market that provides free movement of persons, goods, services and capital within the Union, 2012).
9. Institutions made to protect the rights of investors – the Advisory Council for Foreign Investments and Business Ombudsman Institute – viewed more than 200 appeals, the majority of which were decided in favor of foreign companies. The system of arbitrations (as a form of alternative dispute resolution), helping traditional courts, should also speed up the judicial review of business disputes.
10. Almost all global giants operate in Russia, and they continue to expand their business.
As Muhtar Kent, Chairman and CEO of the “Coca-Cola” company says, ‘Russia is what the investors need’.
We grow, we change, we eliminate barriers to business, and always welcome new partners and friends to Russia!
You can contact me to get the up-to-the-minute information about the Russian offers and their profitability. I am happy to help you discover Russia, to help you pick the most suitable, convenient and efficient way to make your money work, and to support you with further business assistance with it.
Wish you the best realization of any of you ambitious plans in 2016 and a Happy New 2016 Year!
By Anna Menshova
Contact me to get the latest news on sanctions and your opportunity to do business in or with Russia!